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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Disclosure - Rights of Existing Tenant
Question: You have a situation where a contract was entered into between buyer and seller. Apparently the day before closing, the seller extended the lease and reduced the rent on the tenant.
Answer: It would appear to me that the seller is in effect in breach of contract with the buyer. Extending the lease in effect is a sale of an interest in real property. The seller has therefore sold an interest in the future possession of the property which properly belonged to the buyer. The parties need referred to attorneys for independent legal advice.
Contract - Property Used for Loan Qualification
Question: You have a situation where you have a property listed which has an intended use as a rooming house. The banker has indicated that the buyer can qualify for a 95% loan if the property is single family, but if it is multi family or commercial will be required to place 25% down.
Answer: If you know the intended use is not for owner occupancy and single family then writing a contract to the contrary would constitute mortgage fraud. Even if the lender tells you that it is okay, you should not participate in this scam.
Agency - Purchase of a Listing
Question: You have a situation where you have a property listed. The seller is in foreclosure. The lender has indicated that they will accept a reduced price that would be acceptable to you for actually purchasing property for your own interest.
Answer: If you are going to do so you need to cancel the listing and represent yourself as a buyer's agent. You need informed consent of Seller and should suggest seller get legal advice. You need to be aware that in some short sale environments, the lenders will not pay a commission to a broker buyer even if they would pay a reduced commission in a sale to a non-broker buyer.
Question: You have a situation where you wrote a contract and closing was scheduled. It now appears the seller is in foreclosure and new terms are being required.
Answer: The fact that the seller is in foreclosure is a material limitation on the seller's ability to close which should have been disclosed to the buyer prior to the day of closing. In addition, there is a form required wherein the seller has to be informed of the right to rescind the transaction and if that form was not a part of the transaction, which I assume it was not since the buyer didn't know about the foreclosure, then the seller, in effect, has a 5 day right of rescission pursuant to Kansas law.
Contract - Buyer's Rights on Closing
Question: You have a situation where property did not close as scheduled in the original contract. An extension was written which then made closing and possession occur on the same day. The seller, however, is refusing to deliver the keys until they actually receive their money. This will delay receipt of the keys by the buyer over a weekend because the closing is occurring late in the day on a Friday.
Answer: The buyer probably has the better argument. However, without retaining an attorney, it is unlikely you are going to get this resolved. With the involvement of an attorney it is unlikely it will expedite resolution so that the keys can actually be received on the day of closing.
Disclosure - Dedication of Land to an Easement
Question: You have a situation where a home in a new subdivision was purchased without knowledge of a city required detention pond that consumes approximately one-third of the lot. It was not listed on the disclosure document. The closing title work did show a drainage detention easement.
Answer: If the developer was aware of this problem then it should have been disclosed. As a Realtor®, your job is to disclose what you know. Now that you know, you should disclose it whether the seller does or not. The buyer that has already closed may have some rights against the developer but would need referred to an attorney for independent legal advice.
Question: You have a situation where an out of state attorney is, by email and phone, making demands on you relative to title on property you have listed.
Answer: There is nothing of record in the Kansas system which supports claims by this out of state attorney. If there is some limitation on the seller's ability to close, then you would owe a duty to any buyer to disclose that information. Obviously, you are a seller's agent and therefore owe a duty to the seller to disclose to them the facts that you know which are not confidential. The demands by the attorney do not appear to fall within the scope of anything confidential.
