Notes From the Legal Hotline: November 2022

November 2, 2022

- By The MAR Legal Team

Q: If a transaction falls apart and there is a dispute over the release of escrow funds, can the seller place the property back on the market and go under contract with a new buyer? A: Maybe. It is a best practice to fully resolve any outstanding issues with the failed transaction prior to placing the property back on market and proceeding with a subsequent purchaser. Unfortunately, not all situations are able to be resolved in a timely manner. If this is the case, the seller should always be advised to consult with their legal counsel to determine whether they are at risk of any legal liability if they move forward with a new buyer. The question becomes whether the dispute is solely over the disbursement of the escrow funds, or whether there is a dispute relating to the underlying…

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Notes From the Legal Hotline: October 2022

October 3, 2022

- By The MAR Legal Team

Q: Can a brokerage operate as a designated agency on a per-transaction basis? A: No, because of the way agency relationships in real estate transactions work, the type of agency a brokerage practices must be consistent for all transactions. A brokerage may elect to transition from traditional agency to designated agency, or vice versa, as an office policy, but the type of agency practiced at any given time must be consistent amongst all transactions. A brokerage may not switch the agency it practices from one transaction to the next. In a “traditional agency” brokerage, each licensee in the office has the same relationship with each client. This means that when one agent within an office represents a seller and another agent within the same office represents a buyer, dual agency is created. In order to proceed in this scenario, both…

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Notes From the Legal Hotline: September 2022

September 1, 2022

- By The MAR Legal Team

Q: The financing contingency date in the contract has passed and the buyer has not informed us of whether they received a commitment – is the deal dead? A: Not necessarily. The passing of any contingency date without an extension or notification of withdrawal by the buyer simply means that the contingency is no longer available to the buyer, but the deal may proceed. If the buyer has not obtained an extension and then is unable to obtain financing to purchase the property, the buyer may terminate the transaction, however, any deposit funds may be subject to forfeiture as liquidated damages to the seller. As a best practice, buyers and buyer agents should always be certain to maintain open lines of communication with the seller and seller’s agent and request an extension if there is any question about their…

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Notes From the Legal Hotline: August 2022

August 1, 2022

- By The MAR Legal Team

Q: Should a buyer’s agent be checking permits for their clients? A: No. A buyer’s agent’s job is to ensure that their client’s interests are best served throughout the transaction. While this may include advising the client regarding potential issues with outstanding permits or unpermitted work on the property, the agent should not be the one researching this issue. Our recommendation is that REALTORS® always be the source of the source. A buyer’s agent should be advising their clients to inquire about any work that was done on the property that may have required permits and assisting the client with obtaining additional information regarding those permits. This may even include accompanying the client to the building department to obtain this information, which allows the buyer to receive the desired information directly. If an agent were to obtain the information…

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Notes From the Legal Hotline: July 2022

July 1, 2022

- By The MAR Legal Team

Q: I have a tenant who is offering to pay 6 months of rent upfront – is that allowed? A: No. For tenancies greater than 100 days in duration, the provisions of the Security Deposit statute apply. The statute prohibits a lessor from requiring a tenant to pay any amount in excess of: First month’s rent Last month’s rent calculated at the same rate as the first month’s rent Security deposit equal to the first month’s rent The purchase and installation cost for a new lock and key. On occasion, a prospective tenant may offer to pay rent in advance. Even if the subject of prepaid rent originates from the prospective tenant, rather than the landlord making a demand, this is likely still a violation of the statute. Generally, this type of offer is made by prospective tenants who…

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Notes From the Legal Hotline: June 2022

June 2, 2022

- By The MAR Legal Team

Q: What do REALTORS® need to know to avoid antitrust liability? A: The best way to avoid antitrust liability is to ensure that all business decisions are made independently within the brokerage. The potential for antitrust liability arises any time two or more competitors discuss their business practices. REALTORS® must always be alert to discussions that focus on commission rates, pricing structures, listing policies, or marketing practices of other brokerages. If a discussion becomes troubling, immediately suggest a change of topic, or remove oneself from the conversation. Within the real estate arena, we most often hear of antitrust issues arising from price fixing and group boycotts. Price fixing may be as obvious as two or more competitors blatantly agreeing to charge consumers the same commission on real estate transactions or agreeing to the same cooperating commission splits. Price fixing…

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Notes From the Legal Hotline: January 2022

January 3, 2022

- By The MAR Legal Team

Q: I just found out my buyer client bought a house with another agent. What options do I have? A: What recourse is available in these situations depends on the type of relationship between the agent and the buyer. If the buyer and agent entered into an exclusive representation agreement, and a property was purchased during the term of that agreement, or any extension thereof, a commission may be owed. The MAR Exclusive Buyer Agency Agreement states, in relevant part: The parties agree that compensation equal to ___ (insert percent of purchase price or another amount) shall be due BROKER upon successful completion of this Agreement or in the event that, within ___ days following the term of this Agreement, BUYER or any person acting for or with BUYER purchases, leases or otherwise acquires an interest in the real…

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Notes From the Legal Hotline: December 2021

December 3, 2021

- By The MAR Legal Team

Q: I heard there is a new Mandatory Licensee-Consumer Relationship Disclosure. Is that true and when does it need to be presented? A: The Relationship Disclosure must be presented to a consumer at the first personal meeting in which specific property is discussed. Recent changes to the Mandatory Licensee-Consumer Relationship Disclosure clarify that the disclosure is only required in residential transactions, which are defined as land with a building intended for use as a one to four-unit residential dwelling or the purchase or sale of land on which a building is intended to be constructed for use as a one or two-unit residential dwelling. Additionally, the disclosure now states that, in the absence of a personal meeting with a consumer, the licensee must provide the consumer with the relationship disclosure, either electronically or otherwise, prior to the licensee entering…

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Notes From the Legal Hotline: October 2021

October 5, 2021

- By The MAR Legal Team

Q: What tasks may an assistant perform in a real estate office? A: The tasks that may be performed by an assistant in a real estate office are going to depend on whether the assistant is licensed or unlicensed. A licensed assistant may perform any tasks permitted of licensees in a real estate transaction, but an unlicensed assistant is much more limited in the tasks they may perform. Some examples of activities in which an unlicensed real estate assistant can engage are: General administrative tasks, such as answering the phones and sending mailers Placing signs on listed properties Scheduling appointments for the licensee Preparing open house materials   Unlicensed assistants should avoid tasks that place them in direct contact with clients or customers. Specifically, the following are some activities unlicensed assistants should avoid: Providing specific details of a property…

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Notes from the Legal Hotline: September 2021

August 30, 2021

- By The MAR Legal Team

Q: May a landlord use COVID vaccination status in screening prospective tenants? A: While vaccination status itself is not a protected class, the reason an individual is unvaccinated may be because of a protected characteristic, such as children under the age of 12 or individuals with disabilities. A landlord wanting to use vaccination status as a screening tool would need to be prepared to allow exemptions to the policy in these types of situations and should be advised to work closely with an attorney in doing so. Landlords looking to prevent the spread of COVID in their properties may instead want to consider policies for common areas of the building, such as frequent sanitization, asking tenants to wear masks, and avoid congregating in large groups. Q: What happens now that the Supreme Court struck down the CDC Eviction Moratorium?…

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