March 22nd, 2011 at 11:11 pm
It is not unusual, especially in the context of leases, for one of the parties to a transaction to be unrepresented by a broker. When that situation arises, the single agent involved believes that since she only represents the seller/landlord, it does not matter what help she gives to the buyer/tenant because she has no duties to that party. While there is some truth to that belief, it is not that simple. After all, when a buyer or tenant is unrepresented, it is not uncommon for the listing agent to end up doing more work than normal. That is natural, of course, because it is in the listing agent’s interest to assist in moving the transaction along and getting it closed. As a result, the listing agent may help get documents signed by the buyer/tenant, or may answer their questions about those documents or some part of the transaction. In a deal with two agents, of course, those things would normally be done by the selling agent. As a result, by helping in this way, the question arises whether we are “representing” the buyer/tenant or accepting certain obligations that we would otherwise not have. Of course, in my most “lawyerly” way, my answer would be maybe. Depending on how far over the line an agent goes, it is possible that, by their actions, they would be deemed to have accepted the representation of the buyer/tenant. After all, the listing agent is now keeping the entire commission, including the portion that normally goes to the buyer/tenant’s agent. Therefore, if you are ever faced with this situation, remember the following:
1. Always get a “Buyer Non-Agency” Form (CAR Form BNA) signed. With that document, we can always argue that we advised the client we did not represent them and that all of our actions were taken on behalf of the seller/landlord.
2. Be very careful what you do for the buyer/tenant. While providing a document or two along the way may be ok, always accompany those documents with a recommendation that the buyer/tenant talk to their attorney for legal advice. Furthermore, do not give the buyer/tenant advice. Provide the documents only, and stay away for explanations or recommendations. Those things are typically done by the client’s representative. As always, please let us know if you have any questions.
March 18th, 2011 at 11:10 pm
If a claim arises out of one of your transactions, you should know that the TDS, AVID and the SPQ become the most scrutinized documents in the transaction file. We are seeing some deficiencies in these disclosures that, as your legal counsel, we find troubling. We rely on your disclosures in the defense of the claim and when these disclosures are devoid of relevant information, your exposure and the value of the claim increases significantly.
For example, we have come across AVIDs that are virtually blank. As you know, whether you are a listing, selling or dual agent, the law requires that you must conduct a “DILLIGENT VISUAL INSPECTION OF ACCESSIBLE AREAS” even for properties that are TDS exempt. New Construction is not an exception. There is ALWAYS something to note.
Placing a check mark, the word “fine” or your initials next to each line on the AVID will not suffice. Describe what you see in your visual inspection and do not use adjectives such as: hairline, insignificant, superficial, minor etc…when describing defects.
The AVID should be prepared simultaneous with the TDS and provided to the buyer when the TDS is provided. Alluding to the AVID in the TDS and not delivering it with the TDS is negligent. PLEASE print or handwrite legibly. If we can’t read the AVID/TDS the buyer probably struggled with it as well. If you represent the buyer and the TDS/AVID are confusing or not legible, demand an explanation or clarification in writing from the listing agent.
This is a document reflecting YOUR visual inspection. Do not rely exclusively on the TDS and/or the Physical Inspection Report as sources of information to complete your AVID. Expect and request a completed AVID from the other broker/agent in the transaction.
Agents that take disclosures seriously and take the time and effort to adequately complete disclosures keep themselves AND their clients out of trouble and out of court!
March 17th, 2011 at 11:09 pm
As you know, digital signatures are becoming more and more common in our transactions. The use of these technologies, however, have raised a number of questions that we need to be mindful of. First is the security of your digital account. Specifically, you and your client need to make sure that you don’t do anything which gives unauthorized access to your account. For example, we have seen instances where an e-mail was sent to a seller with a link to their account, telling them to click on the link to sign documents. The link is created by the system after the client signs in, so no password is needed when the link is used. If that e-mail is then forwarded, the link is still active and the recipient of the e-mail can now click on the link, access the seller’s account and sign documents on their behalf. Obviously, we need to avoid this situation. As a result, please do not forward e-mails of this nature. Be very mindful to protect access to your digital account.
Next, what happens if you, as the listing agent, have a digital account but the selling agent does not. Can you or your TC forward documents from your account directly to the buyer to make the transaction move more quickly? Unfortunately, the answer is no. Obviously, forwarding documents to a client should also involve some advice and discussion regarding the document itself, what is means and why it is being signed. As a result, the other side may believe we should be giving them advice regarding the specific document. In other words, by sending documents to the other side, we may be creating an agency with that client that we don’t want to have. Of course, that agency brings liability. Additionally, dealing directly with the other side may create conflicts of interest and disclosure obligations with regard to our client. In short, by using our digital account for the other side’s documents, we are blurring the line on agency and creating problems for ourselves. So, as inconvenient as it may be, make the other agent forward documents to his/her client. If that agent does not have a digital account, they will need to print out the documents and deliver them to the client. Unfortunately, that is the only way to properly represent our client and avoid additional liability.
As always, feel free to contact us with any questions you may have.
March 15th, 2011 at 11:09 pm
As you know, in today’s market, transactions have become harder and harder to close. In an equity sale, your buyer may have more difficulty getting a loan. In a short sale, on the other hand, the demands of the numerous creditors may make getting approval almost impossible. Because of these difficulties, we are seeing more agents question where the line on appropriate behavior falls. They seem to be asking themselves whether they can move the line a little farther in this market, allowing themselves to be more aggressive in trying to close their deal. The answer to that question is “no”. You must remember that the difficulty of a certain deal has nothing to do with the appropriateness of your behavior. Doing the right thing is the same no matter how difficult the client or the transaction. With that in mind, we have found that agents are forgetting one very important point when dealing with today’s market: YOUR DEAL DOES NOT HAVE TO CLOSE. We know times are tough, and while every commission is important, when you refuse to walk away from a potentially illegal or unethical deal, you are basically condoning the questionable conduct of others and involving yourself in their schemes. Do not lose sight of the fact that even when a deal is cancelled, life will go on and there will be another deal. If the only way to close the deal you are presently working on is to potentially defraud the bank, WALK AWAY. No deal is worth the problems that come with inappropriate and potentially illegal activity. So, understanding how painful this can be to accept, always remember that YOUR DEAL DOES NOT HAVE TO CLOSE. Do not compromise your integrity or license so that the deal can close. The risks do not outweigh the benefits.
As always, please feel free to contact us with any questions you might have.
March 11th, 2011 at 10:52 pm
Q: (Eric Eaton) In a short sale, if there are fees outstanding that should have been paid to an HOA, can the HOA pursue the seller? Can delinquent HOA fees paid by the buyer to close escrow later be collected from the seller? Do delinquent HOA fees have to be paid at all in order to close a short sale? Are they truly a lien on the property?
A: Eric, by statute, an HOA is entitled to lien a property if agreed upon dues or fees are not paid. So, yes, an HOA lien is a true lien. That being said, in our experience, most HOAs will not agree to release their lien without getting paid so they typically must be dealt with in order to close a short sale. As a result, the HOA’s “pursuit” of the seller is typically to record the lien and demand payment at sale. Of course, if those fees are paid by the buyer at closing, the seller no longer has any liability. The HOA is not entitled to collect the fees twice just because they were paid by the buyer rather than the seller. Most importantly on this issue, because HOAs are so difficult to deal with, it is very important that you address this issue early in the deal. Don’t wait to see if there is an HOA lien. Investigate it up front so you know what you are dealing with. Giving yourself more time to deal with these issues will make your short sale easier to close.
