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Weekly Q&As

Listing Agreements and Consent Orders in Divorce Cases

Release Date: 04/18/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: A potential client has approached me about selling her home. She is in the middle of a divorce, and the judge has just signed a consent order awarding the marital home to her. She would like to sell it as soon as possible and use the money to move on with her life.

The wife’s divorce attorney has assured me that she will get the house. However, the husband has not yet signed a quitclaim deed, even though the attorney has said that getting a quitclaim deed will not be a problem. Can I accept the listing?

ANSWER: The answer is yes, but you will need to take some steps to protect yourself. First and foremost, it is important to understand that the consent order likely does not transfer title of the home. Most orders concerning the property of a divorcing couple will only be a direction from the judge instructing one party to give their interest to the other. This means the husband could decide not to sign the quitclaim deed. He could also decide to pursue an appeal of the judge’s order instead of giving over his interest to the wife. The bottom line is that if the husband does not quitclaim his interest, the wife does not have full title.

If getting a quitclaim deed from the husband is not an issue, then we would strongly recommend waiting for that process to be complete before taking the listing. However, if the wife insists that she needs a listing agreement now, you could sign a listing agreement with the wife and delay the advertising date until she obtains full title. You might also consider having an attorney draft an addendum to the listing agreement explaining that the listing agreement is contingent on the wife obtaining full ownership.

Just remember that a seller’s ability to convey title to a buyer is a material fact. If at any point during the listing it appears that the wife will not be able to do so, you must disclose those issues to any potential buyer.

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

 

 

Is an unsigned addendum enforceable?

Release Date: 04/11/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: I recently submitted a signed offer to a listing agent. When the contract was returned to us, a box was checked in paragraph 15 of Standard Form 2-T to indicate that the Short Sale Addendum (Form 2A14-T) may be a part of the contract. In addition, a copy of the Short Sale Addendum signed by the Sellers was attached to the Contract. My buyer clients initialed the change in paragraph 15 but never signed the Short Sale Addendum. Absent their signatures on the Short Sale Addendum, is the Addendum part of the contract? Without my clients' signatures on the Addendum, do the Sellers have the right to terminate the contract until they receive a "Notice of Approval of Short Sale" from their lender?

ANSWER:  Based on the facts you have described, we believe the Short Sale Addendum is part of the Contract and is legally binding, despite the fact that the Addendum was not signed by the Buyers. However, by failing to obtain the Buyers' signatures on the Addendum, the Sellers and their agent have allowed there to be some uncertainty. That is not what should have happened.

The Guidelines for completing Form 2-T (See Standard Form 2G) include instructions for adding an addendum to the contract. Paragraph 15 of Form 2G states that agents should check the box for any of the standard addenda that may be attached to the contract. The next sentence reads: "Any addenda referred to here should be properly identified, signed by the parties, and attached to each original of the contract."

Here, the lack of the Buyers' signatures on the addendum is only one factor a court would likely consider in deciding the parties' intentions. A court would also consider the fact that, by initialing the Sellers' change to paragraph 15, the Buyers signified their agreement to include the Short Sale Addendum as part of the Contract. Finally, a court would likely find it compelling that the Addendum was attached to the Contract when Sellers delivered the Contract to the Buyers. In our view, these facts provide sufficient evidence that the Buyers intended to be bound by the terms of the Short Sale Addendum. As a result, the likely result is that Sellers would be permitted to terminate the Contract pursuant to those terms.

To avoid any uncertainty, and the possibility of a later dispute, we strongly encourage agents to make sure that all addenda attached to a contract are signed by all parties.

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

 

 

Does a refrigerator stay if it’s not in the Contract?

Release Date: 04/04/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: If a refrigerator is listed as personal property in MLS, does it automatically become a part of any contract for the property without having to list it in the Offer to Purchase and Contract?  

ANSWER:  We’ve written about this subject before but it keeps coming up like the proverbial bad penny.  The answer to your question is an emphatic NO!

The MLS is a mechanism for MLS participants to make and accept offers of cooperation and compensation among themselves. Buyers and sellers are not MLS participants, and nothing in an MLS listing magically becomes a part of any contract between a buyer and seller.  Paragraph 20 of the Contract specifically provides that “[t]his Contract contains the entire agreement of the parties and there are no representations, inducements or other provisions other than those expressed herein.”

Any personal property included in the sale must be spelled out in the Contract.  Paragraph 3 of the Guidelines for completing the Contract (form 2G) states: “List all items of personal property that are to be included in the sale… It is advisable to list any item included in the sale about which some dispute may arise." Examples listed include a refrigerator. 

Who’s to blame if the refrigerator isn’t listed in the Contract and the seller takes it?  In our view, it is primarily the responsibility of the buyer agent to make sure that any personal property the buyer wants to keep is listed in paragraph 3 of the Contract.  However, we also think that the listing agent may bear some responsibility too.  If personal property is to be identified in the MLS listing, the listing agent should be careful to avoid wording that might lead others to believe that the items listed will necessarily be included, and should instead indicate that those items are "negotiable” or something to that effect.  Also, a listing agent may be setting himself or herself up for a potential claim that he or she has violated Article 12 of the Code of Ethics because they haven't presented a "true picture" in their representations in MLS.  We are not saying that this would necessarily be a violation of the Code, but we are suggesting that the listing agent should avoid leaving himself or herself open to such an allegation.

Listing agents and buyer agents should take care to ensure to the extent possible that the parties are on the same page regarding personal property that will be or won’t be a part of the transaction.  Otherwise, they may well find themselves chipping in to buy a new refrigerator!

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

 

 

Is a back-up contract a material fact?

Release Date: 03/28/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: My client is under contract to buy a home in a popular neighborhood. During the due diligence period, we submitted a list of proposed repairs to the seller, and the seller refused all of them. My client told me to inform the seller that if he would not perform the repairs, then my client would terminate the contract. The listing agent responded by telling me that the seller had already accepted a back-up contract, and that if my buyer would like to terminate, the seller would just proceed with the back-up contract.

I confronted the listing agent because he never informed me of the back-up contract. The listing agent replied that the back-up contract is not a material fact and that he had no duty to disclose it. Is the listing agent correct?

ANSWER: In our opinion, the listing agent is correct in this situation. Generally speaking, a material fact is any important or relevant fact to the issue at hand. The North Carolina Real Estate Commission has stated that in real estate transactions, material facts fall into several categories: (1) significant facts about the property itself; (2) facts relating directly to the property, such as a pending zoning change; (3) facts concerning a contracting party’s ability to complete the transaction; and (4) facts that are known to be of special importance to a party. If a fact falls into one of these categories, then the fact is a material fact that must be disclosed to any party an agent deals with, even if the party is not represented by the agent.

NC REALTORS®’ Back-Up Contract Addendum (Form 2A1-T) states: “It is a condition of this Back-up Contract that the Primary Contract is terminated as described below before Buyer and Seller shall be obligated to perform under this Back-up Contract.” Accordingly, a back-up contract can only become effective if the primary contract fails to close. Since the back-up contract does not affect the property itself or limit a seller’s ability to complete the transaction, it is not a material fact that would need to be disclosed to a buyer.

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

 

 

Can my buyer-client buy a property listed by one of my provisional brokers?

Release Date: 03/21/2017

This email address is being protected from spambots. You need JavaScript enabled to view it., Martin & Gifford, PLLC

QUESTION: I am the broker-in-charge of a small firm. There are four other brokers in my firm, one of whom is a provisional broker. The provisional broker has a home listed for sale and the seller agreed to dual agency in the listing agreement. I have some buyer clients that are interested in looking at the home. The provisional broker told me that she learned in her post-licensing classes that a broker-in-charge cannot represent a buyer interested in purchasing a home listed by a provisional broker under his or her supervision. Is she correct?

ANSWER:  She is not. We suspect that your provisional broker misunderstood her instructor's discussion of the Real Estate Commission's Agency Agreements and Disclosure Rule (58A.0104). Subsection (j) of that rule deals with designated agency. It authorizes a real estate firm, with the prior express approval of both parties, to designate one or more agents to represent only the interests of the buyer, and one or more agents to represent only the interests of the seller.

There is a caveat to the designated agency rule that is described in the last sentence of subsection (j). It states: "A broker-in-charge shall not act as a designated broker for a party in a real estate sales transaction when a provisional broker under his or her supervision will act as a designated broker for another party with a competing interest." The reason for this exception is that, since the broker-in-charge has a duty to supervise the provisional broker, the BIC must have access to all information in the provisional broker's possession, including any confidential information. The Real Estate Commission has written: "the broker-in-charge's mandatory supervisory obligations of provisional brokers in his or her office defeat the necessary separation required between designated agents."   

What is important to recognize is that the exception here applies only in the context of designated agency. If both parties agree to "regular" dual agency, i.e. they have not exercised the designated agency option,  those parties can be represented by a single agent. Therefore, it is also permissible for one party to be represented by a provisional broker and the other by the provisional broker's broker-in-charge.

 

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright  2017. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.