April 11th, 2016 at 6:59 pm
Question: We are taking a listing for a home where a famous murder-suicide occurred over 50 years ago. The home is commonly known as the “Los Feliz Murder Mansion.” I know we do not have to disclose a death that occurred on the property over 3 years ago, but should I disclose anyway, and if so, how do I disclose without casting the home in a negative light?
Answer: Yes, you should disclose. As you said, we are not legally required to disclose a death on the property that occurred over 3 years ago. However, to be safe, we should disclose the notoriety of the home, which a judge or arbitrator could potentially decide is a separate material fact affecting the value or desirability of the property. As for your second question of how to disclose, there are many possible answers. You are not obligated to take your eye off the fact that we are still trying to professionally advertise and market the property for sale. One possibility is to say: “Property has been stigmatized by a murder-suicide that occurred on the premises over 50 years ago. Buyer to investigate into this matter as Buyer deems appropriate.”
–Thank you to Nancy Sanborn for suggesting this week’s legal tip.
April 4th, 2016 at 6:08 pm
Question: In last week’s legal tip, you didn’t really finish answering the question. During escrow, the built-in dishwasher stops working. We represent the buyer so we inform the other side that the seller is obligated to repair the dishwasher. As you explained last week, under paragraph 11? of the RPA,? the seller is required to maintain the property in the substantially the same condition as on the date of acceptance. What if the seller still refuses to repair the dishwasher?
Answer: If the seller still refuses to repair, the ball goes back into the buyer’s court for the buyer to decide what to do. One option is to forget about the repair and buy the property anyway. Another option is to cancel the agreement due to the seller’s breach of contract. A third option is to ask the seller to go to mediation. A fourth option, and there may be other options as well, is to buy the property and then pursue a legal claim against the seller after close of escrow. For Option #4, a prudent buyer would, before close of escrow,? inform the seller in writing not to construe the close of escrow as a waiver of any rights the buyer may have to pursue the seller for any legal claims, including the repair of the dishwasher. After close of escrow, the buyer may go directly to small claims court, given that the repair of a dishwasher is likely to be less than the $10,000 limit for small claims court actions (no need for mediation/arbitration). If the dispute involves a big ticket item instead of a dishwasher, the buyer is probably best off hiring an attorney who will pursue mediation/arbitration and litigation if necessary.
All that said, as the broker and agent in the deal, we do not want Option #4. We would strongly prefer resolving this dispute before close of escrow, because if the buyer waits until after close of escrow and the buyer is unsuccessfully in resolving this matter with the seller, the buyer may try to get us to pay for the repair. At a minimum, we should inform the buyer in writing that closing escrow without getting the item repaired is against our advice, and that we strongly recommend that the buyer discusses the legal consequences with the buyer’s own attorney before proceeding with the purchase.
–Thank you to Randy Freed for suggesting this week’s legal tip.
March 28th, 2016 at 10:16 pm
Question: My buyer has been in escrow for 3 weeks. We just got an amended TDS from the other side stating that the built-in dishwasher does not work anymore, even though it was working fine when the buyer entered into the purchase agreement. The listing agent said the seller is not required to repair the dishwasher because the seller provides no warranty for items included in the sale under paragraph 8B(6) of the RPA. The listing agent also said that if my buyer is unhappy about this, he can cancel. Is the seller required to repair the dishwasher?
Answer: Yes. First, the listing agent misquoted paragraph 8B(6) which actually states that the items included in the sale “are transferred without Seller warranty” and a transfer has not yet occurred in our situation. Second, paragraph 11 of the RPA is? more? on point. It? states that the property “is to be maintained in substantially the same condition as on the date of Acceptance.” Given that the dishwasher was working on the date of acceptance, the seller is required to repair it to return it to substantially the same condition as on the date of acceptance. Alternatively, the buyer may prefer trying to negotiate a credit from the seller in lieu of repair.
March 21st, 2016 at 6:26 pm
Question: My clients are a husband and wife purchasing a home together. The wife has very bad credit. The lender told them that, to qualify for a loan, they must put the property and loan in the husband’s name only, and the wife must sign a quitclaim deed. If the couple buys the property the way the lender has advised, but sometime down the road they get divorced, can the husband claim that the wife has no interest in the property because she signed the quitclaim deed, regardless of community property laws?
Answer: Yes. A quitclaim deed transfers any and all ownership interest someone may have to another person. If the wife signs a quitclaim deed, the husband can eventually use it as evidence to show that she released and relinquished all ownership interest she had in the property. Perhaps he can even bolster his claim if, for example, the down payment for the home was a gift from his parents, which is presumed to be his separate property under community property law. Of course, the wife would attempt to refute his claim by arguing that their intent was to use the quitclaim deed for the sole purpose of qualifying for a loan, not giving up her community property rights. However, she would have been much better off if they had a signed agreement between themselves memorializing that intent. In any event, this is just one of many complex issues that may arise concerning holding title, and a good reminder for agents not to advise clients on how to take title to property.
March 14th, 2016 at 10:11 pm
Question: Can an agency agreement between an agent and a client be created without anything in writing?
Answer: Yes. Certain agreements must generally be in writing and signed by the parties before a court will enforce the agreement. This law is called the Statute of Frauds. An agency agreement authorizing you to represent a client is not one of the enumerated agreements within the Statute of Frauds. However, a commission agreement entitling you to compensation? as an agent? is within the Statute of Frauds. Of course, part of the confusion stems from the fact that a C.A.R. standard-form listing agreement so happens to be both an agency agreement and a commission agreement. In any event, if you and a client both verbally agree that you will be that client’s agent, an agency agreement has been formed, absent anything in writing. Legally, what that means is that you are now exposed to potential liability if you fail to satisfy your fiduciary duty to do whatever is in your client’s best interest. Yet, you are not entitled to any compensation. Be sure to avoid this situation by getting all your listing agreements in writing!
