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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Question: You asked about a situation where property was being sold through auction. The auctioneers were being paid a commission by the seller, but the fliers concerning the auction indicated that buyers would be charged a 10 percent buyer's premium which would be paid to the auctioneers. You wanted to know if this premium needed to be disclosed in the final contract to purchase the property.
Answer: Any type of payment, including a buyer's premium to the auctioneer, should be disclosed in the final contract so that everyone understands the actual cost of the property and where the money paid is going.
Question: You asked about an issue that arose in regard to the commercial contract. The contract indicates the earnest money will be presented at the time the buyer signs the contact. The buyer's lawyer is contending that the buyer has five days to present the check for the earnest money.
Answer: The five day period would appear to be the time allowed to deposit the earnest money after the contract is fully executed. If no earnest money is presented at the time the buyer signs, then it is questionable whether there is a valid offer on the table or the buyer may be in default. If the buyer wants additional time to present the earnest money, then some amendment to the contract should be done specifying when the earnest money will be provided. The seller, of course, would not have to agree to accept that.
Question: You have a situation where a salesperson's wages are being garnished.
Answer: Obviously, you do not hold wages. However, if you have money owed to the salesperson as of the date of the garnishment, then you should respond accordingly. The simple fact that the salesperson is an independent contractor does not protect them from garnishment.
Question: You asked how long a business should keep its business records.
Answer: While there is no specific regulation about this, seven years is usually a reasonable time, since the statute of limitations for written contracts is five years.
Question: You asked about a situation where you were acting as a property manager on a listing which was for sale. The tenant has failed to pay rent for three months, and you are aware of other violations to the lease agreement.
Answer: Because the tenant is behind in the rent, the tenant can be given a three day notice to pay the back rent or move out. If the owner wants to collect the back rent and the costs of repairing the damage done by the tenant, the owner should retain an attorney to pursue these matters.
Question: You asked about a situation where some of your licensees wanted to set up a booth at the mall bridal fair and give out coupons for $200 toward a homeowner's warranty.
Answer: The KREC guidelines issued when the rules on gifts were changed indicate that contributing toward a home warranty would be acceptable under the revised law.
Question: You have a situation where an attorney working for the parties prepared a real estate contract. However, it did not deal with interest for the time period between the date of the contract and closing. It also didn't cover title insurance or include a lead paint disclosure form.
Answer: We suggested that you prepare an addendum which would cover those things that the lawyer left out of the contract. You prepared this addendum and the transaction has now closed. Your conduct appears appropriate.
Question: You called the Hotline with a question about your obligations to provide information to a non-client about a client's personal contact information. You represented sellers who have refused to release earnest money being held from a contract that did not close. The sellers have moved, and the defaulting buyers are now contacting you directly seeking contact information - specifically a phone number - for the sellers.
Answer: I have advised you that you should not release any information to the buyers without authorization from your clients. You should advise your clients that the buyers are seeking to contact them and if your clients have questions about their legal rights as to the earnest money and the buyers, you should refer them to an attorney.
Question: You have a situation where you are working as a seller's agent. The seller wants to refuse cooperation with certain real estate licensees.
Answer: Under the license law, that is acceptable so long as the instruction is in writing. You need to be aware that under the terms of both the Code of Ethics and license law, if you receive an offer you will still owe a duty to present it.
