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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Disclosure - Demand Letter from an Attorney
Question: You have received a demand letter from an attorney with regard to a disclosure issue.
Answer: Any time you receive a demand letter from an attorney accusing you or your firm of misrepresentation you should treat it very seriously. Obviously, one choice would be for you to file a response to the attorney. However, it is probably better that you refer it to an attorney for review and a response letter.
Contract - Enforcement of Declarations
Question: You have a situation where a property in a homeowner's association. Apparently there have been some changes allowing modifications to exterior finishes. The specific exterior finish on the property you are concerned about does not seem to exactly fit the restrictions.
Answer: This is a very complicated area of law and you should avoid offering opinions about whether or not a home does or does not comply with restrictive covenants. The parties should be referred to independent legal advice for this type of issue.
Contract - Disappearing Buyer
Question: You have a situation where a buyer apparently entered into negotiations to acquire property in Kansas. The buyer is from a foreign country. The buyer indicated various wire transfers would occur but in effect sent a check payable to a law firm local to your community for a piece of the purchase price but in an amount that seems unrelated to the transaction.
Answer: This is a high risk deal for seller as a result could be a claim by the buyer to have some equity such that a foreclosure to clear the deal might be required. I am assuming the check to the law firm did not clear or they will not tell you. In any event, if I was the seller, I would want a legal opinion based on a review of the contract and communications with the law firm before selling to a second buyer. I think this is what you should encourage the seller to do.
Agency - Avoidance of Agency Duties
Question: You have a situation where the buyer's mother has gone directly to a representative of the seller. They have gone around the listing broker. The listing agent thinks that the selling agent has contacted the seller but it is in effect the buyer themselves.
Answer: It would be wrong for the selling agent to contact the seller but there is nothing you can do about it if the buyer does it on their own. I think it would be equally wrong for the selling agent to encourage the buyer to go around the listing agent.
Contract - For Sale By Owner
Question: You have a situation where you are on the selling side of a transaction with a for sale by owner.
Answer: Use of your local contract for sale board form is the correct method for handling the transaction. The seller is in effect unrepresented and the contract should reflect that circumstance.
Contract - Need for Cancellation
Question: You have a situation where a cancellation agreement was received two days after the purported closing date. This was after the closing date had already been amended once. The seller spent money on repairs. You are still in contract until the cancellation is agreed by both parties, the deal closes, or a court order.
Answer: On that basis, the seller has some risk in selling to a second buyer without resolving their relationship with the first buyer. A cancellation agreement would be the easy way to do that. However, the seller would be releasing the buyer from an apparent default by entering into a traditional cancellation agreement. On that basis, it may be more wise to refer the seller to an attorney for independent legal advice.
