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Legal Hotline FAQs - December 2009
Posted on December 17, 2009
Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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License Law - Licensed Builder Offers Finder Fee
Question: You have a situation where a builder who also holds a real estate license offers a finders’ fee to people in the neighborhood who refer buyers to him.Answer: A finders' fee paid by a licensed person to unlicensed people would be illegal under the law. If the builder were not licensed then he would in effect be selling real estate without a license by paying referral fees in this fashion. However, if he were unlicensed the Real Estate Commission would likely not take jurisdiction over the matter.Contract - Agreement with Departed SellerQuestion: You have a situation where you took a listing from a seller. The seller was derived from a referral company. The seller has now left the area and the house is in foreclosure. You wonder about your commitment to the referral company. Answer: If you made an arrangement with the referral company to pay a referral fee based upon this type of referral then it would seem likely the referral fee is owed regardless of whether or not the seller is still around. You would have to think about how you would feel in the opposite circumstance and what written agreements you may have with the referral company. Miscellaneous - Boundary Line DisputeQuestion: You have a situation where there are some trees along the property line. Apparently the trunk of the tree is on one person's land but some of the limbs extend over onto the neighbor. Answer: Generally, property lines extend up into the air such that if the tree limbs extend on to the neighboring property then the extended tree limbs actually belong to the neighbor on whose property they are above. So to, would liability and risk for those tree limbs falling onto the neighbor's home and responsibility for trimming. Contract - Coop Commission to Non-MemberQuestion: You have a situation where a non-member of your board may be involved in a transaction on one of your listings. Answer: Members of your board are offered compensations through the MLS. A non-member has no compensation agreement with you. On that basis, it would be important to advise the non-member what compensation you intend to offer them for cooperation in helping sell your listing. Contract - Failure to Close Within Extended DateQuestion: You have a situation where property went under contract but for lack of financing closing was then extended by agreement. However, it now appears financing is once again unavailable.Answer: The buyer needs to have made reasonable efforts to acquire the financing. Assuming they have, then the financing contingency would probably allow the buyer to extract themselves from the contract. By the same token, a failure to close on the part of the buyer within the timeline required probably lets the seller out of the contract to deal with other parties if he or she intends.Contract - Amendments to Printed LanguageQuestion: You have a situation where there are multiple changes within one paragraph. Those changes were accomplished by striking through the original information and writing in replacement language. Through the use of brackets, one set of initials by the consumers was utilized. Someone has questioned this practice.Answer: There is nothing wrong with the practice so long as one reading the contract independent of conversation could understand what the intent was. If a third party reader could look at the initialed changes and understand that the bracket reflects initials as to each of the changes made, then the proper interpretation would be easily understood.Contract - Inclusion of Personal PropertyQuestion: You have a situation where a washer and dryer were described as working and available in the seller disclosure form. In your case, the seller disclosure form is not made a part of the contract. The buyer did not describe the washer and dryer as elements of personal property desired as a part of the purchase. The seller removed those items and the buyer is upset in a post-closing context. Answer: The seller probably has the better argument. If there is an intention to include personal property in the sale of real estate, then it needs to be clearly identified in the contract. Both parties should be referred to independent counsel.Contract - Abandoned Previous Owner's PropertyQuestion: You have a situation where you are handling foreclosure properties. The previous owner has abandoned some property and the foreclosing entity indicates that the abandoned property should simply be trashed. In this instance, some of the property seems to be of some value.Answer: I would suggest that the abandoned stuff in this case be treated like abandoned tenant property under the Kansas Residential Landlord Tenant Act. This requires notice to the previous owner and published notice of an intent to sell. Care should also be taken to try to make sure that none of the property is in effect leased furniture that belongs to a furniture leasing company.Disclosure - Cancellation by a Previous BuyerQuestion: You have a situation where a property was sold to a buyer who then walked away from the transaction because the owner is apparently a registered sex offender. The buyer did not want to provide any benefit to someone of that variety. You asked whether or not the reasons for the buyer walking away from the transaction need to be disclosed to subsequent buyers. Answer: First of all, I would guess that you are telling me you don't really know why and can therefore only guess as to the reason the first buyer walked away. I do not see that you have a duty to disclose this issue about the seller but I also don't think you are violating something that is in effect a public record either.
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