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.
March 5th, 2011 at 10:51 pm
Given the recent change in our policy regarding Personal Transactions, we are getting numerous questions regarding what an agent can and cannot do in this regard. In order to avoid any confusion, please be aware that, in general, our policy is as follows:
1. First, an agent cannot represent themselves in the sale of any property in which they, their spouse or their life partner has any interest. In such an instance, the listing must be handled by another agent within the Company.
2. Next, an agent can represent themselves when buying or renting property. Those transactions are outside our Personal Transaction Policy. (For the specifics of the Policy, please refer to the document itself).
Given those guidelines, we have seen a number of transactions recently where the agent/seller complies with the Policy and hires a listing agent for the property, but then brings in their own buyer and represents that buyer in the subject transaction. That, of course, cannot be done. Regardless of who is representing the property, an agent/seller clearly has a conflict of interest with the buyer of his/her property. Think of all the issues that have to be negotiated in the deal (repairs, cost sharing, hold backs). If I am the seller of the property, even if I am represented by another agent, I cannot properly represent the buyer in those negotiations, which are actually with myself. So please remember that under no circumstances may you represent the buyer of your own property. As always, please let us know if you have any questions.
March 5th, 2011 at 10:51 pm
From time to time it is advisable to re-familiarize yourself with some of the important clauses in the RPA. For example, we discovered recently several seasoned agents had been informing clients that if the Liquidated Damages Clause is initialed by both parties, and if the buyer breached the agreement, the seller is entitled to 3% of the purchase price as damages. This is incorrect. The Liquidated Damages Clause specifically states in pertinent part: “If the buyer fails to complete the purchase because of Buyer’s default (removed all contingencies and later cancelled) Seller shall retain, as liquidated damages, the deposit actually paid…amount retained shall be no more than 4% of the purchase price.” (Emphasis added) As you may surmise, misstating this could lead to significant discrepancies and disappointed clients.
