FENCES, WALLS & VIEWS — 2017

Posted on August 11, 2017     Leave a Comment

FENCES, WALLS AND VIEWS

View Rights Don’t Exist in California.

You just purchased a hillside home with a view. Your neighbor constructs a new 2 story home and plants a row of trees which destroys your view. It may surprise you to learn that there is probably nothing you can do about it.

You do not have a right to a view in California. Courts have rejected almost every effort by neighbors to classify an interference with a view as a “nuisance.” However, there are some exceptions and they are as follows.

Option #1: In some communities, CC&R’s contain provisions protecting a view. CC&R’s in many hillside communities: (1) prevent a homeowner from engaging in construction, or (2) landscaping that blocks your view.

Option #2: In other communities, the Grant Deeds contain restrictions that prevent the homeowners from using their property in any way that interferes with a neighbor’s view. For example, a Grant Deed may prevent a home owner from building two-stories or from planting certain trees on the property.

Option #3: Although less common, there are some cities that have implemented rules that either directly or indirectly protect view rights. For example, some zoning rules prohibit owners from building 2 story homes in hillside communities. Other municipal rules have strict guidelines for planting and maintaining trees, which indirectly protect your view.

Absent protective language in either the CC&R’s, Grant Deed or municipal rules, you have no right to a view. Consider the court’s decision in Wolford v. Thomas (1987) 190 Cal.App.3d 347.

In that case, Wolford owned a view home on Russian Hill in San Francisco with a fantastic view of the San Francisco bay. Thomas purchased the lot next door to Wolford and built a three-story penthouse condominium that destroyed Wolford’s bay view. Wolford sued Thomas for damages. The court dismissed Wolford’s complaint and stated in its decision “California law does not protect views.”

This means that if you purchase a property with a view, you need to understand that you probably have no right to protect that view from future development.

ADVERTISING ANOTHER AGENT’S LISTINGS

Posted on July 6, 2017     Leave a Comment

ADVERTISING ANOTHER AGENT’S LISTINGS

Can one salesperson advertise another salesperson’s listings? The general answer is “NO” subject to the following exceptions.

Permission.

A salesperson who is also a “Realtor®” is subject to NAR’s Code of Ethics. A salesperson who is also a member of a Multiple Listing Service is subject to the MLS Rules.

Standard of Practice rule 12-4 requires “authority” to advertise a listing. Standard of Practice rule 12-4 states:

“Realtors® shall not offer the sale/lease or advertise property without authority.”

MLS rules are similarly drafted. MLS rule 2.7 prohibits any salesperson from advertising another salesperson’s listing without “consent.” Rule 2.7 states:

“A listing shall not be advertised by any Participant, other than the listing broker, without the prior consent of the listing broker.”

Based upon these rules, a salesperson may not advertise another salesperson’s listing without prior consent of the listing broker.

Exceptions.

While listing brokers are sometimes irritated to see their listings advertised by another salesperson, it is a victimless crime. The seller never complains and arguably benefits from having their listing advertised by other people.

The more exposure that the listing receives, the better. But this doesn’t change the fact that advertising someone else’s listing violates Standard of Practice 12-4 and MLS rule 2.7. There are some creative ways to advertise another’s listing without violating the law.

First, simply request permission to advertise from the listing broker. Many listing brokers will grant consent as more exposure benefits their seller. Once you have consent, in writing (i.e. e-mail), then you comply with MLS rule 2.7.

Second, an agent is permitted to show other people’s listings to known “potential buyers” such as to friends on Facebook. Friends on Facebook are a limited group who are likely to be “potential buyers.” However, a general post on Facebook would probably violate the law.

Third, there is no violation for “commenting” on a listing if you include in your comment a link back to the listing agent’s cite containing all of the listing agent’s contact information. This way it is clear that you are not advertising the listing as your own. It is important that all of your on-line activities comply with NAR’s “true picture” test, which states:

“Realtors® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations.”

Although a general post on Facebook or other advertising normally would violate the law, a creative option is for the agent to preface the advertisement with one of the following comments and include a link back to the listing agent:

“Check out the incredible price of this property”
“Check out the incredible remodeled kitchen on this property”
“Check out the most expensive property in town.”

When prefaced with one of these comments, coupled with a link back to the listing agent’s cite, is likely permissible.

What can a Listing Agent do about unauthorized advertising.

If you are a listing agent, and find an unauthorized advertisement of one of your listings on Facebook, Craigslist of elsewhere, you can take the following steps:
1. Send a Cease and Desist letter by certified mail to the offending broker and/or
2. File a complaint with MLS/ local board of Realtors®.

Summary.

In summary, you generally cannot advertise another broker’s listing without violating the law. However, you can ask the listing broker for permission, you can advertise to your own friends on Facebook, and you can comment on another broker’s listing provided that you include a link back to the listing broker.

COMMISSIONS: OUT-OF-STATE TRANSACTIONS

Posted on May 15, 2017     Leave a Comment

COMMISSIONS: OUT-OF-STATE TRANSACTIONS

An agent can earn a commission on out-of-state transactions, but must follow some simple rules set forth below.

1. Representing a buyer in purchasing an out-of-state property.
In this example, the California agent represents a buyer in purchasing an out-of-state property. This means a California agent is representing a California buyer purchasing an out-of-state property.

First, the agent must use a written California Buyer-Broker Agreement that specifies the amount of commission due. That Buyer-Broker Agreement must contain a provision requiring the agreement to be enforced under California law. The CAR Buyer-Broker Agreement-Exclusive satisfies these requirements.

Second, the agent must conduct all “licensed activity” from California. This means that all negotiations must occur in California. The agent may not personally show the property or negotiate terms of sale while in another state. In other words, the agent must stay in California.

Third, the agent must enter into a Cooperating Broker Agreement with the listing agent that specifies the amount of commission due and contains a provision requiring the agreement to be enforced under California law.

Follow these three simple steps and the California agent can receive a commission as a selling agent for an out-of-state property.

2. Representing a seller in listing an out-of-state property.

In this example, the California agent represents a seller in listing an out-of-state property. This means that a California agent is taking a listing from a California seller to list an out-of-state property.

First, the agent must use a written California Listing Agreement that specifies the amount of commission due. That Listing Agreement must contain a provision requiring the agreement to be enforced under California law. The CAR Listing Agreements satisfy these requirements.

Second, the agent must conduct all “licensed activity” from California. This means that all marketing, negotiations and sales efforts must occur in California. The agent may not personally show the property or negotiate terms of sale while in another state. In other words, the agent must stay in California.

Third, use a major title company to provide escrow for the transaction. Most major title companies have national divisions which allow you to maintain control of out-of-state escrows from California.

Follow these three simple steps and the California agent can receive a commission as a listing agent for an out-of-state property.

3. Paying commission to an out-of-state broker.

A California broker can share commission with an out-of-state broker as long as that broker does not engage in any “licensed activity” in California.

Business & Professions Code §10137 specifically authorizes a California broker to pay commission to an out-of-state broker.

However, this means that the out-of-state broker cannot market, negotiate or conduct any sale activities while in California. The out-of-state broker cannot perform any services inside the state of California. The out-of-state broker must stay out of California or forfeit his/her commission.

4. Summary.

The key for the California agent is to: (1) use CAR Buyer-Broker Agreement-
Exclusive (if representing a buyer) or use CAR Listing Agreements (if representing a seller); (2) do not engage in any “licensed activities” while out-of-state; and (3) use a major title company with offices in California as escrow.

IDENTIFICATION IN ADVERTISING MATERIAL 2017

Posted on May 2, 2017     Leave a Comment

NEWSLETTER

IDENTIFICATION IN ADVERTISING MATERIAL 2017

General Advertising.

Advertising requirements have been in a constant state of uncertainty since they became a legislative concern in 2008.

In 2016, California Association of Realtors® sponsored AB1650 which clarified standardized disclosure requirements as follows:
1. Requires real estate agents to include the following information on all “Solicitation Material:”
a. real estate agent’s name;
b. real estate agent’s license number; and
c. broker’s identify (company name or broker’s name).
2. “Solicitation Material” is intended to mean the following materials intended to be the point of first contact with consumers:
a. business cards;
b. stationary;
c. advertising flyers;
d. advertisements in print, radio or internet; or
e. “for sale,” “for lease,” “open house” and directional signs (“Signs” ).
3. However, Signs that provide broker’s identity (company name or broker’s name) are not required to contain the real estate agent’s name or license number.

Fictitious Business Name Advertising.

SB 710 makes technical changes to fictitious business names and team names and
requires as follows:

1. Fictitious Business and Team Advertising must contain either company name or broker’s license number, not both. Prior law required both.

A licensed salesperson can now file for his own fictitious business name without the broker. The salesperson will need to file the Add/Cancel Salesperson Owned Fictitious Business Name form with BRE prior to using the Fictitious Business Name (see BRE form RE 247).

C.A.R. RESIDENTIAL PURCHASE AGREEMENT

Posted on April 19, 2017     Leave a Comment

BUYER TO PERFORM (“NBP”); NOTICE TO SELLER TO PERFORM (“NSP”);
DEMAND TO CLOSE ESCROW (“DCE”).
C.A.R. RESIDENTIAL PURCHASE AGREEMENT
The RPA requires (i) buyers and/or sellers to respond to a NBP or NSP within 2 “days after” delivery and (ii) buyers and/or sellers to respond to a DCE within 3 “days after” delivery. The RPA defines “Days,” “Days After” and “Days Before” as follows:
“Days” means calendar days. However, after acceptance, the last day for performance of any act required by this Agreement (including Close of Escrow) shall not include any Saturday, Sunday, or legal holiday and shall instead be the next day. (See paragraph 3OF of the RPA)
“Days After” means the specified number of calendar days after the occurrence of the event specified, not counting the calendar date on which the specified date occurs, and ending at 11:59 P.M. on the final day. (See paragraph 30G of the RPA)
“Days Prior” means the specified number of calendar days before the occurrence of the event specified, not counting the calendar date on which the specified date on which the specified event is scheduled to occur. (See paragraph 30H of the RPA)
1. PARTIES have 2 “Days After” delivery to RESPOND to a NBP or NSP (See paragraph 14E of the RPA).
The NBP and NSP each require a response within 2 “Days After” delivery calculated as follows:
I. The day that the NBP or NSP is served does not count. For example, if you serve a NBP or NSP on Tuesday at 9:00 a.m., then you cannot cancel until after 11:59 p.m. on Thursday night. In other words, only complete days counts toward calculating the deadline.
II. The time of day that you serve the NBP or NSP is irrelevant. For example, if seller serves the NBP on Tuesday at 9:00 a.m., then Wednesday and Thursday are the two days that count. The seller cannot cancel until after 11:59 p.m. on Thursday.
III. The date that the scheduled event is to occur does not count. For example, assume that buyer has until March 15th to remove contingencies. The earliest that you can serve a NBP would be any time of day on March 12 (3 days prior to the contingency removal date).
The first full day that counts is March 13th. The second full day that counts is March 14th. March 15th does not count since that is the date that buyer is required to remove contingencies. You must remember that the day that a party is required to remove contingencies, provide documents, or close escrow does not count towards the calculation.
IV. Deadlines that fall on Saturday, Sunday or a Legal Holiday are extended until the next business day. For example, if you serve a NBP or NSP on Thursday, then the deadline would be Saturday at 11:59 p.m. However, since the deadline falls on a Saturday, you cannot cancel until Monday morning (i.e. the next business day).
2. PARTIES have 3 “Days After” delivery to RESPOND to a DCE (See paragraph 14G of the RPA)
The DCE requires a response within 3 “Days After” delivery calculated as follows:
I. The day that the DCE is served does not count. For example, if you serve a DCE on Tuesday at 9:00 a.m., then you cannot cancel until after 11:59 p.m. on Friday night. In other words, only complete days count toward calculating the deadline.
II. The time of day that you serve the DCE is irrelevant. For example, if seller serves the DCE on Tuesday at 9:00 a.m., then Wednesday, Thursday and Friday are the three days that count. Because you cannot cancel on Saturday or Sunday, the seller cannot properly cancel until Monday.
III. The date that the scheduled event is to occur does not count. For example, assume that March 15th is the closing date. The earliest that you can serve a DCE would be any time of day on March 11 (4 days prior to close of escrow).
The first full day that counts is March 12th. The second full day that counts is March 13th. The third full day that counts is March 14th. March 15th does not
count since that is the closing date. The actual closing date does not count towards calculating “days prior” for purposes of a DCE.
IV. Deadlines that fall on Saturday, Sunday or a Legal Holiday are extended until the next business day. For example, if you serve a NBP or NSP on Thursday, then the deadline would be Saturday at 11:59 p.m. However, since the deadline falls on a Saturday, you cannot cancel until Monday morning (i.e. the next business day).
Learning these deadlines and how they are calculated will prevent an untimely cancellation. A party to an untimely cancellation is in material breach of the RPA and is set-up to pay the other party’s attorney fees.

RESIDENTIAL LISTING AGREEMENT

Posted on April 10, 2017     Leave a Comment

RESIDENTIAL LISTING AGREEMENT

Listing Agents can preserve their right to commission after Expiration or Cancellation of the Residential Listing Agreement (“RLA”) by doing the following:

1. Fill-in “calendar days” in paragraph 3(A)(2) of the RLA; and
2. Send a PROSPECTIVE BUYER NOTICE to seller identifying all “Prospective Buyers” NO LATER THAN THE END of the Listing Period upon Expiration or Cancellation of the RLA.

California Association of REALTORS® revised the Residential Listing Agreement in 2016 to require Agents/Brokers to provide a list of Prospective Buyers no later than the “end of the listing period” instead of “within 3 days” as formerly allowed.

The purpose of paragraph 3A2 of the RLA is to allow Agents/Brokers to receive a commission after expiration of the Listing Agreement if the seller ultimately sells to (i)a Prospective Buyer who physically entered the property or (ii) made a written offer during the listing period.

Many agents neglect to complete paragraph 3A2 and accidently give the right to commission away when seller then sells to a Prospective Buyer after Expiration or Cancellation.

WHO IS A “PROSPECTIVE BUYER” UNDER THE RLA?

A Prospective Buyer is a person who either (i) physically entered the property during the listing period or (ii) wrote an offer for the property during the listing property (see paragraph 3A2 of the RLA).

Paragraph 3A2 of the Listing Agreement allows the Agent to earn a commission if the property is ultimately sold to a Prospective Buyer even after the RLA has Expired or has been Cancelled.

However, to preserve that right, the Listing Agent must fill-in the number of “calendar days” at paragraph 3A2 of the RLA at the time that the Agreement is signed. Paragraph 3A2 states:

“If within calendar days (a) after the end of the listing period or any extension; or (b) after any cancellation of this Agreement, unless otherwise agreed, Seller enters into a contract to sell, convey, lease or otherwise transfer the Property to anyone (“PROSPECTIVE BUYER”) or that person’s related entity: (i) who physically entered and was shown the Property during the Listing Period or any extension by Broker or a cooperating broker; (ii) for whom Broker or any cooperating broker submitted to Seller a signed, written offer to acquire, lease, exchange or obtain an option on the Property.

The most common number of “calendar days” selected is 90, 120 or 180 days. This means that the Listing Agent is entitled to commission anytime a seller sells to anyone named by the Listing Agent who (i) physically entered the property during the listing period or (ii) wrote an offer on the property during the listing period even though the property is not sold until after the listing period expires.

This prevents a seller from rejecting a good offer during the listing period, and then accepting that same offer with the same buyer after the listing period expires to avoid commission.

It also prevents another agent from picking-up your expired listing and selling the property to one of your Prospective Buyer without paying you commission.

WHAT IS A “PROSPECTIVE BUYER NOTICE.”

Once the Listing Agreement expires, or is cancelled, the Listing Agent must send a written list to the seller identifying the names all persons who (i) physically saw the property or who (ii) made a written offer during the listing period (“Prospective Buyer Notice”).

The PROSPECTIVE BUYER NOTICE must be in writing. It can be sent by the Listing Agent to the seller by e-mail, facsimile or U.S. Certified Mail. However, the timing is critical, and it must be sent “NO LATER THAN THE END OF THE LISTING PERIOD.

“Seller, however, shall have no obligation to Broker under paragraph 4(A)(2) unless, not later than the end of the Listing Period or any extension or cancellation, Broker has given Seller a written notice of the names of such Prospective Buyers.”

This means that the Listing Agent must send a PROSPECTIVE BUYER NOTICE to the seller no later than at the end of the Listing Period. You no longer have 3 days as was given under the previous version of the RLA.

If the Listing Agent fails to send a PROSPECTIVE BUYER NOTICE in a timely manner, then the Listing Agent will have no right to commission even if the seller sells the property to a buyer who saw or made an offer on the property during the Listing Period.

CANCELLATION OF LISTING.

If the seller requests Cancellation of Listing, the Listing Agent will generally complete the CAR Cancellation of Listing form (form COL).

However, Listing Agents often forget that they still need to send out a PROSPECTIVE BUYER NOTICE to preserve their right to commission after Expiration of Cancellation of the RLA.

PROSPECTIVE BUYERS in the RLA

Posted on January 30, 2017     Leave a Comment

RE: Residential Listing Agreement (RLA): Who are PROSPECTIVE BUYERS in the RLA?
Paragraph 3A2 allows the agent to recover commission after the expiration or cancellation of the listing period if buyer contracts to sell, lease or option the Property to any PROSPECTIVE BUYER (defined below) who saw the Property during the listing period.
Paragraph 3A2 of the RLA states:
“If within calendar days (a) after the end of the Listing Period or any extension; or (b) after any cancellation of this Agreement, unless otherwise agreed, Seller enters into a contract to sell, convey, lease or otherwise transfer the Property to anyone (“PROSPECTIVE BUYER”) or that person’s related entity; (i) who physically entered and was shown the Property during the Listing Period or any extension by Broker or a cooperating broker; (ii) for whom Broker or any cooperating broker submitted to Seller a signed, written offer to acquire, lease, exchange or obtain an option on the Property. Seller, however, shall have no obligation to Broker under paragraph 3A2 unless, not later than the end of the Listing Period or any extension or cancellation, Broker has given Seller a written notice of the names of such PROSPECTIVE BUYERS.”
First, the listing agent is required to complete paragraph 3A2 by inserting the number of “calendar days” after expiration that you can receive a commission . A typical number of calendar days is 90, 120 or 180. This period of time is commonly referred to as a “tail period.”
Second, immediately upon cancellation or expiration of the listing period, the listing agent must send a list of names of all PROSPECTIVE BUYERS who either saw the Property or submitted a written offer on the Property to the Seller. This list of PROSPECTIVE BUYERS should be sent by e-mail or facsimile on the same day as the listing is either cancelled or expired. You need proof that you sent it.
If the listing agent does these two things, then he/she gets commission if the Seller subsequently contracts to sell, lease or option the Property to one of these PROSPECTIVE BUYERS during the “tail period.”
However, the listing agent gets no commission if he/she fails to give seller “written notice” of the names of PROSPECTIVE BUYERS immediately upon expiration or cancellation. Paragraph 3A2 goes on to state:
Seller, however, shall have no obligation to Broker under paragraph 3A2 unless, not later than the end of the Listing Period or any extension or cancellation, Broker has given Seller a written notice of the names of such PROSPECTIVE BUYERS.”
It is my recommendation that all listing agents take the following action:
1. Make sure that you insert the number of “calendar days” at the time you take the listing;
2. Make sure that you give “written notice” of the names of all PROSPECTIVE BUYER to the seller by e-mail or facsimile immediately upon expiration or cancellation of the listing period.

AGENT INSPECTION & DISCLOSURE

Posted on January 3, 2017     Leave a Comment

INSPECTION AND DISCLOSURE
1. RESIDENTIAL PROPERTIES: 1-4 dwellings. If a Property is mixed use, then the agent’s inspection duties apply to the “Residential” portion only.
2. INSPECTION OBLIGATION: An agent has a duty to conduct a reasonably competent “visual” inspection of each “Residential” property and disclose any “defects” that affect:
a. Market value or
b. Desirability.
3. SCOPE OF INSPECTION: The agent’s “visual” inspection should include inspection of the following areas:
a. INSIDE: inspect all rooms, guest houses and garages.
b. OUTSIDE: inspect yard, fences, landscaping, missing tiles, stucco and driveways.
c. NEIGHBORHOOD: inspect for nuisances, aircraft/train noise, smells.
USE ALL OF YOUR SENSES:
a. Eyes: Report what you see.
b. Ears: Report what you hear.
c. Nose: Report what you smell.
4. RED FLAGS: Defects that the agent is obligated to disclose are often referred to as Red Flags. Disclose anything that would bother you if you were the buyer:
– leaks (vs. stains) – interior/exterior stains – teenage band on block
– missing roof tiles – interior/exterior stains – noisy dogs next door
– low water pressure – interior/exterior strange smells – aircraft/train noise
– leaning walls – overgrown landscaping – any abnormalities.

5. AVID: Agent Visual Inspection Disclosure – Required for all “Residential” transactions.
a. Complete the entire form as to all rooms. If a room has nothing wrong, then state “NOTHING NOTED.
b. Only report your observations: only what you see, hear or smell. – Mold: report “black substance.” Algae: report “green substance.”
c. Do not use adjectives or make conclusions
– Do not say “small stain” or “insignificant crack” or “minimal leak.”
d. Disclose INACCESSIBLE areas of the property.
– boxes in 3rd bedroom prevent inspection
– furniture against south wall in dining room prevents inspection
– large throw rug over wood floor in living room prevent inspection
– boxes in garage prevent inspection
– large painting on south wall in dining room prevents inspection.
e. Make no representations about permits, zoning or code compliance.
6. AMENDED DISCLOSURES: If seller discovers and/or discloses a defect after removal
of buyer’s contingencies, then buyer has FIVE (5) DAYS to cancel based upon that late disclosure.
7. VIDEO/PICTURES: Some agents take video or pictures of their inspection. If you do
this, then.make sure that the defects appearing in the video or pictures appear on your AVID.