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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Contract - Multiple Offers
Question: You have a situation where you are working on a property where more is owed than can be reasonably obtained through a sale. Thus, a short sale is required. In this case, there are several buyers apparently intending to make offers. The bank wants the seller to enter into multiple contracts so that the bank can determine which offer they will take.
Answer: It would appear that the short sale addendum would reduce the risk for the seller in entering into multiple contracts because the short sale addendum clearly indicates there will be no deal unless the bank approves. However, it does not seem fair to the buyer that was first in line to find they are in a bidding war that may take months to resolve.
Contract - Sale By A Charitable Institution
Question: You have a situation where a charitable institution intends to enter into a contract where a part of the price will be a gift.
Answer: So long as the true terms and conditions of the deal are reflected in the contract there is no likely mortgage fraud. This assumes, of course, that the gift is real and the price is otherwise as described by the terms of the contract. You should also be cognoscenti of the fact that this may be an effort to defraud the IRS about the real value of a charitable deduction. You should not participate in the preparation of documents which establish a fraud.
Contract - Payment of Buyer Fee
Question: You have a situation where an asset management company has indicated that there are certain required fees of a buyer who buys property that had been under their asset management agreement.
Answer: Unless those fees are a part of the terms and conditions of the contract, it is not likely enforceable against the buyer. If the buyer is concerned about this, then the buyer should consult with independent legal advice.
Contract - Liability for Frozen Pipes
Question: You have a situation where you have received a letter from an attorney on behalf of a property owner. You had the property listed and the pipes froze during the listing term. The seller moved out and told you they had turned off the water and you were asked to simply set the furnace. You did set the furnace as requested.
Answer: It is not likely that you have liability. You may want to turn this over to your errors and omissions carrier as it may blow up on you in the future.
Contract - Divorced Couple As Seller
Question: You have a situation where husband and wife are both part owners pursuant to the terms and conditions of a divorce resolution.
Answer: Any listing agreement would require both signatures. Failure to have both signatures would violate the license law by putting a sign on property without the permission of the owner and offering property for sale on a price and terms other than those authorized by the owner.
Contract - Delivery of Acceptance
Question: You have a situation where an offer was made to a seller in the form of a counter offer that has never been accepted. This acceptance has not been delivered back to the first buyer. Meanwhile a second buyer has appeared and made an offer.
Answer: So long as there is no attempt to interfere with the first offer, the fact that it has not yet been accepted and returned is probably evidence that there is no contract. To be safe, the buyer should be referred to an attorney for independent legal advice. You cannot advise parties of legal ramifications of actions as you do not hold the appropriate license.
License Law - Exclusive Listing Agreement
Question: You asked a question about the Kansas Real Estate Commission form for a listing agreement. It has some confusing language which seems to indicate both the broker acting as a transaction broker and the broker acting as a seller's agent in the same transaction.
Answer: I reviewed the form and believe it to be incorrect. When I called it to the attention of the Real Estate Commission, they responded that they understood the form was incorrect and were going to rewrite it eventually. I will let you know when changes occur.
License Law - Agent Being Paid by the Hour
Question: You have a situation where in a new development the Realtor® is willing to pay one of your agents by the hour to sit the open house.
Answer: You can do it, but the per hour fee needs to go through your company because he is paying someone to perform real estate licensed services. You would likely need to withhold and treat the payments as salary or wage since the money is not being paid based on performance so the independent contractor rules would not apply. You should consult with your tax person for direct advice on that issue.
Disclosure - Duty to Investigate
Question: You asked whether or not it is the listing agent's responsibility to research previous listings on the MLS and disclose copies of inspections and/or previous seller disclosure forms that are found in that search.
Answer: The license law has no duty to investigate. It only requires disclosure of what you actually know. The seller would be under a responsibility to disclose the things you describe.
Disclosure - Defective Title
Question: You have a question about a pending auction. The auction has been advertised and is scheduled. However, title problems reveal that the seller will not be able to provide good title.
Answer: You should probably either cancel the sale or at the time of the sale indicate to bidders that the contract is subject to a serious title problem which will have to be cleared up. It would seem likely that the sale will go better if the title is already resolved.
License Law - Master Listings on Foreclosures
Question: You have a situation where a foreclosure company has indicated they want to provide you with a master listing agreement without individual listings.
Answer: There are several problems in accepting a listing under those terms. Because Kansas license law specifically requires a fixed date of expiration it is doubtful that a blanket listing can provide that. You could certainly have a master listing agreement which provided the basic terms and conditions of the agreement if you had individual agreements which included the specific term of individual listings as they came along.
Disclosure - Residential Death
Question: You have a situation where you know of a death in a home. You asked about your responsibility to disclose the existence of the death.
Answer: You have to realize that some buyers would be quite concerned about this condition. On that basis, disclosure would be better since they will ultimately find out anyway from the neighbors. There is no specific case in Kansas which indicates that you must disclose this type of occurrence nor is there any case, rule, regulation, or statute which indicates you have no liability if you fail to disclose this kind of information.
