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Weekly Q&As

Can a seller deny the buyer’s home inspector access to the property?

Release Date: 10/19/2017

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

QUESTION: Does a seller have the right to deny entry to a buyer’s chosen home inspector because of the home inspector’s criminal history? If so, does this right apply to other service providers used by the buyer during due diligence?

ANSWER: The answer to this question depends on the particular facts of a given case. Paragraph 4(b) of the Offer to Purchase and Contract (Form 2-T) states that “Buyer or Buyer’s agents or representatives, at Buyer’s expense, shall be entitled to conduct all desired tests, surveys, appraisals, investigations, examinations and inspections of the Property as Buyer deems appropriate, including but NOT limited to the following . . .” Paragraph 8(c) of Form 2-T also states that the seller “shall provide reasonable access” to the property so that the buyer and buyer’s agents can have “an opportunity to (i) conduct Due Diligence, (ii) verify the satisfactory completion of negotiated repairs/improvements, and (iii) conduct a final walk-through inspection of the Property.” The standard form therefore gives the buyer broad power to conduct due diligence as they see fit, while providing the seller only a limited ability to prevent access in circumstances where it is unreasonable.

Home inspectors are regulated and licensed by the North Carolina Home Inspector Licensure Board (“NCHILB”), and therefore it is unlikely that the criminal past of a currently licensed home inspector would be serious enough to deny access to the buyer’s selected inspector. If a seller is concerned about a particular inspector’s criminal history, the seller can contact the NCHILB and address their concerns there.

As for other service providers, the seller would need to show that it would be unreasonable to allow access to the buyer’s selected provider. There are no facts in this question indicating what crimes are at issue, but given the buyer’s broad power to conduct due diligence, we believe that the criminal history would have to be substantial and serious to support a seller’s denial of access. We would strongly suggest that any broker whose seller-client seeks to prevent a buyer’s service provider from accessing the property during due diligence advise their client to consult with counsel first.

 

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 I use the term REALTORS® in the name of my firm?

Release Date: 10/12/2017

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

QUESTION: I am forming a new firm and would like to use the term REALTORS® as part of my firm's name. I know there are some restrictions on what I can do. What do I need to know?

ANSWER:  First of all, you are NOT permitted to use the term REALTORS® as part of your firm's name.

The National Association of REALTORS® ("NAR") has published a Membership Marks Manual that provides excellent guidance on the use of NAR's registered trademarks, including the term REALTORS®. The Manual can be accessed here.

The Membership Marks Manual makes it clear that individuals who hold REALTOR® membership in a Member Board may use the terms REALTOR® or REALTORS® in connection with the name of their real estate business as an indicator of their membership in the REALTOR® organization. To do so, however, the term must be separated from the business name by appropriate symbols or punctuation. The term REALTORS® may not actually be included as a part of the business name itself.

The Manual gives the following example of an appropriate use of the term REALTORS®:

            S.S. Smith Realty, Inc., REALTORS®.

An example of a similar but improper use is the following:

            S.S. Smith REALTORS®, Inc.

The Manual includes the following suggestion: "When selecting a firm name, members are strongly encouraged to utilize the words “Realty,” “Real Estate," or similar terms that indicate the real estate nature of their business. When these words are used in the firm name, the terms REALTOR® and REALTORS® are more clearly and easily perceived as indicators of membership and professional commitment."

 

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 I show a buyer client my firm’s listings without written authority?

Release Date: 10/05/2017

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

QUESTION: There was a discussion at my firm’s sales meeting last week about the practice of oral buyer agency. We try to avoid it but occasionally find it necessary with buyers who want representation but are reluctant to sign a buyer agency agreement right away.  One of our agents said he thought he’d learned at the last Annual Update program that you have to have something in writing before you can show a buyer any of your firm’s listings.  Is that correct? 

ANSWER: Technically, no, but it’s a very good idea to confirm the existence and terms of an oral buyer agency agreement in writing, including the buyer’s permission for you to act as a dual agent.

Real Estate Commission Rule 58A.0104(a) provides that a broker may enter into an oral buyer agency agreement under certain circumstances.  Among other things, the oral agreement must be “express.”  According to Black’s Law Dictionary, “express” means “[d]eclared in terms; set forth in words…Made known distinctly and explicitly, and not left to inference.”  As the Commission’s 2016-2017 Update materials point out, if you don’t discuss dual agency with a buyer with whom you are working on an oral basis and obtain his or her oral permission to act as a dual agent, then you can’t show him or her any of your firm’s listings since he or she hasn’t expressly given you permission to do so. 

The Update materials confirm that you aren’t required by the Rule to get a buyer agency agreement reduced to writing until an offer is made, and that would include permission to act as a dual agent.  However, the materials also state the following: “[i]t is wise to confirm the terms of this oral understanding in a written letter or email from the broker to the buyer/tenant.”  We couldn’t agree more.  Such a practice may help avoid misunderstandings with your buyer client, and from a risk management perspective, being able to produce a written document could really come in handy if a disaffected former buyer client alleges that they’ve suffered harm because, for example, they didn’t understand that you were acting as a dual agent in a transaction.  Also, a written document could potentially help prove the existence of a buyer agency relationship in a commission dispute with a listing agent who made an MLS offer of compensation only to buyer agents.

A sample letter confirming the establishment and terms of an oral buyer agency relationship is available on the Legal Overview page of the NC REALTORS® website under Standard Forms/Non-Standard Forms/Model Letter for Confirmation of Oral Buyer Agency. Members may modify it to create their own version of such a letter or email.

 

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 NC REALTORS® forms be used in other states?

Release Date: 09/28/2017

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

QUESTION: I am a REALTOR® who lives in North Carolina near the Tennessee border. I am licensed in both states, but I am not part of a local association of REALTORS® in Tennessee. From time to time, I use NC REALTORS® forms for property located in Tennessee because I am more familiar with them. I’m not an attorney, but it seems like our forms are good enough. Is this permissible?

ANSWER: There is not a specific law or rule that explicitly forbids this practice, however, we believe that it is nevertheless impermissible for several reasons. First, the forms are developed by several committees in which all members are either REALTORS® or attorneys licensed in North Carolina. Each form, and each revision to a form, is carefully debated and scrutinized by these committees to make sure the forms (1) comply with North Carolina law and (2) help our constituents and their clients achieve a smooth transaction.

Because the forms are created with North Carolina law in mind, there can be no assurance that NC REALTORS® forms comply with the laws of any other state. You might be subject to discipline by the Tennessee Real Estate Commission for endangering the interest of the public. And be aware that just because a transaction may be in Tennessee, you are not immune to possible discipline by the North Carolina Real Estate Commission.

Second, if you were to use our forms for a Tennessee transaction, we believe you would be representing – at least implicitly – that NC REALTORS® forms are sufficiently compliant with Tennessee law for use in that state. We believe this could be viewed as providing a legal opinion to your client, which means you would be practicing law without a license to do so.

Finally, there is no reason to use our forms in Tennessee. Pursuant the Universal Access to Services component of the National Board of REALTORS® Board of Choice Policy, you can use forms created by Tennessee REALTORS®. Simply give them a call and they should be able to assist you.

 

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.

 

 

Who should sign the Additional Signatures Addendum?

Release Date: 09/21/2017

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

QUESTION: I have a listing on property owned by three brothers and their wives. We recently received an offer on that property and my clients want to accept it. Form 2-T has two signature lines for sellers to sign and two of the brothers have signed on those lines. In addition, I checked the box in paragraph 15 of Form 2-T to indicate that the Additional Signatures Addendum (Form 3-T) is a part of the contract. The third brother and all three of the wives have signed Form 3-T. But do the two brothers who signed the contract also have to sign Form 3-T? And do the buyers need to sign Form 3-T as well?

ANSWER:  While there is certainly no harm in having all parties sign the Additional Signatures Addendum, that practice is not required. The “Signatures” paragraph of the Guidelines for Completing Additional Signatures Addendum (Standard Form 3-G) states as follows: “The parties identified on the form to which the Addendum is attached do not need to be identified on the Addendum, and likewise, the parties identified on the Addendum do not also need to be identified on the form to which the Addendum is attached.”

If there are multiple addenda identified in paragraph 15 as being part of the contract, only one Additional Signatures Addendum must be signed. In other words, it is not necessary to attach a separate Additional Signatures Addendum to each of the other addenda to the contract.    

 

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.