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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Procuring Cause - Seller Couldn't Close
Question: You have a question about the earning of a commission when the seller cannot provide clear title.
Answer: Any questions where there is a potential conflict between two members of the Kansas Association of Realtors® are not eligible for an answer on the hotline. This is because we could conceivably hear from both brokers and find ourselves in a position of conflict. The appropriate remedy is to file for arbitration with your local board.
Contract - Modifications That Seem Fraudulent
Question: You have a situation where a transaction is prepared to close. Shortly before closing the buyer is asking for modification to the contract which would in effect deceive the County Appraiser's office with respect to the real value of the sale.
Answer: As a real estate agent, you are not in a position to participate in fraud on any public official. You must refuse to participate in making these modifications even though ultimately they have nothing to do with the price.
Radon Disclosure Language
Question: You are concerned about the new radon disclosure language. A contract is being negotiated at this time and you are wondering how the new radon disclosure language applies to a transaction where the disclosure obligation becomes part of Kansas law in the middle of the deal.
Answer: I would suggest that there is no reason not to include the radon disclosure language at this time. Simply because the legislature timed the requirement for July 1 does not mean you need to wait for that date. If your Board form does not currently include the radon disclosure language, then adding it as an addendum or additional provision would be an effective way to accomplish the same thing.
License Law - Payment of Referral Fee
Question: You have a question about the payment of a referral fee to an unlicensed person.
Answer: Paying referral fees to an unlicensed person would cause you to violate the license law. Making a referral for compensation is licensed activity.
Contract - Potential Default by Seller
Question: You are a co-listing agent on a property which is under contract. The seller now wants out of the sale but the buyer wants to close. The seller has asked you to postpone the appraisal in hopes that the buyer would then go into default.
Answer: The seller needs referred to outside legal counsel for advice with respect to breach of contract issues.
Contract - Responsibility of Real Estate Licensee for Referral to Appraiser
Question: You have a situation where in the course of selling real estate you were asked by the seller about a referral for an auctioneer to handle a personal property sale. You gave that referral and now the seller is unhappy with the auctioneer.
Answer: I do not see that you have any responsibility for the seller's unhappiness with the auctioneer. As I understand it, you gave full disclosure to the seller about your lack of complete knowledge with respect to the auctioneer but merely offered the auctioneer as a choice in response to their inquiry. Assuming another person is reasonably competent for the services they offer and a referral by a real estate licensee for specialized services is controlled by a reasonable man rule. As long as you reasonably believe the person has the skills necessary for the job for which they are hired, you do not have exposure.
Contract - Title to Lots During Construction
Question: You have a situation where a custom home is to be built on a lot owned by the owner. The suggestion has been made that the property be transferred to the builder who would then acquire the construction loan and hold title during the period of construction. You asked what protection would be available to the homeowner in this circumstance.
Answer: Unless the homeowner files some kind of a lien against the lot, then they are risking the money that they have put into the lot prior to transferring it to the builder. There is obviously little assurance that the builder will transfer the property back, that the amount of debt thereon at the time will be in accord with the agreement, or that the builder will ever transfer the lot back.
Agency - Contact by Another Licensee
Question: You have a situation where another licensee has contacted your client.
Answer: When you have an exclusive right to sell listing, then other agents should not be in contact with your client. This is a violation of both the license law and the code of ethics. It is commonly referred to as "crossing another broker's listing."
Contract - Settlement of Claim
Question: You have a situation where some money is being paid to a party. You wonder whether signing a settlement agreement before closing is acceptable.
Answer: If a signed settlement agreement is delivered to the closing agent who then in effect exchanges the settlement agreement for money, it should be acceptable and not expose you to any claim that you have prematurely released the other party. Delivery of the release is in effect when the release occurs.
