arrow

Legal Quiz (November 2022)

BY JOHN WAIT, GENERAL COUNSEL

These questions are based on weekly Q&As published in the REALTOR® Rundown between April 2022 and August 2022.

1. If the buyer is seeking an FHA or VA loan, are Additional Earnest Money Deposits refundable if the property doesn’t appraise and the buyer chooses to terminate?  Yes or no?

2. Can the seller refuse to permit access to their property if the buyer has failed to timely deliver the Due Diligence Fee? Yes or no?

3. Can the buyer withdraw an offer if the seller has signed the contract, but the listing agent has not yet communicated the seller’s signing to the buyer? Yes or no?

4. Do I have to report that my listing is under contract to the MLS even if the Due Diligence Fee has not been paid? Yes or no?

5. Can a bedroom be a “bedroom” if there’s no closet? Yes or no?

6. Can I recommend an inspector’s walk and talk service? Yes or no?

7. Is the seller’s home gym a fixture that should convey? Yes or no?

8. May the seller remove the contents of a fuel tank after going under contract? Yes or no?

9. Are listing agents required to assist their sellers in completing the Residential Property and Owners’ Association Disclosure Statement (the “RPOADS”)? Yes or  no?

10. Does the seller have to deliver a key to the buyer at Closing if the seller is remaining in possession under Form 2A8-T? Yes or no?

 

HOW DID YOU DO? Click below to discover the answers.

Answers

1. Yes. The definition of “Earnest Money Deposit” in Form 2-T includes any “Additional Earnest Money Deposits.” Therefore, if the property doesn’t appraise, and the buyer chooses to terminate, then any Additional Earnest Money should be refunded to the buyer, even if the termination occurs outside  the Due Diligence Period. Weekly Q&A dated 5-12-22.

2. No. The Offer to Purchase and Contract (Form 2-T) is effective on the “date that: (1) the last one of Buyer and Seller has signed or initialed this offer or the final counteroffer, if any, and (2) such signing or initialing is communicated to the party making the offer or counteroffer, as the case may be.” Once the contract is effective, the buyer has the right to conduct inspections until closing, even if monies due under the contract have not yet been delivered. If the  buyer fails to timely deliver the Due Diligence Fee, the seller should make a written demand, which can be made with Form 355. If the Due Diligence Fee  is not then paid within one banking day, the seller may terminate. Weekly Q&A dated 6-16-22.

3. Yes. As stated in answer #2, Form 2-T does not become effective until the last party’s signing is communicated to the other party. In this case, the  seller’s signing was not communicated to the buyer prior to the withdrawal. A buyer has the right to withdraw their offer at any time prior to acceptance.  Weekly Q&A dated 4-21-22.

4. Yes. As stated in answer #2, the Effective Date in Form 2-T is not dependent on whether the buyer has timely paid any monies due. Once the contract  is effective, the change should timely be reported to the MLS. Weekly Q&A 4-28-22.

5. Yes. Agents must be honest, truthful, and accurate in their advertising and use common sense and exercise reasonable judgment when determining  whether a room is, for listing purposes, a bedroom. This includes examining whether the number of bedrooms advertised matches the septic permit (if  applicable). The absence of a closet is not a determining factor. Weekly Q&A dated 5-26-22.

6. It is not advisable. The North Carolina Attorney General has issued an advisory letter concerning “walk and talk” services. The letter states that  depending on how many systems the inspector is looking at, a walk and talk service may violate an inspector’s statutory duty to provide a written report.  The North Carolina Real Estate Commission expects that brokers will not recommend services they either know or should know are being offered in  violation of state law. The Commission will evaluate each case individually, however, the advisory letter is a significant red flag that walk and talk services may not be legal. Weekly Q&A dated 7-14-22.

7. Yes. If the home gym is attached to the property, then it should convey as a fixture. “Fixture” is not defined in Form 2-T and therefore state law controls. North Carolina uses the Total Circumstances Test to determine whether an attachment is a fixture and therefore part of the land. The test examines four factors: (1) the intention of the person installing the attachment; (2) the permanent or temporary nature of the attachment; (3) the way the property was adapted to accommodate the attachment; and (4) the relationship of the person installing the attachment. Weekly Q&A dated 8-25-22.

8. No. Under revised Form 2-T, the seller can use any fuel in a tank through Settlement, but the seller cannot remove the fuel or resell it. If there is a  significant amount of fuel in the tank at the time of an offer, the seller should take that into account in determining an acceptable sales price since all fuel  remaining in the tank at Settlement will be included in the sale as part of the purchase price (whether the tank is owned or leased). In addition, the seller  should be advised to consult with their fuel provider to discuss the manner in which the tank will be refilled between the dates of contract and closing,  including the possible discontinuation of any periodic refilling. Weekly Q&A dated 6-30-22.

9. Yes. A real estate broker acting as an agent in a residential real estate transaction has the duty to inform each of their clients of their obligation under the Residential Property Disclosure Act. Section 47E-8 of the Act states that if the broker performs this duty, the broker will not be responsible for the  client’s refusal to complete the disclosures required by the Act. Weekly Q&A dated 5-5-22.

10. Yes. The Seller Possession after Closing Agreement (Form 2A8-T) was amended to state that the buyer has the right to access the property in the  case of an emergency. The seller must provide an entry key to the property at closing for this purpose. The seller may retain other means of access to the property until the end of their right of possession, at which point they must turn over all access to the buyer. Weekly Q&A dated 8-4-22.

 

STUDY HARD If you’re not doing so already, be sure to read the Q&As that appear in the REALTOR® Rundown every Monday. It’ll help you on the next  quiz!



Be Epic. Be an NC REALTOR®.