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Legal Hotline Attorney Vern Jarboe answers frequently asked questions from Kansas REALTORS® about their transactions.
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Contract - Buyer Remodeling Costs
Question: You have a situation where the agreement between the parties includes the seller providing some help to the buyer with remodeling costs.
Answer: I have suggested that the best way to handle this would be to have the seller actually go buy the materials it is agreed the seller will provide and then leave them in the house when they move. In that way, if it does not close, the seller can simply return the items for credit at the store (presumably). The lender apparently wants this agreement to be "off the page." That could constitute mortgage fraud and is not a practice that should be utilized.
Disclosure - Buyer Number One's Inspection Results
Question: You have a situation where contract number 1 failed due to inspections. The seller apparently does not want to disclose the results of that inspection report.
Answer: Your job as a licensee is to disclose what you know. On that basis, it seems to me the wisest course is to give any subsequent buyers a complete copy of the inspection report. Otherwise, information in the report could come back to bite you as something that "you knew." If the seller does not believe the results of buyer number 1's inspection reports, then you should suggest to the seller that they get their own inspection of this same property's condition and distribute buyer number 1's inspection report together with the seller's inspection and then offer buyers an opportunity for a third inspection.
License Law - Multiple Licensed Personnel
Question: You have a situation where a salesperson you have hired is also licensed as a real estate appraiser. You asked about disclosure and handling intra-office transactions.
Answer: The licensee with this situation should carefully consider their responsibilities under their appraisal license. Standards for appraisal licensing impose obligations on licensees for not having a financial interest in the transactions where they perform appraisals. Assuming those issues can be resolved, then you also need to consider real estate license law provisions dealing with getting paid from multiple sources. Finally, there can be real estate settlement procedure act problems if consumers do not receive adequate notice of the multiplicity of compensation and opportunities to select alternative service providers.
Ethics - Offers of Cooperation But Not Compensation
Question: You indicate that a REALTOR® in your market offers cooperation (meaning you can show their listings) but does not offer compensation to selling side agents.
Answer: Article 3 of the Code of Ethics specifically indicates that REALTOR® members must offer cooperation "unless it is not in their client's best interest," but also indicates that compensation and cooperation are different matters. It is possible to write an offer in situations such as this whereby the buyer requests that the seller pay the buyer agent's fee. You cannot write an offer which requires the listing broker to pay a fee as that would interfere with their contract with their consumer.
Contract - Withdrawal of an Offer
Question: You have a situation where a written offer was made. Subsequently, the buyer decided to withdraw that offer and the buyer's agent phoned the listing agent and indicated that the offer was being withdrawn.
Answer: The better practice would have been to have done this by fax or email so that a written document would exist to support the fact that it was withdrawn and give a date and time of the withdrawal. The listing agent is now claiming that the seller has accepted the offer. The question of whether or not the offer was withdrawn before acceptance might be a close question and each buyer and seller may need referred to independent legal counsel for advice.
Contract - Interpretation of Language
Question: You have a question about use of two different contract forms in your market. One of them refers to two days for a particular event and another to 48 hours.
Answer: I think you would have to conclude that 48 hours means exactly 48 hours. The calculation of time using the "two day" language would be more difficult and create more opportunity for disagreement. Usually "two days" would contemplate a midnight to midnight calculation for the event. Obviously, the use of 48 hour language provides more certainty for interpretation and criticality for documentation.
Termite Inspection
Question: You have a situation where a termite inspection revealed live infestation. The termite inspection company recommends treatment of the entire property. The seller wants to treat only the small areas where the termites were located.
Answer: Each buyer and seller should be referred to independent legal counsel for advice on the meaning of the contract language. I would judge that each side may have a reasonable argument for their interpretation and ultimately the seller is going to have to decide whether they want to risk losing the deal over the amount involved.
