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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 whether a person who is not licensed could show a property.
Answer: An assistant to an agent may be present, unlock the door, or allow access to a property as long as the persons provides no information and gives no advice to the parties looking at the property. All questions should be referred to the licensee and the assistant who is present should not answer questions or provide any information.
Question: You asked about whether or not a seller has a right to unilaterally cancel a listing.
Answer: Some listing agreements give the seller a right to terminate at any time. Absent such a provision, then there is no general right to terminate a listing. Under the old common law rules where a listing might be deemed to be a form of employment, then Kansas would generally recognize employment as a relationship which exists at the will of both parties and it could therefore be terminated at the will of either party. However, because we now have statutory agency, and the statute does not provide for unilateral termination, it would seem that the only basis of termination on the part of a seller would be if the seller were able to establish cause sufficient to indicate the listing broker had violated the terms of the listing.
Question: You have a situation where a contract was entered into contingent upon the sale of buyer's existing home. One of the clauses in that contingency allows the seller to in effect kick out the first buyer's contract by indicating another offer is available which they intend to take. The first buyer then has an opportunity to indicate they are willing to waive the contingency on sale of another home and proceed to closing but they must provide a financing commitment letter evidencing their ability to do so. The first buyer has produced a pre-approval letter which indicates they are approved for this transaction subject to various underwriting requirements.
Answer: It does not sound as though this pre-approval letter is the commitment letter described in the original contract. If the buyer wishes to go forward they may need to consult with independent legal counsel.
Question: You asked about a situation where a developer was wanting to pay a referral fee to neighbors who would refer a buyer who ends up purchasing one of the developer's properties.
Answer: There should be no problem with this, because the developer is not subject to the real estate broker statutes, unless the developer is, in fact, a licensee.
Question: You asked about a situation where you were representing a young couple in buying a spec home. The couple was getting a rural development loan. They were then told they could get Kansas Housing Resources Corporation (KHRC) money for purchase of the property, but have now been told that the government will not approve such unless the contract is done after the certificate of occupancy is issued. In this case the contract was done before the certificate of occupancy was issued.
Answer: It is possible the parties could agree to cancel the original contract and enter into a new contract now that the certificate of occupancy has been completed, but the buyers run the risk of one of the parties wanting to change the terms of the contract. The buyers should consult with their own attorney on how to handle the situation if they want to apply for KHRC money.
Question: You asked about a situation where you had listed a property and were acting as a transaction broker. An agent with another broker is representing the seller as a transaction broker. Contracts have been signed, but the buyers have not produced the earnest money. The five days for paying the earnest money is about to run out and their agent is proposing to pay it with her own money, believing the buyers will reimburse her.
Answer: The statute which prohibits gifts and gratuities prohibits a licensee from paying the earnest money in a transaction. Even though the licensee believes she will be reimbursed, there is no guarantee and the payment, even if she is reimbursed, is still in the nature of a gift. Furthermore, there may be an issue of mortgage fraud if the buyers are unable to come up with the earnest money.
Question: You asked about a situation where you had a contract pending which provided that the buyers had until a specified date to obtain financing and contained the usual contingencies. Another buyer has come in with a cash offer and insists that a cash offer takes precedence over a contract with financing provisions.
Answer: The contract controls in any such situation and if the contract makes no provision for cancellation when another offer is received (even a cash offer), then the sellers are bound by the terms of the first contract.
Question: You have a situation where a transaction required a survey. The cost was to be paid by the buyer. The buyer did not submit any money for the cost and the transaction has now failed. The survey company is billing the company who ordered the survey and you asked who should be responsible for the cost.
Answer: Obviously, the buyer should be responsible for the cost. The survey company may have the right to pursue the company that actually called in the order unless they got an agreement that the buyer was actually the person responsible for those costs.
