July 29th, 2012 at 1:47 pm 
The investor buyer has an accepted contract on a property, and plans on listing it either for sale or for lease. Let's assume that the property is vacant. Must they wait until they close on it and have title, or can they list it now?
Certainly, unless the contract they wrote with the seller forbids that activity the buyer has the right to market the property. Yes, it would be better to obtain the sellers permission, especially if the buyer wants access to show the property, but again, that is not absolutely required.
A buyer in escrow, anticipating a successful close, has an equitable interest in the property. While they do not have title to the property, an equitable interest provides them with certain rights, which includes the right to list it for sale or lease.
Any such listing, and certainly any contract they execute with a buyer or tenant must contain a disclosure that the seller is acquiring title but does not yet have title, and a contract for sale or lease should be contingent on the seller or landlord obtaining title. There should be no prepossession, a tenancy could not begin until the client owns the property, and while a buyer might be allowed to do inspections and a walkthrough, they would not be allowed to begin any work or move anything into the property. If a lease requires the landlord to redecorate, repair, paint or clean, that should not commence until after they own the property.
Be sure to discuss any potential transaction such as this with your broker.
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November 8th, 2011 at 12:43 pm
That is a common statement real estate agents make when they are asking their broker for help with a landlord or tenant. While they are involved with the day to day issues of a tenant and landlord, they insist they are not managing the property.
So, what's the problem? The Arizona Revised Statutes identify the activities of a property manager and go on the say that if a licensee is a property manager (by definition) they must execute a Property Management agreement between themselves and the landlord. This is where real estate agents get themselves into trouble.
It is important to understand the activities that constitute property management, and once you recognize them, act accordingly. And, always be certain that your broker allows property management before executing an agreement with a landlord.
Since the question often arises from the agent that listed the property for lease and was successful in getting it rented, we will use that scenario. From the moment you list the property for lease, up until the tenant moves in, all of your activities are considered part of your listing obligations. No problem there. But, once that tenant moves in, and keys and money are exchanged, your obligations as the listing agent end. If you are not managing the property, you should not have any interaction with that tenant and that landlord about that property until that lease is ending. Talking to the tenant about repairs, calling the landlord in Ohio and telling them the tenant needs pest control and any activity like that IS property management and doing that without a valid PM agreement is a violation of state statute.
If your broker allows you to manage properties, great. You may do so under a valid property management agreement yet keep in mind, if you are handling rent monies, that money must be deposited to your broker's trust account or delivered direct to the landlord. You may not deposit those funds to any account other than the trust account or the landlord's account, and you personally may not be in receipt of those funds in any way.
With the sheer number of rentals increasing as a result of our recent market, more and more agents are handling leases. It is critical for any licensee to understand what activities constitute property management, what their obligations are and what they need to do to protect the landlord, tenant and themselves. If you are not sure, you must talk to your broker.
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September 2nd, 2011 at 4:23 pm
Have the rules regarding the MARS disclosures changed?
Our market was not complicated enough before we needed to make disclosures to our sellers that we would not attempt to hurt, scam or lie to them about short selling their homes. But, nonetheless, these requirements for disclosure came on the scene in early 2011 and have been part of the
landscape since.
The original rule from the Federal Trade Commission (FTC) came out in February. Soon thereafter, The Arizona Department of Real Estate (ADRE) enacted additional rules which brought us the 4 MARS disclosures that are required. The MARS disclosures are typically 4 different forms. First is Advertising Disclosure, then the Consumer Disclosure, The Offer-Contract Disclosure and lastly the Lender-Servicer Disclosure. (They will often have slightly different titles from broker to broker if the broker did not use the forms that AAR provided). While all 4 were required there was confusion as to when the agent needed to have them completed.
Needless to say, there was considerable confusion about what we needed to disclose and when. But, as the months have marched on, we now have settled into a moderate routine that does not seem that bad.
In early July, the rules were rescinded…maybe. The FTC announced that although the rules are still in place, they would not enforce them on real estate licensees. When news of this arrived, the citizens rejoiced. No more MARS disclosures. The party lasted only a day or so, before ADRE delivered a message that basically said “…not so fast…” While the FTC relaxed their enforcement, ADRE said that we still needed to make the disclosures, could not charge the seller for short sale negotiation and identified who could negotiate a short sale for a fee.
Was that clear to everyone? No, so what we have now is loose and limited adherence to the MARS disclosure rules, as brokers across the state have interpreted the two statements differently.
Now with the confusion of ADRE and the FTC saying different things, there is more confusion as to if the forms are needed at all, and if so, which ones and when.
Your obligation to be in compliance falls to you and your broker. Thus, if you are listing short sale properties, to insure that you are most current on the MARS disclosures, you need to research as much as you can, and ultimately follow what your broker says. Some brokers have relaxed the rules, while others have maintained adherence to the rule.
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April 16th, 2011 at 4:34 pm
Arizona HB 2001 Signed by the Governor
HB 2001, called the “Jobs Bill” was signed by the governor in late February. With little fanfare or debate, the 214 page bill was approved that will give tax incentives to businesses to help them hire more employees. But, buried within the bill was one funding provision that might increase the property tax on thousands of homes in Arizona.
Here's how it works...Most Residents of Arizona did not realize that their property tax on primary residence, 2nd home and/or vacation home was lowered by a credit from the state general fund to the county in which the property sits. That credit was automatic for all Class 3 properties, which included primary residence, 2nd home and vacation home properties.
This bill changes all that. First, only primary residence homes will be Class 3 properties. 2nd home and vacation home will become Class 4, taxed at a higher rate as rentals. And, here's the kicker. Homeowners will have to “opt-in” for the credit by completing an Affidavit every other even-numbered year, starting in 2012, attesting that they or a family member occupy the home. That affidavit will be mailed with the Notice of Full Cash Value that is typically sent in February of every year. Homeowners will have 60 days to complete and return the affidavit in order to remain as a Class 3 property. If they fail to submit the affidavit, on the 61st day, that property will become a Class 4 property and their tax bill will increase by as much as $600, according to budget estimates.
This bill will provide incentives to businesses even if they do not hire any additional employees. But, this bill will certainly affect thousands of homeowners, already struggling to cover the costs of the home, by increasing their taxes. All owners of 2nd homes and vacation homes will see their taxes increase. Many people who might be entitled to the credit will overlook the form in the mail, or might complete it improperly, and they will see their taxes increase. While they always maintain the right to appeal the valuation of their home, they cannot appeal this re-classification. They would need to wait 2 years before the opt in is available again, when the notices are mailed in 2014 and so on.
For real estate agents and brokers, this is an opportunity to notify every homeowner you know and every buyer who closes in 2011 and beyond. Your information could save them hundreds of dollars and they will thank you for that.
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April 12th, 2011 at 11:36 am
MARS Rules and the Realtor
This should not be any news to you that both the Federal government and the Arizona Department of Real Estate have established rules, guidelines and disclosures that licensed agents must follow when listing a short sale property. These rules are confusing, challenging and oppressive, yet, as licensees, we must follow them.
My only advice here is that as a licensee, if you have a listing right now that is a short sale, or if you believe that anytime in the future you might list a short sale, you must, and I repeat MUST, know the rules, guidelines and disclosures that are needed before you go forward.
One source right now is The Arizona Association of Realtors website, www.aaronline.com and more specifically, at this link…
There you will find the rules and guidelines, as well as suggested disclosure forms for you to use. Until your broker provides specific and detailed information, I suggest that you print Michelle Lind's article regarding MARS and the disclosures that follow it.
Once your review all of that, you might question yourself as to why in the world would you want to assist the seller in negotiating a short sale.
The back-story here is that the Feds and ADRE really want us out of the short sale negotiation business, so they have imposed some extremely burdensome rules to affect that end result.
These rules will constantly be revised so your best source for information is AAR and/or your broker.
Don't ignore this! Our industry is being watched by several agencies and they are itching for a test case of an agent assisting in the short sale and not following the rules and disclosure obligation. Don't be that test case…
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February 16th, 2011 at 8:04 pm
The Truth About a Real Estate Sales Tax.
Remember the old adage, good news travels slow, but bad news travels fast. Well, several months ago the rumors started flying fast that Congress buried a real estate sales tax into the Healthcare bill that was signed by the President last spring. Yes, that is partly true... There is a provision in the Healthcare bill that does impose a 3.8% tax on the sale of certain real estate. Well that's only part of the story. “Certain real estate” does not include sales that most Americans and Realtors will be involved in.
Here are the rumors and the truths behind them...
MYTH: Congress hid this provision of the bill deep within the language and no one saw it.
TRUTH: This provision was well discussed in Conference committee as a means to help fund part of the Medicare provisions. While it is true that several members of Congress voted on the bill without reading it, that is a common occurrence and not unique to this bill. Members of Congress often vote on a bill without reading it.
MYTH: This matter will affect every real estate sale in the country and will destroy our economy.
TRUTH: The 3.8% sales tax on real estate will be imposed on those who earn more than $250,000 Adjusted Gross Income per year (married couples) and who sell a property that provides them with a profit of more than $500,000. That's profit, not proceeds. The Congressional Budget Office stated that less than ½ of 1% of American households would earn over $250,000 and have more than $500,000 profit on the sale of a property. And, only the portion that is above the $500,000 is taxed.
Thus, it is clear that this provision will only affect a minute portion of the sales we encounter and clearly will have no impact on the day to day real estate transactions that you will see
If you are going to spread the news, please be sure to spread the total and correct news...and not repeat the e-mails and messages that said EVERY sale would be taxed with this.
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July 5th, 2010 at 2:35 pm
DON'T SIGN A COMMISSION REDUCTION…
Unless you fully agree with the change. If you sign, you agree, so don't think you can file an arbitration against the listing agent later.
Sadly, lately, there has been extreme pressure on our commissions, both at the time of listing and at the time of contract acceptance. So, what can you do, as the buyer's agent, when the listing agent, representing a short sale or lender owned property, asks or demands your acceptance of a lower commission? Must you sign it? Can you say no?
Let's explore…
You wrote an offer on a short sale listing offering you 3% in the MLS. The offer was accepted by the seller, but now needs lenders approval. After waiting weeks, the listing agent calls you and says the lender has accepted the deal, but they are cutting the commission from 6% to 4%, so you need to accept 2%. They send you an addendum for you/your broker to sign.
The Commissioners Rule, R4-28-1101.D says… A licensee shall not allow a controversy with another licensee to jeopardize, delay, or interfere with the initiation, processing, or finalizing of a transaction on behalf of a client.
So, you might interpret that to mean you cannot say no. Well, that is not necessarily the case. The balance of that section says...This prohibition does not obligate a licensee to agree to alter the terms of any employment or compensation agreement or to relinquish the right to maintain an action to resolve a controversy.
Thus, you might be faced with a difficult business decision. Say yes and sign it, and the deal probably goes through, albeit at lower compensation for you. Say no, and you have the right to say no, the deal might fall apart, and you might need to start all over again with that buyer. Or worse, that buyer might be upset and bail on you, leaving you with no buyer and no commission.
But remember, if you sign it, even with the words “under duress” “under protest” etc. you will have little or no chance of collecting any compensation later at an arbitration.
As a member of the AAR Professional Standards Committee, I can attest that I have witnessed this attempt by agents to collect the balance after they signed “under protest”, and every one failed.
This issue can pose a difficult decision for you. Be sure to call your broker for help sorting through this issue.
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September 14th, 2009 at 12:53 pm
Arizona's Anti-Deficiency Statutes to Remain Unchanged
As a result of legislation that was signed by Governor Jan Brewer last week, the Arizona Anti-Deficiency statutes will remain unchanged.
Earlier this summer, the Governor signed SB1271, which effectively changed the rules on how and when lenders could pursue a borrower after a default of a mortgage loan. The statutes have been in place in Arizona for decades, and they protect a residential homeowner from being sued by a lender after a default, such as a foreclosure. With those statutes in place, after a lender foreclosed against a homeowner, in most cases, they were unable to pursue the homeowner for the deficiency. SB 1271 would have changed that, and many of the provisions of the bill were ambiguous as to the definition of a resident or occupant. This ambiguity could have thrown thousands of homeowners into a situation whereby they could have faced additional costs after a foreclosure. Thus, The Arizona Association of Realtors along with many other consumer groups lobbied the Governor and the Arizona Legislature to draft legislation to repeal 1271 before it went into effect on September 30,2009.
The Arizona Legislature and the Governor did just that. During a special legislative session this summer, HB 2008 was drafted and approved and Governor Brewer signed the bill last week. HB 2008 repeals SB 1271 and its change to the anti-deficiency statutes; thus, the statutes remain as they were.
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September 11th, 2009 at 2:32 pm
HVCC Creates Havoc
Are you confused by the HVCC (Home Valuation Code of Conduct)? Don't feel bad, most people are. This new rule went into affect May 1, 2009 and has done nothing but create havoc for all concerned in a typical real estate transaction.
The original intent of the rule was to create a separation between a lender and the appraiser, so that the lender would not exert undue influence on the appraiser to appraise the property for more than it was worth. Sounds good on paper, but on the street it creates confusion and tension between lenders, buyers and their agents. NAR has lobbied Congress to impose a moratorium on the rules, so that everyone could obtain a better understanding. As of this date, the rules are still in place.
Without going into the complicated and gory details, there is one misconception that impacts agents. Many believe, since they have been told this, that they cannot talk to or interact with the appraiser, give them comparables or assist them in any way. That is flat-out; not true… The HVCC does limit the lenders ability to talk to the appraiser, but does not limit the agent's ability to do so. Thus, we may still meet the appraiser at the property, provide them comparables or other data and assist in the process. We may provide updates comparables after an appraisals is done, just as we always have. If you attempt to do just that, and the appraiser tries to stop you, remind them that the HVCC rules allow for this.
Our National Association has an excellent flow chart dealing with the HVCC and can be found at http://www.realtor.org/wps/wcm/connect/f57e63804e57784890e4b3d4f1772a7a/HVCC+Flyer+6.16.09.pdf?MOD=AJPERES&CACHEID=f57e63804e57784890e4b3d4f1772a7a
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September 5th, 2009 at 7:08 pm
As a listing agent, getting listings on short sales can be challenging. With so many variables and every lender acting differently, it can be daunting to stay on top of all the issues. While there are so many steps to insure that a short sale transaction moves smoothly, I could never cover them all here. Yet, one issue looms large and if not done properly, could cause you considerable grief and aggravation possibly resulting in a failed transaction.
The issue is obtaining the HUD-1 that the lender will require when considering a short sale transaction. Most often, the process starts with you going to a title company and asking for a short sale HUD-1. With that request, most title companies will simply ask you and/or the seller about the current liens. Since the seller owns the home, they should be the one to answer those questions. So, let's assume the seller tells the title company that they have one lien; that being the lender who is considering the short sale.
Thus, the title company prepares the short sale HUD-1, most often without doing a title search, and shows the liens that the seller tells them about. That's the problem. By not doing a title search, and by not grilling the seller with questions which might uncover additional liens, the HUD-1 is prepared with incomplete information which is a recipe for doom.
If done that way, the lender approves the short sale and everything moves forward. The buyer deposits their money, pays for an inspection, appraisal, and loan application and incurs various other costs, while assuming they are buying the house. Low and behold, much later in the process, the 2nd lien pops up, typically a Home Equity Line of Credit (HELOC) or some other lien, which the seller either forgot about or did not realize was part of the transaction. Closing is delayed as the 2nd lien holder is contacted and typically offered pennies on the dollar. Many of them say no, and the deal fails.
Is there a lesson to be learned? Yes. When ordering that HUD-1, either insist that the title search is done in conjunction with the preparation, or very soon thereafter, so that if another lien shows up, everyone will know about it long before the 1st lender approves the short sale and the buyer spends any money. If the title company refuses to accommodate that request, find another title company, as some do this as a matter of course, but many do not.
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