June 20th, 2016 at 8:25 pm
Please join us on Thursday, June 23, 2016 at 11 a.m., for a one-hour legal webinar presented by Stella Ling on “The Most Common Legal Mistakes Agents Make (and How to Avoid Them).” In this interactive and face-paced presentation, Stella will cover the common legal pitfalls concerning agency, commissions, disclosures, contracts, and documentation. What do agents do wrong in agency relationships? What aspects of the purchase contract often trip agents up? Sign up now to attend to get the answers to these questions and much more!
June 13th, 2016 at 11:24 pm
Question: You are the listing agent for a home. The buyer’s mother submits an offer to you. The mother does not have a valid real estate license, although she used to be in the business for many years. She tells you that she will be helping the buyer with the purchase, and that the buyer will not be represented by any real estate agent. Can you proceed with this transaction?
Answer: Yes. The mother does not have to be licensed to act on someone else’s behalf in buying a home unless she is acting for compensation (or in anticipation of compensation). So if the mother is helping the buyer free-of-charge, that’s fine. However, you are not allowed to or required to pay the mother any compensation. You should have the buyer sign the Buyer Non-Agency Agreement (BNA) to document that we do not represent the buyer, and that the buyer is not represented by a real estate licensee.
Bonus Question: If you have a 6% Residential Listing Agreement (C.A.R. Form RLA) and you offered 3% to a cooperating broker through the MLS, what is your commission for this transaction?
Answer: You are entitled to receive 6%. Under the RLA, you earn 6% regardless of who procures the buyer, and in this instance, you have no obligation to pay out 3% to a cooperating broker.
June 3rd, 2016 at 7:16 am
Fact Pattern: Title to a home is held in the name of Mom Jones as to an undivided 50% interest and her daughter and daughter’s husband as trustees of their trust as to the remaining 50% interest. Mom and the trust hold title as tenants in common (no right of survivorship). Mom has died leaving a will that gives her interest in the home to her daughter. Daughter’s husband has also died.
Question 1: Does Mom’s interest in the home have to go through the probate court process if she left behind a will?
Answer: Yes. Leaving a will does not avoid probate. After all, only a judge has the power to decide whether the will is uncontested and valid, and if so, to transfer Mom’s interest to her daughter.
Question 2: Can the daughter enter into a valid sales contract for the home before the probate court process?
Answer: Yes, technically. By entering into a sales contract, the daughter does not guarantee that she currently has marketable title. Instead, she is merely promising to transfer marketable title at close of escrow. However, entering into a sales contract now is very risky because, if the daughter doesn’t obtain marketable title by close of escrow, she can be held liable for any monetary damages the buyer suffers as a result of her breach of contract. The daughter should, at a minimum, consider making the sale contingent upon court approval using C.A.R.’s Court Confirmation Addendum form (CCA). She can also sell the home during the probate process using the C.A.R. Probate Purchase Agreement (PPA).
-Thank you to Lyle Elliott for suggesting this week’s legal tip.
May 31st, 2016 at 11:18 pm
Question: I am the buyer’s agent. The seller served the buyer with a Notice to Buyer to Perform (NBP) to remove contingencies by May 26, 2016. We then got a one-week extension to remove contingencies which expires on June 2, 2016. Does the seller have to serve the NBP again before cancelling?
Answer: The answer is unclear, but likely to be “yes.” Unfortunately, the C.A.R. Residential Purchase Agreement (RPA) does not specifically address whether a seller must give a new NBP under these circumstances. Your buyer can argue that a new NBP is required. Your buyer can point out that the previous NBP is ineffective for the June 2nd deadline because a NBP “may not be Delivered any earlier than 2 Days prior to the expiration of the applicable time for the other Party to remove a contingency” (paragraph 14E of the RPA). However, the seller’s counterargument would be that the previous NBP was properly served for the May 26th deadline and nothing in the contract specifically requires the seller to serve the NBP again (see paragraph 14D).
In this situation, the buyer’s position may ultimately be stronger because the seller’s cancellation without a new NBP may be too harsh of a result under the seller’s obligation to act in good faith and deal fairly with the buyer. However, if the parties cannot agree on this issue, it would ultimately be up to a judge or arbitrator to decide whether the seller must serve a new NBP. Of course, no one wants to go through the legal process to get a decision on this issue. So to be safe, a buyer should just assume that the seller can cancel without serving another NBP, whereas a prudent seller should just serve a new NBP 2 days before the expiration of the extended contingency period. Next time, you can use the C.A.R. Extension of Time Addendum (ETA) for the extension of the contingency period, and under “Additional Terms,” the parties can specifically address whether the seller must serve a new NBP before cancelling.
-Thank you to Scott Harvey for suggesting this week’s legal tip.
May 23rd, 2016 at 7:42 pm
Multiple Choice Question: You are the listing agent. The last day of your seller’s 60-day escrow falls on Sunday, May 29, 2016. What is the earliest day that you can serve a Demand to Close Escrow (DCE) to the buyer under the Residential Purchase Agreement (RPA)?
A.? Thursday, May 26.
B.? Friday, May 27.
C.? Saturday, May 28.
D.? Monday, May 30.
E.? Tuesday, May 31.
Answer: The correct answer is C. When a sales transaction is scheduled to close escrow a certain number of “Days After Acceptance” under paragraph 1D of the RPA, the capitalized word, “Days,” is specifically defined. Under paragraph 30G of the RPA, “Days” means calendar days, but “the last Day for performance of any act required by this Agreement (including Close of Escrow) shall not include any Saturday, Sunday, or legal holiday, and shall instead be the next Day.” For this particular? transaction, the last day of the 60-day escrow falls on Sunday, May 29, 2016. Hence, escrow is not scheduled to close until Tuesday, May 31, 2016, because Monday is Memorial Day which is a legal holiday (Cal. Gov’t Code section 6700).
As for the DCE, a seller cannot serve the DCE “any earlier than 3 Days Prior to the scheduled close of escrow” (paragraph 14G). In your case, 3 days before Tuesday, May 31, is Saturday, May 28. The above rule excluding Saturdays, Sundays, and legal holidays does not prevent the seller from serving a DCE on a Saturday. That rule only applies when “the last Day for performance” falls on a Saturday, Sunday, or legal holiday, such as removing contingencies or closing escrow, not serving a DCE.
