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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 you were representing a buyer on the short sale. It took the lender four months to approve the sale of the property at the price offered and the house has deteriorated in that time. The buyer wants the house fixed up or a lower price. It is unlikely that the buyers can get the lender to lower the price any further. There is a completed offer and acceptance and, thus, the buyer is bound by the terms of the contract. While the buyers may have a claim against the sellers for failing to maintain the property, it is unlikely the buyers can collect against them. In the meantime, you have another party who is interested in buying the property.
Answer: There is already a contract, in effect, and you cannot have a second contract on the property, unless you can get the original buyer and seller to cancel the contract or the contract falls through at closing. The parties need referred for legal advice.
Question: You asked about a situation where you were representing the sellers in a transaction. The buyers signed a contract for the property stating they would accept the property "as is." The buyers want a termite inspection and you wanted to know if the sellers had to pay for any treatment if the contract says the buyers are accepting the property "as is."
Answer: The contract specifically states that the sellers will be responsible for paying for treatment. This provision of the contract would take precedence over any general "as is" provision. Pursuant to the specific provision in the contract, the sellers would have to pay for termite treatment.
Question: You asked about a situation where one of your agents listed a property. The agent then entered into a separate agreement with the seller to paint the seller's house for $600. The seller is now unhappy with the job done and wants a number of problems fixed. Your position is that this agreement between the agent and the buyer was a matter separate from the sale of the house and that you were in no way a party to that agreement or responsible for the painting.
Answer: While the agent's painting business should be treated as a separate entity not connected to your agency, the seller could make some argument that the agent was acting as agent for the broker and the broker is liable for any negligent acts of the agent.
Question: You have a question where the compensation might be variable depending upon the type of buyer and price received.
Answer: Variable commissions can be acceptable if your local MLS rules allow it. However, it needs to be fully disclosed to cooperating brokers so that they know what the deal is if they bring a buyer to the table. A failure to disclose could make you responsible for the higher rate of commission.
Question: You have a question about the interpretation of a referral fee agreement.
Answer: First of all, remember as a Realtor® the golden rule always applies. On that basis, it is important to think about this problem from the perspective of the broker who made the referral and whether or not they had an expectation for payment of a bonus and how you would feel if you were in their position. Apparently, buyers were referred to an agent within your firm. Part of the referral agreement requires payment of a referral fee. Buyer agent also earned a bonus in the transaction. I cannot become embroiled in debates between two firms over commission splits. It would seem that payment of a referral fee on a bonus would depend upon the language utilized in creating the referral fee agreement. Commissions are obviously distinct from bonuses but the referral agreement should be read in that light.
Question: You have a situation where an original offer was made on your local board form and a counter offer written on another board form. Apparently, an objection has been made by one of the companies.
Answer: There is no law about which form is preferable or legal. The only requirement is that any form being utilized has been approved by legal counsel for the appropriate board and that the form is being utilized by someone authorized to use it. To avoid copyright infringement you either need to be a member of the local board whose form you are using or have authority from that board. In this case, agents on both sides are members of the board for whose form they are using. At this point it would be up to the consumers to decide which form they want to negotiate from. There is no legal impediment to the use of either form, nor any legal preference.
Question: You have a situation where property is currently leased by a tenant. The property is being sold. You asked about the rights of the tenant.
Answer: The tenant has the same lease rights after sale as they had before the contract was entered into. On that basis, the seller should disclose the tenant's lease rights to the buyer. The buyer needs to know that they are taking title to the property subject to whatever rights the party in possession may have.
Question: You asked whether a financing addendum necessarily requires all of the various terms of financing to be included.
Answer: It is for the buyer's protection that the financing addendum includes all of the various terms and conditions of the loan. If the loan becomes available only at an interest rate which the buyer can't afford, then the buyer needs to be able to extract themselves from the contract without penalty. If all you knew was the amount of the loan, then that might be inadequate for the needs of a particular buyer. It would require review of the contract and amendments to determine whether or not we have enough information to know whether or not there is an agreement between the parties.
