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Weekly Q&As

Current laws and rules on the use of drones

Release Date: 10/20/2015

QUESTION:  What are the latest rules, laws and suggestions for the use of drones in photographing and marketing real estate?

ANSWER:  The National Association of REALTORS® has published an excellent list of frequently asked questions concerning the use of Unmanned Aircraft Systems (or drones) by real estate professionals. That FAQ can be accessed by clicking on the following link: http://www.realtor.org/law-and-ethics/drones-frequently-asked-questions

The general rule is that the use of drones for real estate marketing is prohibited by the Federal Aviation Administration ("FAA"). However, there is an important exception to this rule: the FAA has the ability to issue what are known as "Section 333 waivers". These waivers grant authorization for certain unmanned aircraft to perform commercial operations on a case-by-case basis. Brokers interested in using a drone in connection with their real estate marketing activities can apply for a Section 333 waiver; the application procedure is described on the FAA's website.

As an alternative, brokers may hire an individual or company to operate a drone on their behalf. However, before doing so, brokers should verify that the individual or company has obtained the required Section 333 waiver. NAR's website has a list of the individuals and companies specific to the real estate industry that have been granted Section 333 waivers.

New federal rules governing drone use should be expected. In fact, Congress gave the FAA a September 30, 2015 deadline to develop new rules to govern the commercial use of drones in the national air space. However, the rule-making process has been delayed; NAR now believes that the new rules will not be issued before August 2016. Until the FAA issues those rules, the Section 333 waiver will be required.

The commercial use of drones is also governed by state law. In August, 2015, Governor McCrory signed a new law which requires anyone operating a drone in North Carolina for commercial purposes to first obtain a permit issued by the Division of Aviation of the State Department of Transportation. Since the state's permitting process has not yet been implemented, the statute provides that a user with FAA authorization will not be deemed in violation of the state statute as long as that user obtains the required permit within 60 days after the permitting process is implemented.

North Carolina's statutes contain some other prohibitions to keep in mind. One example: drones may not be launched or recovered from private property without the property owner's permission. Also, with limited exceptions, it is illegal to photograph a person while using a drone for commercial purposes without that person’s consent.

 

NCAR 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.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.

© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

 

 

I’m representing a brother and sister who have inherited a condo from a parent who just passed away.  Aren’t the heirs of estate property exempt from the requirement to provide either the Residential Property and Owners’ Association Disclosure Statement or the Mineral and Oil and Gas Rights Mandatory Disclosure Statement to prospective buyers?

Can a seller refuse to accept a full-price offer?

Release Date: 10/13/2015

QUESTION: I just had a multiple offer situation with a buyer I am representing and she didn’t get the property.  We were the first one to put in an offer.  The list price was $250,000.  Our offer was $252,000 with no concessions and $4000 in earnest money.  The listing agent called back and said that he had four offers, and was asking everyone to submit their best and final offers.  My buyer increased her offer to $259,000 with the same terms as the first offer. The seller accepted one of the other buyers’ offers. The buyer's father told me that he knew a lot about North Carolina real estate law, and according to him, the seller was obligated to take his daughter’s offer because it was the first offer made and was for more than the asking price with no concessions.  Is he right? 

ANSWER: No, he is not.  A seller is not bound to consider offers in the order in which they are submitted, whether they are for full price or more than full price.  For that matter, a seller is not obligated to either consider or accept a full-price offer at all. When a seller advertises a property for sale on certain terms, it doesn’t constitute an offer in a legal sense that may be accepted by a buyer.  Rather, it should be seen as an invitation to buyers to submit offers.

Although a seller is not obligated to accept a full-price offer, the seller may be obligated to pay the listing firm its fee in such a case according to the terms of the listing agreement.

 

NCAR 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.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.

© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

 

 

I’m representing a brother and sister who have inherited a condo from a parent who just passed away.  Aren’t the heirs of estate property exempt from the requirement to provide either the Residential Property and Owners’ Association Disclosure Statement or the Mineral and Oil and Gas Rights Mandatory Disclosure Statement to prospective buyers?

Buyer's responsibility for loan-related costs

Release Date: 10/06/2015

QUESTION:  I represent a seller who owns some property at the end of a private road. The road runs down the edge of a neighbor's property. That neighbor has granted an access easement to my client and to two other neighbors. For many years, the four property owners have had an informal agreement to share any road maintenance expenses equally. The property went under contract several weeks ago. The buyer's lender has conditioned approval of a loan on the creation,  execution and recording of a road maintenance agreement. The buyer has asked my client to provide such an agreement. If a lawyer is hired to prepare and record that agreement, who is responsible for the legal fees and related costs?

ANSWER:  Paragraph 8(g) of the standard Offer to Purchase and Contract (Standard Form 2-T) obligates a seller to provide "legal access to a public right of way". However, that paragraph is silent on the issue of roadway maintenance.

Where several properties are served by a private roadway, the owners of those properties do not have a legal obligation to enter into and record a Roadway Maintenance Agreement ("RMA"). Nevertheless, when a lender is asked to finance the purchase of a property served by a private roadway, that lender may insist on a recorded RMA as a condition to approving a loan. If no PMA exists, the cost of preparing one is analogous to other lender-required costs that are referenced in paragraph 6(c) of Form 2-T. That paragraph clearly states that it is the buyer who is responsible for "all costs with respect to any loan obtained by Buyer, appraisal, title search, title insurance, recording the deed and for preparing and recording of all instruments required to secure the balance of the Purchase Price unpaid at Settlement."

Here, since it is the buyer's lender that is requiring the preparation and recording of the RMA, it is the buyer that is responsible for the costs related to that process.     

 

NCAR 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.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.

© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

 

 

I’m representing a brother and sister who have inherited a condo from a parent who just passed away.  Aren’t the heirs of estate property exempt from the requirement to provide either the Residential Property and Owners’ Association Disclosure Statement or the Mineral and Oil and Gas Rights Mandatory Disclosure Statement to prospective buyers?

Can commission rates be used in advertising?

Release Date: 9/29/2015

QUESTION: A broker in my area is running an ad that say he takes listings for a specified flat fee.  The ad also prominently features a big No symbol—you know, the red circle with a diagonal line through it—and inside the circle there’s a number with a percentage symbol after it.  The clear message is that other brokers charge commissions at that percentage rate but that he does not.  Doesn’t this ad violate the antitrust laws since it mentions specific commission rates?  Should I report this to my local association?

ANSWER: Although as a general rule, it’s a good idea to avoid talking about or advertising commission rates charged by your competitors, in our view there is no antitrust violation in the ad, and we do not think you should report it to your local association.  The essence of an antitrust violation is an agreement among competitors that imposes an unreasonable restraint on trade.  You can read the ad to infer that other brokers generally charge the commission rate specified inside the No symbol, but even if all others do charge commissions at that approximate rate, it would be a violation of the law only if they've actually agreed to charge that amount.  The ad is pro-competitive because it is explicit price competition, which is favored by antitrust law enforcers.  In fact, antitrust enforcers would almost certainly object if your association made any attempt to stifle or suppress the ad.

Any question a broker may have about whether an ad or other marketing material complies with the antitrust laws should be directed to the firm’s broker-in-charge, who in turn should seek legal advice from the firm’s own lawyer is he or she is unsure of the answer.      

 

NCAR 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.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.

© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

 

 

I’m representing a brother and sister who have inherited a condo from a parent who just passed away.  Aren’t the heirs of estate property exempt from the requirement to provide either the Residential Property and Owners’ Association Disclosure Statement or the Mineral and Oil and Gas Rights Mandatory Disclosure Statement to prospective buyers?

Does a buyer's decision to obtain a loan change the seller's contractual obligations?

Release Date: 9/22/2015

QUESTION:  I represent a wealthy buyer who is under contract to purchase a home. In paragraph 5(a) of the Offer to Purchase and Contract (Standard Form 2-T), the buyer checked the box representing that he did not have to obtain a new loan in order to purchase the property. In paragraph 8(i), the parties agreed that seller would pay $1,500.00 toward buyer's expenses at Settlement. Prior to closing, my buyer client decided to finance a portion of the purchase price. When the seller found that out, he notified us that he would not honor his agreement to pay $1,500.00 of the buyer's expenses. Does the buyer's change of heart regarding financing relieve seller from any of his contractual obligations?

ANSWER:  No. The buyer's decision to obtain financing despite his representation that a loan was not required is not a breach of contract and does not relieve the seller from his contractual obligations.

As stated in the Guidelines for Completing the Offer to Purchase and Contract: "Buyer Representations are statements of current facts that Seller may reasonably rely upon in deciding whether to enter into the Contract." A note at the end of paragraph 5(a) advises sellers that if a buyer represents that he or she does not have to obtain a new loan in order to purchase the property, they should, prior to signing the offer, obtain documentation from buyer which demonstrates that buyer will be able to close on the purchase without the necessity of obtaining a loan. That note also cautions buyer's agents that if they know, or reasonably should know, that a buyer must obtain a loan in order to purchase the property, that is a material fact that the buyer's agent has a duty to disclose.

In the facts you have described, there is no indication that, at the time the offer was submitted, the buyer in fact needed a new loan in order to purchase the property. If the buyer had sufficient liquid assets to purchase the property, the fact that he subsequently decided to obtain financing was perfectly permissible and did not violate any provision of the contract.

Sellers should recognize that a buyer's representation that financing is not required is not the same thing as a warranty by the buyer that he or she will pay the purchase price in cash. Since a buyer's decision to obtain financing is not a breach of contract, sellers will remain bound to all of their contractual obligations, including any obligation to pay a portion of the buyer's expenses at Settlement.        

 

NCAR 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.  If you or a client requires legal advice, the services of a private attorney should be sought.  Always consult your broker-in-charge when faced with a question relating to the practice of real estate brokerage.

© Copyright  2015. North Carolina Association of REALTORS®, Inc. All rights reserved. No reproduction of any part may be made without the prior written consent of the copyright holder. Any unauthorized reproduction, use, disclosure or distribution is strictly prohibited.

 

 

I’m representing a brother and sister who have inherited a condo from a parent who just passed away.  Aren’t the heirs of estate property exempt from the requirement to provide either the Residential Property and Owners’ Association Disclosure Statement or the Mineral and Oil and Gas Rights Mandatory Disclosure Statement to prospective buyers?