Posts Tagged ‘2011 CA real estate laws’

Real Estate Agents Need More Rules

Tuesday, May 17th, 2016

There are too many mistakes made by real estate agents – some come from a true lack of understanding of the legalities that are inherent in buying and selling real estate, and others from ignorance, selfishness or stupidity. But either way the fact is that real estate agents need more training and licensing requirements should be much stricter. images

I was contacted last week by a lady who felt she had been taken advantage of by her current agents. They failed to inform her about the process of accepting a particular tricky offer, and the ramifications associated with doing so, in order for her to  make an informed decision on whether to accept the offer. They did not explain many other things she had the right to know. She was beyond frustrated.

The reason this home seller called me is that she had been referred to me, and liked my legal background – she wanted to fire her agents and have me list the home. I counseled her on the terms of her listing agreement, and provided options and advice; in the end I told her she should try to resolve issues with her current agents so that she could get her home sold since they had already done so much work, while renegotiating some terms and making clear that she needed to be kept in the loop throughout the process. She said she felt much better after speaking with me, and I was glad to help.

The listing agent team she was working with is seasoned, so I was rather surprised that they did not provide information and explanations on many of the forms and processes that come with selling a home. They also charged a 6% commission fee, and they offered 2.5% commission to the selling agent, so they were planning to make 3.5% on the sale! She tried to negotiate with them but they would not do so. She was told that was standard and she had no idea that commissions are negotiable. But I am more disgruntled with other aspects of the sale that I feel were not handled properly.

It is time our national, state and local associations set up mandatory training programs for every agent, and license renewal programs that touch on much of that training so that agents are reminded of their professional and legal responsibilities every time they have to renew their license. Here are some suggestions:

1. Real estate exam – this needs to be more difficult and more expensive to take – that will keep those out who are only in it because they think they will make a lot of money.

2. Across-the-board mandatory training programs – these need to be implemented for all new agents – every broker must comply. This will ensure that all new agents have the same degree of basic knowledge about real estate and law, and the practicalities of sales (forms, paperwork protocol, transaction management, etc.).

3. Stricter license renewal requirements – these also need to be addressed, because the license renewal requirements could be more challenging.

4. Stricter punishment for ethical violations and breaking of laws – as the current rules stand in my state, an ethical violation may or may not be punished – it all depends on whether the agent on the other side of the violation, or a disgruntled buyer or seller – reports the behavior. Unfortunately many do not, because they do not want to be involved in a situation where they are pointing a finger. Agents especially do not like to get involved in ethical hearings because they feel their reputation may be at stake for calling out a fellow agent – thus many unethical agents continue to slide downhill. Punishment is also not meted out often enough or enough to match the crime. The same is true of agents who break laws, like committing fraud. Reporting and punishment need to change.

The real estate business would benefit immensely from the above changes – real estate agents would be a more educated, professional and savvy group of people, and home buyers and sellers would win in the biggest way.

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5 Top Ethics Errors Made by Real Estate Agents

Friday, February 12th, 2016

If you are a regular reader you know that I have a thing for ethics and those who violate the boundaries of professionalism in any field. We’ve all known of someone who crosses or has crossed the line. The real estate industry is no exception. Here are the most common ethics breaches made by real estate agents: Ethics

1. Going after other agents’ clients. Amazing, but yes there are slimy people out there. This actually just happened to me – another agent took advantage of my client in a very sneaky way. When an agent knows that someone is a client of another agent, to go after that person in order to get them to work with you is not just unethical, but it’s nasty. Karma will get all those people one day, but they really should not be in the business if they cannot be professional and respectful. That agent’s reputation will suffer, especially among area agents.

2. Not disclosing relevant information. This happens all too often. Some agents actually advise their sellers to NOT disclose information that could affect a sale – such as problems that have occurred in the home (broken pipes, electrical problems, roof leaks, etc.). Again, not only is this an ethical violation but it is illegal. Many lawsuits are initiated because buyers were not made aware of past problems – it is one of the main reasons for real estate lawsuits. I tell all my sellers that it is better to over-disclose than leave anything out. If you lay it out on the table it is up to the buyer to check out any issues and make informed decisions.

3. Telling home inspectors not to notify of problems or directing what should/should not be in a report. It is hard to believe but there are agents who do this. One home inspector told me that a successful area agent once told him not to notify him (the agent) of any problems concerning the roof, and to leave them out of the report! I couldn’t believe that. That is far more than an ethical violation – it is illegal. Things like this apparently go on all the time. Thus the reason you need an excellent home inspector that you trust, and also whom your client can trust. Mine is also a civil engineer and a licensed contractor – a little piece of mind goes a long way in preventing problems and legal action down the road.

4. Taking referral fees from lenders or others specified by law or statute as not allowable. This is a big no-no: unethical and also illegal.

5. Giving a client advice that is not in their best interests in order to secure a sale. Clients need to make their own decisions on whether or not to buy or sell a property. The role of the agent is to make sure the client receives all the pertinent information in order to make an informed decision. I never make decisions for my clients – rather, I offer my expertise in answering their questions and concerns. If there are problems with the property that are inherent and could cause issues down the road, I always point that out and suggest expert advice when needed. The ultimate decision belongs to the client – our role is to facilitate providing information. Encouraging a client to buy or sell when it may not be in their best interests is unethical.

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There are many other glaring examples of ethical breaches in the real estate industry, and there is always the agent who invents a new one. But the above 5 examples are perhaps the most dangerous because they are crossing over into breaking laws and could have legal consequences. This is why all agents need strong training programs and continuing education to keep them abreast of new rules and laws.

The real estate industry needs to crack down on agent training and make cross-the-board mandatory programs, as well as stricter licensing requirements. Brokers also need to take responsibility with stricter oversight of their agents (if I was paid $1 for every time I had to call another broker to report something their agent did that jeopardized a contract, I would have a lot of dollars). Until such changes are set in motion we will unfortunately see more ethical/legal violations in the industry.

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New Real Estate Laws You Should Understand

Friday, November 5th, 2010

Starting January 1, 2011 there will be some new laws effecting buyers, sellers, homeowners and renters, as well as foreclosures. To read the full text of the laws you can go to http:// www.leginfo.ca.gov. Here they are in a nut shell.

Short Sale Deficiencies Not Allowed. Lenders may not go after borrowers for the short sale deficiencies any longer after January 1. Once the lender has given written permission to accept the short sale price it is bound to accept that price as payment in full of the obligation. This law applies to first trust deeds only, in residential 1-4 unit properties, and still permits the lender to seek damages for fraud or waste committed by the borrower in relation to the sale. Senate Bill 931.

Home Inspection Report Energy Audit Inclusion. Buyers will be allowed to ask that an energy audit be included in their home inspection report, according to the standards of the Home Energy Rating Systems (HERS). Assembly Bill 1809 and California Civil Code Section 2079.10.

Adverse Possession Claim Restriction. A person or entity may not initiate a claim for adverse possession (taking of property of another) without certified proof that all taxes–state, county and municipal–have been paid for the five year period the property has been occupied and claimed. Assembly Bill 1684.

Mortgage Loan Originator (MLO) Enforcement. One who acts as a MLO without a license endorsement as such will be guilty of a crime. Senate Bill 1137.

Post-Foreclosure Tenant Protection. Tenants remaining on property after a foreclosure sale must receive a notice of tenant’s statutory rights. There is another part of this bill that also protects residential tenants’ credit. Senate Bill 1149.

Tenant Protection and Domestic Violence. A landlord cannot terminate a tenancy based on domestic violence that occurred or is alleged against the tenant or his/her household members. There are some exceptions. A landlord is also required to change exterior locks on leases entered into after January 1, 2011 upon written request of the tenant and within 24 hours of a request. For details and exception see Senate Bill 782.

Real Estate Fraud Protections. There are several new laws pertaining to foreclosure consultants, mailed solicitations and grant deeds, and for renting out dwellings without owner permission. See Assembly Bills 2325, 1373 and 1800.

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