Legal Hotline Attorney, Vern Jarboe, answers legal questions. Access live legal help and get answers to your questions. Click here to subscribe today!
License Law – Earnest Money Received
Q: You asked whether the office needs a copy of the actual earnest money itself.
A: No, you need a receipt from the escrow agent, but you do not need to keep a copy of the check or earnest money. A good reason not to have and retain an earnest money check and certainly to never email one from or to anyone else is the rapid increase in electronic fraud of all kinds. The check ends up in the wrong hands that the bad actor sees the check they now have the name of the account holder, bank routing number and account number. The receipt is all you need to retain.
License Law – MLS Change Forms
Q: You asked whether or not you need something signed by your client with respect to an MLS change form with respect to prices changes, withdraw or changing some field in the system.
A: The Kansas Real Estate Commission has actually approved email as a legitimate way for the seller to extend or otherwise modify a listing. From that basis, the MLS change should be acceptable by email or text. Email is a little better than text in that it is easier to keep track of and retain a copy of.
Contract – Property Currently in Probate
Q: The person who is going to inherit a property out of probate wants to list it before the probate is completed.
A: From a legal standpoint that person probably holds a sufficient interest in the property to sign a listing. However, any closing would definitely have to be contingent upon a conclusion of the probate process. Most buyers would not be very interested in taking a contract from someone who does not hold title. There is nothing illegal about you taking the listing.
Contract – Description of Loan in Contract
Q: You asked whether or not a description of the type of loan sought by the purchaser needs to be included in the contract.
A: There is nothing either in contract law or license law which would require this to exist. However, there are benefits to both buyer and seller by including a loan description. From the buyer’s perspective, if they need a loan, then they probably also have a maximum payment they can absorb along with loan costs that they may experience differently in one type of loan compared to another. Obviously, for that buyer, the type of loan matters and they don’t want to have to be in default under a contract for not getting a loan that will not work. From the seller’s perspective, it is important to know the type of loan sought by the buyer for a variety of reasons. The first question from a seller side might be whether or not the type of loan sought by the buyer is reasonable in the current economic times. A second question might be the type of expenses the seller may be expected to pay for that particular type of loan such as in a VA loan.
Contract – Non-exclusive License Description in Listing Agreement
Q: You were signing a listing with a new seller. The seller asked questions about language in your listing agreement dealing with a non-exclusive license. The seller was also concerned because the language specifically indicated the non-exclusive license extended beyond the term of the listing.
A: By looking at other contract language in the immediate vicinity of this discussion, we were able to ascertain that the non-exclusive license language was designed to deal with copyright issues. Specifically, a seller may have provided a broker with either a written description or photographs of the home that are used in marketing. The seller would then hold the copyright to those items and needs to assign the right to use those items to the listing broker for advertising purposes. Because the advertising elements once posted to internet remain active in the internet essentially forever, this license needs to be not only non-exclusive, but also not expire at the time the listing expired.
Contract – Multiple Offers and Seller Takes Lower Offer
Q: You have a situation where your company had a listing. The listing agent developed an offer from buyer No. 1 and a separate offer was developed from a buyer No. 2 by someone else. The seller elected to take the buyer No. 1 offer which was lower and generated by the listing agent. Buyer No. 2 seems to believe there was something unethical or illegal in this decision.
A: Based upon our discussion, it appears likely the seller’s decision was fully informed understanding the risks and rewards of each offer. On that basis, it seems unlikely the buyer 2 has a viable claim. In your particular facts, buyer 1 has agreed to cancel their contract and allow, in effect, an auction between buyer 1 and buyer 2. The seller is also okay with this. All parties need independent legal advice.
License Law – Duty of Confidentiality as a Transaction Broker
Q: You are working as a transaction broker in a transaction. The deal has become the subject of threatened litigation and the seller wants the transaction broker working with the buyer to provide the buyer’s address for purposes of litigation over earnest money.
A: I don’t think there is any duty to provide this information and it likely falls under the definition of confidential information as described in the brokerage relationship law.