WE’RE TAKING ON simple, routine, non-controversial topics this time, involving the Attorney General, the Real Estate and Appraiser boards, foreclosures, fraud – things like that.Support the troops
Q. Have you heard from the Attorney General lately?
A. I got a nice call a couple of weeks ago, thanks. Actually, an attorney from the Coast Guard called and asked me to remind all REALTORS® that regardless of what your landlord’s lease provides, a landlord subject to the Residential Landlord Tenant Act may not charge members of the military for early termination of their leases, if termination is done in accordance with the Act. Mitigation is no longer permitted, even if the lease so provides. (The Act was amended a year or two ago, but old leases may still be in effect.) According to the Coast Guard, the AG is watching Virginia property managers and landlords closely, so remember that whatever your lease says, mitigation is no longer permitted, and you may not charge active duty tenants for early termination. Please be sure that all new leases are consistent with the Act as amended.
No licensed agent? no open house
Q. May my unlicensed assistant conduct open houses if she merely permits access and hands out general information about the property and does not answer any questions about the house or give advice to the visitors?
A. There are two theories about how unlicensed assistants can legally do open houses in Virginia. Unfortunately, neither works. The Real Estate Board (REB) has long considered holding open houses to be the practice of real estate, and thus appropriate only for licensees, regardless of whatever is said or done at the open house. When the subject was raised again recently, I asked REB to revisit the issue and let us know whether its position had changed. The board confirmed its long-standing position that only licensees may hold houses open. I realize there has been quite a bit of information disseminated lately to the opposite effect, in articles, on blogs, in continuing education courses and elsewhere. In many cases, this information deals with the law in other states where the law may be different. In Virginia, however, at least in the opinion of the REB, this practice requires a license.
Pay up…dead or alive (or retired)
Q. An agent left my firm with several deals pending, but was not affiliated with another firm by the time the deals closed. If the agent’s license is inactive, may I legally pay him the commission he is owed on these deals as they close? If he has affiliated with a new firm, must I pay the commission to his new broker?
A. There is a great deal of confusion on this matter, so let’s clear it up once and for all. The only relevant issue is whether the agent was actively licensed at the time he performed the act for which the commission is due (obtaining the listing or buyer agency relationship, obtaining a purchase contract or lease, or whatever it is that gives rise to the entitlement to a commission). His license status at the time of payment is irrelevant. So if, for example, he obtains a listing, and it goes under contract while he is at your firm, you may pay him at closing whatever his status. The verity of this can best be illustrated with the following example. Suppose a commercial agent obtains a ten-year lease with a ten-year renewal, on which the firm is to be paid its commission monthly as rent is received from the tenant. Can we really require the agent to remain actively licensed for the next 20 years to receive his monthly commission split? What if he died during the term of the lease? Obviously, we can’t outlaw retirement or death for this fellow, but may pay him, or his estate, or his designee, whatever his license status at the time of payment. It is license status at the time of his actions giving rise to the entitlement that matters, not what he decides to do thereafter. He can go to Tahiti and paint the natives while basking like a lizard on a rock, or he can keep working. You can pay him either way. By the way, if he joins another firm, you pay him, not his new broker. Your debt is to him, and the new firm has no entitlement to any of his fee. The broker of the firm receiving the commission on the deal is the broker the REB regulations are speaking of when they require all fees to be received through the firm’s broker.
An exemption…with exception
Q. Do foreclosing lenders have to provide disclosure statements, Property owners Association (PoA) packets or condominium resale certificates to buyers who buy at the foreclosure?
A. No. The relevant statutes exempt foreclosing lenders and their trustees from these requirements. As to REO, the lender is likewise exempt from the requirements of the Residential Property Disclosure Act, and thus does not have to provide a disclosure statement. Lenders selling REO must provide the POA packet and the condominium resale certificate, but buyers may waive the right to receive the condominium resale certificate, although they may not waive the right to receive the POA packet. Got that? I knew you would. Be very careful about language in REO contracts attempting to affect a waiver as to these documents.
These provisions often say something like “to the fullest extent allowed by law” buyer waives the right to receive the information, but Virginia law is clear that contract waiver language is unenforceable against buyers of POA property. The Condominium Act has no such prohibition against waiver, so I assume the right to receive the resale certificate can be waived by contract.