RE Broker Disclosures -foreclosures/ short sales? - Posted by Benajmin

Real Estate Investing Real Estate Law
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Posted by BTI on November 04, 2006 at 22:33:33:

Ben

The disclosures are very simple. E.g. Sellers acknowledge and understand that the buyer is a licensed agent, buyer is acting as an investor for his own personal investment program, buyer does not represent anyone in this transaction other then himself, buyer recommends that seller seek legal and tax advice from professionals of their own chosing.

I would have no qualms about giving you a copy of mine but everything related to real estate is buried in storage due to my leaving California for a heart transplant in Utah, don’t know when I’ll be returning.

As for the one you create, just have a real estate attorney review it, it will be worth it. He/she may be a future source of business.

BTI

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RE Broker Disclosures -foreclosures/ short sales? - Posted by Benajmin

Posted by Benajmin on November 01, 2006 at 11:54:52:

Hello all,

I am a Licensed RE Broker in California, and I am beginning to get into the foreclosure business. Before I get myself in trouble I want to make sure I disclose everything. So i have a few questions;

  1. For advertising in newspaper “We Buy Houses Cash” type of ad, do I have to put bkr or agt, with the ad even though I am not going to be using my license in order to obtain the house?

2)If I am selling an investment property and dont want to list it MLS, and do a FSBO do I have to disclose I am a broker in my ads?

3)For Short Sales, when negotiating with the bank, they sometimes ask for a listing agreement to validate that the house tried to be sold. Can I be the listing broker or would that be a conflict in interest?

  1. when Using a “home equity agreement” or “Purchase agreement” do I have to disclose I am a broker on that or can I use a separate Disclosure agreement that of course I have the home owner sign?

Thanks in advance for any replies.

-BEN

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Re: RE Broker Disclosures - Posted by Natalie-VA

Posted by Natalie-VA on November 05, 2006 at 12:52:34:

Ben,

In my state, if you are not advertising under the brokerage name, you must disclose your status as a licensee. One or the other will suffice.

–Natalie

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Re: RE Broker Disclosures - - Posted by BTI

Posted by BTI on November 04, 2006 at 24:29:09:

Ben

  1. No you don’t need to put agt in the ad. This is an activity not requiring a license, unless your intention is to try for listings instead of investment properties for yourself. However you will need to advise the sellers in writing in the contract but I use a disclosure prior to writing the contract.

  2. Same as 1.

  3. Mr Lender, if I thought I could obtain that kind of price I would have put it on the MLS. Or we have had it on the MLS since when and there is no activity whatsoever and at that price we don’t expect any. Bank wants it gone, if a licensee wants to be the buyer so what.

  4. Again, written disclosure upfront before writing the agreement and another disclosure in the agreement confirming they recieved the first disclosure before the contract was written.

Most states consider licensees to be vastly superior in knowledge and expertise to a non-licensee and in many cases that is true, but I would like the court to explain how I could take advantage of Donald Trump.

BTI
California license since 1965

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Re: RE Broker Disclosures - Posted by christine mendenhall

Posted by christine mendenhall on November 02, 2006 at 20:39:06:

Ben

You absolutely must disclose every time you buy or sell ANY real estate and that includes advertising. Be it your own or someone else?s. I would not try to get around this law ever. The fines for realtors are steep, not to mention the fact that you will lose your license.

I do shorts as well and have not had a lender tell me that they will not do business with because I hold a license. Usually they just tell me they won?t pay me a commission. Which is fine by me, I don?t have any interest in making 3% anyway.

Do yourself a huge favor, get a mirror and practice this statement? Hi, my name is Ben and I am a REAL ESTATE BROKER with (insert the name of your company.) Otherwise drop that license quick and hire one instead. If you don?t, you are likely to get sued sometime in the near future.

I use Joe Kaiser ?best darn document on the planet? to cover myself and have added a line in that document to acknowledge that I am a licensed Real Estate Broker. I also use Board contracts and in my area there is a line on the last page of the sales contract where I can acknowledge that I have a vested interest in the property that I am purchasing, and although there is not a space for the sellers I request them to initial next to my name. Again showing that they are clear I am purchasing and I am a Broker.

Last question for you, do you have E&O insurance and does it cover you buying and selling your own property? Some policies do and some do not. If not, get on that quick.

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Re: RE Broker Disclosures - - Posted by christine mendenhall

Posted by christine mendenhall on November 05, 2006 at 08:24:14:

Not so fast gentlemen,

You may want to go back and check the laws… I have placed them in this response for your review. And, with all due respect to BTI, I am going to beg to differ with you on this one.

Q. If I am selling an investment property and don?t want to list it MLS, and do a FSBO do I have to disclose I am a broker in my ads?

A. Any licensee (whether sponsored or inoperative) CAN sell their property “by owner,” provided the licensee is “sole owner” of the property. In this context, the licensee is a “sole owner” if the licensee (i) has a 100% ownership interest, (ii) has ownership as a joint tenant or tenant by the entirety, or (iii) holds a 100% beneficial interest if the property is held in a land trust. A licensee who qualifies to sell property “by owner” must include in all advertisements (including yard signs) the words ?agent owned? or ?broker owned.? See Section 10-30(c) of the Act.

Q. Must I disclose everytime I am a principal in a real estate transaction?
A. Yes. Every time a licensee is a principal (the seller, buyer, landlord or tenant) in a real estate transaction, the licensee must disclose in writing his or her status as a real estate licensee. The best way to comply with this requirement is to write the disclosure (e.g. ?real estate licensee,? ?real estate salesperson,? ?real estate broker,? etc.) next to the licensee’s signature on the real estate contract or lease. Another way to comply is to add the disclosure as a printed provision within the contract or lease. Disclosure may also be made by a separate writing (e.g. via a letter to all of the other principals) tendered prior to the execution of the contract or lease. However, simply providing the licensee’s business card to all of the principals is insufficient disclosure.

If a licensee signs a real estate contract or lease as an employee of the principal (e.g. as an officer of a corporation that is the seller), the licensee must make the same disclosure.

See Sections 10-27 and 10-30(c) of the Act and Rule 1450.190.

Q. For advertising in newspaper “We Buy Houses Cash” type of ad, do I have to put bkr or agt, with the ad even though I am not going to be using my license in order to obtain the house?
A. Real estate advertisements are governed by Section 10-30 of the Act and Rule 1450.140. Advertisements on the Internet are also governed by Rule 1450.145

All real estate advertisements must be supervised by the managing broker. The name of the sponsoring broker must appear in each advertisement. It is recommended that the sponsoring broker’s address and telephone number also appear in each advertisement. The name and telephone number of a sponsored licensee may appear in an advertisement along with the information regarding the sponsoring broker. In other words, a sponsored licensee may not advertise in his or her name only - this includes a listing in a telephone directory. Subparagraph (f) of Section 10-30 states: ?Nothing in this Act shall be construed to require specific print size as between the broker’s business name and the name of the licensee.? Also, note that business cards are advertisements and must comply with these requirements.

These are not state laws, These are the National laws which govern all of us, be it sales person or broker.

C
Real Estate Broker

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Re: RE Broker Disclosures - - Posted by Benjamin

Posted by Benjamin on November 04, 2006 at 04:58:29:

BTI, do you mind if I email you some of my disclosures so you can take a look at and tell me what you think. Thanks again for the great reply!

BEN

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Re: RE Broker Disclosures - Posted by Natalie-VA

Posted by Natalie-VA on November 05, 2006 at 12:47:09:

Hi Christine,

Do you have an E&O carrier who will insure those transactions where you have an ownership interest?

Mine will not. In fact, I just received a notice of cancellation because over 90% of my income is through investing and not brokering. I rarely take on clients anymore, so no huge deal, but if there’s a carrier out there who will give me E&O on my own houses, I might give them a try.

–Natalie

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Re: RE Broker Disclosures - - Posted by BTI

Posted by BTI on November 05, 2006 at 17:08:11:

Christine

Nice response, now would you be so kind to tell us what act you are referring to?

BTI