April 10th, 2017 at 5:20 pm
Question: I am the listing agent in a sales transaction. The buyer was supposed to remove all contingencies within 5 days and close escrow within 10 days. None of that has happened. Is the seller required to serve a Notice to Buyer to Perform before serving a Demand to Close Escrow, or can they be served at the same time?
Answer: At the same time. Nothing in the Residential Purchase Agreement prohibits service of both notices at the same time. As for the Notice to Buyer to Perform (NBP), the seller cannot cancel based on the buyer’s failure to remove contingencies unless the seller first serves a 2-day NBP (see paragraph 14D(1)). The NBP cannot be served any sooner than (more…)
April 3rd, 2017 at 5:17 pm
Question: Two weeks ago, you talked about the C.A.R. Seller Counter Offers (SCO and SMCO). You said that, if a seller uses the SCO or SMCO to increase the purchase price and the buyer accepts, the boilerplate language adjusts the buyer’s loan amount and down payment in the same proportion as in the buyer’s original offer. As a follow-up question, if the buyers do not have more money for the down payment, do they have to counter again? And what if it’s a multiple offer situation?
Answer: As to your first question, the answer is “Yes.” As background, let’s say a buyer offers $1 million with an $800,000 loan contingency and $200,000 down payment, but the seller counters at $1.1 million and the buyer accepts. Under that circumstance, paragraph 1B of the SCO states that the loan amount and down payment will be adjusted proportionally as with the buyer’s original offer. Hence, the buyer’s loan contingency will be for an $880,000 loan, and the down payment will be $220,000.
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March 27th, 2017 at 5:14 pm
Question: I’m taking a listing. My client acquired title to the property in her maiden name. She then got married and changed her name. Now she wants to sell the property. How should I identify her on the listing agreement (and subsequent purchase agreement)?
Answer: There are many possible correct answers. If her maiden name was Karen Maiden, and her married name is now Karen Married, my recommendation would be to identify her as “Karen Married (fka Karen Maiden).” The acronym “fka” means “formerly known as.” Alternatively, you could identify the seller as “Karen Married” and in paragraph 21 of the Residential Listing Agreement, you could indicate as an exception to title that she acquired title as Karen Maiden.
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March 20th, 2017 at 5:12 pm
Question: A buyer submits an offer for $1 million using the C.A.R. Residential Purchase Agreement. The offer includes an $800,000 loan contingency (or an 80% loan-to-value (LTV)), and a $30,000 escrow deposit equivalent to 3% of the sales price. The seller responds to the offer using the C.A.R. standard-form Seller Counter Offer (SCO). The only new term that the seller inserts in the SCO is an increase of the sales price to $1.1 million. The buyer accepts. Are the buyer’s 80% LTV loan contingency (plus 20% down payment) and 3% deposit calculated based on the new $1.1 million sales price?
Answer: Yes and no. The pre-printed language in the C.A.R. standard-form SCO (as well as SMCO) includes a proportionate adjustment of the down payment and loan amount, but not the escrow deposit. So with the price increase, the buyer’s loan contingency will be for an $880,000 loan (still an 80% LTV). Plus the buyer must have $220,000 (not just $200,000) as a (more…)
March 13th, 2017 at 5:09 pm
Fact Pattern: A landlord and tenant have a month-to-month rental agreement for an apartment unit in an L.A. building built in 1911. The tenant fails to pay rent. The landlord serves the tenant with a 3-day Notice to Pay or Quit that includes a demand for $739 in back rent. The tenant still does not pay, so the landlord sues to evict the tenant and collect the back rent. In court, the tenant reveals that his apartment unit has just been tagged by the housing inspector because it is unpermitted with no Certificate of Occupancy.
You Be the Judge: Can the landlord collect back rent and have the tenant evicted?
Answer: No. This was the recent decision in the case of North 7th Street Associates v. Guillermo Constante (2016) (7 Cal.App.5th Supp. 1). Under these facts, the Court ruled that the rental agreement for an illegal unit was void, and so the landlord could recover no rent.
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