Archive for the ‘Legal’ Category

Real Estate Agent Responsibility When Showing Property

Friday, February 10th, 2017

Real estate agents wear many hats – from negotiator to chauffer to therapist, and that’s just for starters. A real estate agent often must take clients by the hand and walk them through the home search or listing process, as well as the subsequent purchase or sale transaction. But there is one thing that agents need to keep in mind during these busy and sometimes emotional times – responsibility for clients.

Responsibility for one’s clients as it relates to agency comes in many forms – some are spelled out in the ethics code (such as the duty to disclose), and some come from law (such as anti-discrimination, personal injury, tort and criminal law). But many situations with clients fall into a gray area when it comes to responsibility. One of those most important is the responsibility to accompany clients when viewing a property. If an agent does not do so there could be legal ramifications, say for example if an injury or property damage occurs.

Here are some tips to use when showing property to keep you and your clients out of harm’s way and avoid potential legal action:

1. Never let clients visit a property alone. While this seems obvious to many of us, I have read stories of agents giving clients one day lockbox codes or passing along entry instructions. As the representative of your clients you need to understand that this action can land you in hot water – unless you have been authorized by the property owners in writing to allow your clients to enter on their own (and I still would never allow that). Let’s just say there are a handful of legal issues here – from trespassing to other issues of someone gets injured or breaks something, or leaves a door/window open which could allow a thief to access the property.

2. Make sure you stay with your clients as they tour a property. Again, if you allow your clients to wander off it could cause problems. If it is a large property you especially need to stick with your touring clients. Make sure you and they have access to all areas of the property. If your clients have small children and there are potential hazards (steep or dangerous areas or animals, for example), make sure your clients do not wander off alone without permission and without you at their side.

3. Ask the owner or listing agent if you are allowed to access areas about which you are unsure. If there is a part of the property that you are not sure about, ask the listing agent or owner if you have permission to explore there. For example, a guest home, separate structure or animal pen, or flowing water. Oftentimes a listing agent will specify whether such areas are able to be viewed, but if not don’t ever assume.

The bottom line is that if your clients are not in your presence while touring a property, they could end up creating problems or suffering injuries to themselves or their property. If they were being careless and wandering around without permission, they likely will not have rights to recover for injuries suffered. Make sure to establish this right off the bat in order to protect yourself and your clients.

 

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Buyers, Sellers & Agents: Make Sure Your Sale Is Legal

Wednesday, November 16th, 2016

There is something important that all home buyers, sellers and agents need to be aware of and it is very easy to discover: making sure all parties on title have signed the listing agreement and the residential purchase contract (and of course all further documents that relate to the sale).  th

It is extremely important that all listing agents check the property deed prior to having sellers sign a listing agreement. It is not hard to do and takes only a call to the title representative.  You cannot rely on what the seller(s) tell you, as they may not even realize that there is another person on title. Recently I sold a home on behalf of my buyer clients. I pulled up the tax records and saw there were 2 sellers named as owners. I drafted the offer with both names. Due to complicated circumstances one party was going to sell and the other was going to sign an interspousal deed transfer, but that was not signed yet. We got around it but it was a very strange situation and a bit risky.

Another home I sold recently had 3 sellers, but only 2 were named in the tax records; however the deed showed there was a third party on title (parent of one of the sellers). The listing agent was not aware of this and we had to get the third seller’s signatures on all paperwork after the contract was accepted. Luckily that third seller was cooperative – this may not always be the case.

If someone who is on title does not sign all paperwork then technically there is no contract, as the law states that all owners on title need to agree to a sale. You can imagine the legal repercussions down the road if things are done  improperly! The good news is that the title company will catch this and it can be corrected, but not if the other person who has not signed decides to be uncooperative.

If you are an agent, this is something you should know, but believe it or not many agents have listing agreements signed without checking with their title department to assure that all parties on title sign the agreement. Similarly, buyers agents need to check the deed before writing offers to make sure this is the case. If you are a buyer or seller, you should ask your agent to make sure s/he has all the correct information at the time of listing or writing an offer.

 

 

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CA Supreme Court to Review Legality of Dual Agency

Tuesday, May 10th, 2016

The California Supreme Court will soon have a chance to review the practice of dual agency, where a broker (either through one agent or two agents who work for the same broker) represents both the buyer and seller in the sale of real property. California is a state that allows this practice, although the California Association of Realtors has penned rules that require full disclosure of such situations to all parties. Nevertheless, when one agent/broker represents both sides of a sale transaction there is a big conflict of interest, and the possibility of misrepresentation and breach of agency duties is highly possible. I have always been against dual agency, but I have represented both buyer and seller in transactions – there are rare situations where the scenario can work effectively. I think it would be better for all sellers and buyers if it were not allowed. images

Here is an example of a typical dual agency dilemma for an agent: If a seller tells his agent something in confidence, say what is his bottom line for an acceptable sales price, and that agent then represents the buyer – who asks what price they should offer on the home – the agent is placed in a very precarious situation. The agent in this example owes a duty to both sides, but how can she answer  her buyer’s question without betraying the seller’s confidence? She knows what the seller will take, but it is her duty to get the seller the best offer possible. Similarly, it is her duty to do her best on behalf of her buyer now, so it puts her in a hard place.

The case at hand stems from a sale of a luxury home in Malibu, in which the buyer (represented by a Coldwell Banker agent) claimed the listing agent (a different Coldwell Banker agent) failed to disclose to him that his home was much smaller in square footage than advertised – this claiming that the price was inflated for the size of the home.

I believe that dual agency should never be allowed unless the broker is also an attorney, and even then I have doubts. After all, it is not allowed with attorneys – could you imagine hiring counsel for the opposing side in a court battle! This is a very sensitive area and many agents do not understand the legalities involved. It will be interesting to see what the court decides.

 

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New California Law That Will Affect Investor-Owners, Renters

Wednesday, February 19th, 2014

California’s new law, AB 1513, will make it a felony to unlawfully possess the property of another, including refusal to leave another’s property after being requested to do so. This law should make it easier for landlords to evict tenants – after proper notification of course – and will also keep tenants on their toes when served with a notice of eviction.dreamstime_5338072

The legal term for failure to vacate the premises is unlawful detainer. The language of the new law states the following:

160.5 A person who does either of the following is guilty of a felony punishable pursuant to subdivision (b) of Section 1170 of the Penal Code:

(a) Knowingly holds and occupies any residential property, owned or managed by another, by force or threats of violence.

(b) Knowingly enters residential property without the property owner’s express written permission and refuses or fails to leave the residential property after being requested to leave by the property owner or agent of the owner.

For more information on the bill you can click here. To learn more about the eviction process in California click here. Most importantly, if you are a tenant facing the possibility of an unlawful detainer action, I highly advise you to seek the advice of an attorney as early as possible.

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Beware: Secondary Lien Holders Could Sue You…

Saturday, December 8th, 2012

If you are facing foreclosure and have more than one lien (mortgage), there is a new law that could greatly affect you. The California Supreme Court just denied review of a state appeal court ruling that allows second “purchase money” lien holders to sue homeowners for deficiency judgments after a first lien holder has foreclosed. Don’t worry, I’ll break it down in simple terms.

In California the homeowner is protected from lawsuits for the amount of the difference between what is owed on the mortgage, and what the home sells for at foreclosure auction (or even a short sale) – this is called a deficiency judgment. Other states allow lenders to sue homeowners for deficiency judgments, but California is a non-deficiency state. So if you only have one loan and are foreclosed upon, you are safe for now from a lawsuit by your lender.

The new ruling applies to secondary lien holders and foreclosures. Back in the boom of the real estate market many people took out two loans to purchase their homes. The second lienholder almost always loses big when there is a foreclosure, as there is not enough money to cover the debt owed to the first.

NOW, that second lender can sue the homeowner after the foreclosure for the deficiency, BUT only if the second lender is not the same lender as the first. (It is important to remember is that many loans are bought and sold on the secondary market, so even though you may originally have had two loans held by the same lender, one may have been sold. So it is imperative to know who your lienholders are before heading into a foreclosure).

It is very important for any homeowner facing foreclosure to contact an attorney to discuss their particular scenario, to make sure that you understand whether there is a chance you could be sued after foreclosure. Do not wait until the last minute – this could severely effect your options and what you could possibly do to avoid future lawsuits. For more information on this particular case, here is the citing: Cadlerock Joint Venture, L.P. v. Lobel, 206 Cal.App. 4th 1531 (2012); 143 Cal. Rptr. 3rd 96.

 

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Why Selling Your Home by Owner is Tough in Today’s Market

Monday, November 26th, 2012

I recently came across a home that was for sale by owner. My client and I had been out looking at properties, and she later drove back through a neighborhood she particularly liked. She noticed a For Sale sign partially obscured on a home, which we had not noticed. I searched the internet for information about the home, but found nothing indicating it was for sale. I called the very nice owner, but when we finally connected my client had already flown back home and he did not want to cooperate with agents.

I know there are many agents out there who specifically seek out for sale by owner (or FSBO) properties, and many of them make it a priority to get those homes listed. But there are some big problems on both sides that need to be considered before hanging up a FSBO sign.

Issues Owners Must Consider

1. Exposure. As indicated in my example above, if you are going to sell your home it is extremely important to get exposure. The MLS is the number one place to showcase your listing, as thousands of property sites (where the buyers are looking) link to the MLS. Most active buyers have searches, oftentimes multiple searches, set up on agent sites and other house hunting sites like Zillow, Trulia and Redfin. If your home is not there, these buyers have NO idea it is for sale. In today’s market, where there is little inventory in most places, and where there ARE active buyers (and many multiple offer situations), it is simply silly not to have your home on the MLS.

If you still insist on trying to sell yourself, my best advice to you is to get your listing on the MLS. There are brokerages that will charge a small fee to do so, without doing any other work for you. It is well worth the expense.

2. Calls from LOTS of agents…who will want to know if you are willing too cooperate with them should they bring a buyer to your home. Most buyers DO work with agents, and if you are not willing to do so yourself you could be losing qualified buyers. An agent will not show your home if s/he will not get paid for making a sale and doing all the work involved in an escrow.

3. Unqualified buyer issues. If you do find buyers who are interested and not represented by an agent, you will be responsible for making sure they are qualified. This requires a lot of leg work, which most agents do before showing homes to their clients. You could take your home off the market for weeks assuming your buyers are qualified, only to find they are not. During that time you could have found other buyers, and then you will have to start all over.

4. Possibility of no showings, as many buyers are working with agents. This goes hand in hand with some of the above points.

5. Loads of paperwork and legal ramifications. If you are representing yourself in the sale of your home, you’d better be careful. You need to fill out a disclosure packet, and if you leave out crucial information it could come back to bite you down the road. An agent on your side is there to make sure you have filled out the disclosures correctly, and that all the paperwork is in order. Also important, if there ever is a legal problem down the road (and this is not a rare occurrence), it is nice to have the brokerage on your side to help you.

6. Other warnings. It is very important to note that if you are delinquent in your mortgage and are trying to do a FSBO, BEWARE. This is not something you should attempt on your own. You need to find a local agent who is experienced in delinquent properties so that you can discuss your options. If a short sale is an option I advise you to not even contemplate attempting one on your own. There are people who are experienced with short sales who can help you, providing a much stronger chance of approval.

Issues Buyers Must Consider When Purchasing a FSBO

1. No representation = Possible Legal issues. As discussed above, if you are a buyer purchasing a FSBO without an agent to represent you, you need to be very careful. If the owners do not fill out paperwork correctly and fail to disclose something, which later becomes an issue, you could be stuck with a legal dilemma. If you have an agent on your side to review all documentation and make sure you are legally protected, you will be in a much better position.

2. Escrow is a neutral party. It is important to know that the escrow officer can help you in some ways, telling you what paperwork you need. But keep in mind that escrow is a neutral party, and cannot give you any legal advice – they do not represent the interests of any single party to the sale.

3. Pricing. Make sure, if you are purchasing a FSBO property, that you have a copy of recent sold comparables in the area, and that you understand the prices and reasons for them. You obviously do not want to overpay for a home. This is not something you have to have an agent to do, but local area agents are usually very in touch with area sales and could explain to you why a particular home sold for more or less than the comps, and in doing so figure out the “right” price for a home you are thinking of purchasing. Most FSBO owners are savvy and know the neighborhood comps, but it is still important to study them yourself, especially if you are purchasing the property with a loan – lender scrutiny is rigid, and if the home doesn’t fit in with the recent comparables your loan will be denied (unless of course you renegotiate price with the seller at that point…something you need to be prepared to do well).

4. Must-Do’s in Buying FSBOs. If you are a buyer contemplating a FSBO purchase, it is imperative you do the following: get pre-approved with a lender first, get a good comparable market analysis – CMA (which you may be able to get from a local area agent even though they are not representing you), make sure you connect with escrow to understand what paperwork is needed, and have a home inspection.

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Top 10 Legal Mistakes Homebuyers Make

Tuesday, August 28th, 2012

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