December 21st, 2015 at 9:30 pm
Multiple Choice: Given that Christmas is on Friday, if a buyer’s 17-day contingency period ends on Monday, December 28, 2015, what is the first day that the seller can serve a 2-day Notice to Buyer to Perform (NBP)?
A.? December 23 because we don’t count weekends and holidays.
B.? December 24 because the seller cannot serve a NBP on a weekend or holiday.
C.? December 26 because the seller can serve the NBP up to 2 days beforehand.
D.? December 28 because the seller must wait for the contingency period to end before serving a NBP.
Answer: Answer A is wrong because you do include weekends and holidays when counting days. However, the last day to perform an act required by the contract cannot fall on a Saturday, Sunday, or legal holiday (see RPA paragraph 30F). Answer B is wrong because the RPA does not prohibit the seller from serving a NBP on a weekend or holiday. Answer C is correct and Answer D is wrong because the seller can serve a NBP up to 2 days before the expiration of the applicable time frame (see RPA paragraph 14E). Happy Holidays Everyone!
September 12th, 2014 at 3:40 pm
Over the past few months, we’ve been advising you about the new rules allowing CAR to publish Code of Ethics Violators.? CAR has modified what is going to be published starting January 1, 2015 as follows:
1.? ? ? ? ? ? ? Name and photograph of the member found in violation.
2.? ? ? ? ? ? ? The Article(s) of the Code of Ethics that were violated.
3.? ? ? ? ? ? ? A brief summary of the case involving the violation.
4.? ? ? ? ? ? ? The discipline imposed.
5.? ? ? ? ? ? ? The effective date and duration of the discipline imposed.
6.? ? ? ? ? ? ? The hearing panel’s rationale for the discipline imposed.
Unlike earlier versions of this new rule, reporting is not for all violations. Individuals who are disciplined with a letter of warning or only a requirement to take an educational class will not be published.? In addition, the broker of the violator will not be published unless there is a separate allegation against the broker and the broker is found to be in violation.
Local associations may start requiring that Respondents in an ethics hearing provide a photograph at the time of responding or allow their picture to be taken at the hearing.? As was the case with the earlier versions of this rule, I expect that there will be privacy challenges to this “picture taking” requirement.
We will continue to keep you posted on this topic.
As always, if you have any questions, please contact the Legal Department
September 4th, 2014 at 12:35 am
IMPORTANT MESSAGE: RESPA AND MARKETING AGREEMENTS
| Top-producing Long & Foster team facing class-action RESPA suit over alleged kickbacks Court battle highlights potential legal pitfalls in marketing title insurance, settlement services Ken Harney Contributor, February 25, 2013A federal district court’s decision to certify a class-action suit against one of the highest-volume Realtor teams in the country should set off alarms for brokerage firms that have marketing agreements between themselves and settlement service providers, say RESPA legal experts. Not only is the class-action certification ominous in its own right, but it comes on top of indications that the Consumer Financial Protection Bureau is actively probing marketing agreements … Visit this site: ? RESPA Suit for alleged kickbacks and MSAs |
Marketing agreements have become all the rage with mortgage companies and title companies approaching real estate agents with an offer to compensate them if the real estate agent will market their products and services. So, what is a marketing agreement?
A marketing agreement is just what it sounds like. It’s an agreement for the real estate agent (or a team of agents) to market the services of a mortgage company or title company. Typical agent marketing services may include a link to a website from the agent’s website, handing out brochures, joint advertising in newspapers, on billboards, or in trade magazines.
What you need to know about marketing agreements: (1) they are regulated by RESPA (the Real Estate Settlement Procedures Act of 1974), (2) they are complicated to implement and difficult to do in a legally compliant manner, and (3) people will tell you they are legal when they may, in fact, not be.
The headline article above identifies two tremendous risks that accompany marketing agreements: (1) class-action suits and their defense costs, which can bankrupt you; and (2) investigation by the CFPB (the Consumer Financial Protection Bureau) for RESPA violations.
In 2007, a massive investigation into joint venture title companies resulted in the wide-spread shutdown of title companies and the prosecution of real estate agents for violating state real estate license laws when the joint venture title companies turned out to be violations of RESPA—despite assurances from some that they were legal. Marketing agreements are subject to the same pitfalls, only worse. Beginning in 2011, the CFPB has the power to fine violators $25,000 to $1,000,000 per day for violations of RESPA.
RESPA violations are not covered by errors and omissions insurance policies. BHHSCP will not defend or indemnify you if you are accused of violating RESPA because you have entered into a Marketing Agreement. You will be required to defend and Indemnify? BHHSCP for any damage you cause? the Company? by entering into a Marketing Agreement subjecting you and the Company to RESPA scrutiny.
September 4th, 2014 at 12:09 am
We have? seen a significant rise of undisclosed seller credits after a loan approval has been issued.? ? ? In light of the stringent new lending laws, it is imperative? to disclose any and all seller credits early in the process for the reasons described below.
New disclosure rules require that any seller credit must be noted by the appraiser in the appraisal report and documented by an RPA amendment before closing can occur.? ? Often lenders require the credit be fully disclosed in the transaction documents BEFORE? the loan docs can be issued.? ? As such, a last minute seller credit can delay a closing and cause the buyer to be in breach of the RPA.
We have seen the following? scenario occur too often:? Approval is in, ? Buyer removes Loan Contingency, Buyer is? ready? to sign loan dos, HSL/Lender ? asks for a HUD and the lender is apprised for the first time that there is a new credit to Buyer.? ? Subsequently the Lender alerts the appraiser to make a change, and Buyer may? risk a 3-day waiting period and delay imposed by the lender.? The Buyer is then in breach, and Seller? may issue a Demand to Close and cancel the deal.
Agents please? disclose these credits to the lender as soon as they are negotiated.? Waiting? 1-2 days before closing may have negative consequences and cause the Buyer to breach the RPA.
August 14th, 2014 at 9:31 pm
Agents Beware! Some agents and managers have recently been running into problems with a lack of service provided by outside escrow companies, other than Pickford Escrow. In one situation, the escrow officer refused to prepare an amendment to a purchase agreement at the agent’s instructions. The escrow officer claimed that the subject matter of the amendment did not pertain to the escrow file. Yet, the subject matter did pertain to the purchase agreement.
In another situation, the escrow officer refused to directly pay our salesperson’s corporation, even though our branch manager gave escrow written authorization to cut the check from our commission. The escrow officer erroneously claimed that it was “illegal” for escrow to cut the check.
Aside from our own Pickford Escrow, other escrow companies are independent companies, and we cannot dictate to them what to do and how to do it. From a legal standpoint, these other companies do have the right to decide to provide certain services and not to provide other services as in the above situations. However, if you are not dealing with a reputable company, some of their arbitrary decisions may cause problems for one of your transactions, including a delay in the cutting of your commission check!
In multiple offer situations, buyers and their agents are, quite understandably, often unwilling to put the selection of the escrow company at issue. However, as a buyer’s agent, if you are unfamiliar with the escrow company that the other side wants to use, or if you have had a bad experience with that particular company, you are very well-advised to inform your client accordingly.
