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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 called the Hotline with a question about the new Home Equity Protection Disclosure Addendum recently circulated by KAR. You asked whether or not it was necessary to include the addendum in all contracts.
Answer: I advised you that it is not necessary to include the addendum in all contracts, but it is strongly suggested that the addendum be included in any situation where owner-occupied real property that is subject to foreclosure is being conveyed. Failing to include the language in the disclosure addendum could allow the seller to avoid the contract after execution, potentially including after the contract has closed or the deed recorded.
Question: You have a question about whether or not the association would have liability for any brokers who do not use a new lock box system that has been adopted on a voluntary basis by the Board. The new lock box system will record who accesses a property. On that basis, it is believed that it will be easier to protect the seller's property from unwanted invasion.
Answer: I do not see the association is liable, but a broker may find themselves liable for failing to use state of the art equipment.
Question: You asked about a situation where you had a house under contract. The seller's disclosure specifically excluded from unacceptable conditions the fire place. The buyers are having inspections done, including an inspection of the fireplace. Your seller is concerned that the buyers are going to try to claim they are entitled to have any problems with the fire place repaired.
Answer: The Seller's Disclosure becomes part of the contract when the buyers enter into the contract. The exclusion for the fire place should have been made known to them at that time. You should probably point this out again to the buyers' agent so the buyers are aware of the exclusion and that they agreed to such when they entered into the contract.
Question: You asked about a situation where a homeowner is in foreclosure. The mortgage company has had an appraisal done. The company, however, has refused to give a copy to the homeowner.
Answer: Since the homeowner has not paid for the appraisal, he would not have any right to a copy of the appraisal.
Question: You have a question about the license law implications of hiring a salesperson who also runs a management company.
Answer: Kansas license law regulates leasing activity of commercial real estate but does not regulate in any way either leasing activity of residential real estate nor management activities themselves. Without knowing whether or not the management activity includes leasing, it is difficult to speculate whether or not there is any license law implication to the management activities of your proposed new hire. If management includes leasing, then the question needs to be whether or not commercial or residential is involved for the reasons expressed above. In addition, you should be aware of potential liability risks if the salesperson, who is also engaged in management activity, in any way uses business cards, signs, letterhead, or your office phone for any of the management activities. If they do, then you are potentially at risk for liability to landlords represented by the person or tenants or repair people, even if the activity is otherwise unregulated.
Question: You have a question about distributing the sign-in list achieved from a new home open house subdivision to lenders for calls related to lending.
Answer: It would seem that a person signing in at an open house has probably given permission to the person holding the open house to contact them with respect to the sale of real estate. However, you run the risk of a no call list violation by the lender contacting persons who sign in in this way because they have not given permission for that call. This could potentially be cured by a disclosure at the top of the page indicating permission is granted for contact of this type.
Question: You have a question about advertising a property as available for sale at a price which the seller does not intend to take.
Answer: This would seem to violate both ethics and license law. It would be misrepresentation of the property as available at a price for which there is apparently no intention on the part of the seller to take. An MLS listing is not an offer and therefore no buyer can force the seller to accept a contract at the price indicated in the MLS. However, a commission may be due.
