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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Contract - Closing Date is Now Passed
Question: You have a situation with substantial earnest money in escrow. The closing was extended but has now expired. The buyer and seller are in a dispute.
Answer: The earnest money will have to stay in escrow until the parties resolve the problem. If they cannot reach agreement and you are unable to mediate the problem then you should simply refer them to outside counsel for resolution.
Disclosure - Home Moved to Current Location
Question: The seller did not disclose to the buyer that the house was moved in. An inspection was done but this fact did not come to light.
Answer: It is difficult to say whether or not the fact that a home was moved into a location is a defect which a seller needs to disclose at all. The buyer would have to have some evidence that the home is worth less or there is a substantial defect arising from this condition. The buyer needs referred to outside legal counsel.
Contract - Contingency For Receipt of Insurance Benefits
Question: You have a situation where a buyer wants to write an offer contingent upon receipt of some life insurance benefits. It apparently will take about three weeks to confirm the existence or nonexistence of these benefits.
Answer: A buyer and a seller can certainly agree to make a contract contingent on whatever legal matter they want to make the contract contingent on. This may require the assistance of an attorney to write an appropriate contingency.
Contract - Lease with Option
Question: You have a situation where the listing broker has suggested a pure rental agreement. The buyer wants an option to purchase.
Answer: Structuring a transaction where there is a contract and the buyer has an option to purchase the property is possible. Important rights are dealt with in such agreements. If you do not have an appropriate form, the parties will need referred to an attorney to draft the contract.
Contract - Contingent for Sale of Second Home
Question: You have an offer where it is contingent on the sale of a second home. There is no 72 hour kick out clause provided.
Answer: Unless there is specific language which allows the seller to accept a second offer and kick out the first contract, then that term will not exist. On that basis, the seller would need to be very careful in accepting this offer.
Miscellaneous - Real Estate Settlement Procedure Act and Title Insurance
Question: You asked whether or not there is a rule about who gets to pick title insurance.
Answer: The Real Estate Settlement Procedures Act generally provides a basis for a buyer to claim that they have the right to pick the title insurance. Of course, it is the buyer who will in effect be insured. However, the seller often wants some say so in the title insurance company because of cost. This necessarily places the matter into a position of being negotiable.
Contract - Management of Rentals
Question: You have a situation where you would like to provide a service to real estate owners in finding them a tenant.
Answer: You need to be very careful that you properly define the scope of work. Typical license law rules will not provide you with coverage. For residential property, this activity is not something which requires a license or is regulated. The contract between you and the property owner will be of critical importance.
