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VAR introduces commercial forms

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NOTE: The phone number originally given for the Richmond Association of Realtors was incorrect. It has been corrected in this version.

The Virginia Association of Realtors is pleased to announce the addition of commercial forms to its Forms Center! Through a licensing agreement with Central Virginia Regional MLS, VAR will now provide the following forms:

  • Commercial Purchase Agreement – Form 700;
  • Commercial Listing Agreement – Form 710;
  • Commercial Letter of Intent for Purchase – Form 720; and
  • Commercial Letter of Intent for Lease – Form 730.

We offer these forms as a resource that will improve basic commercial deals by providing you a template for structuring and moving forward in these transactions.

We strongly encourage agents who lack commercial experience to obtain training before engaging in these often complicated transactions. Remember, Code of Ethics Article 11 requires competence to engage in a specific real estate discipline such as commercial real estate, and you could subject yourself and your firm to discipline if you are unprepared.

COE Article 11:

The services which REALTORS®provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/10)

General training concerning commercial transactions can be found throughout Virginia; specific training concerning these forms may be obtained by contacting the Richmond Association of Realtors at (804) 422-5000; ask for “Education.”

Click here to go to VAR’s Forms Center. We hope these forms are helpful to you. Happy Holidays!

It’s best to fill out your own inspection contingency removal addenda

Recently we’ve learned that some home inspectors, as a service to real estate agents, are preparing inspection contingency removal addenda after performing the home inspection. Drafting contracts for others is the practice of law in Virginia, and it is therefore generally restricted to licensed attorneys. However, real estate licensees may do it if it’s incidental to a real estate transaction in which the licensee is involved, and the licensee does not receive a separate fee for it (See § 54.1-2101.1.)

This exemption does not extend to home inspectors. In fact, home inspectors drafting these addenda are likely engaging in the unauthorized practice of law, which is a misdemeanor in Virginia. There are also copyright issues involved with the use of Realtor forms by non-Realtors.

Please do not encourage inspectors in this practice. It does a disservice to our clients and potentially subjects home inspectors to prosecution and other liability. If you need a home inspection addendum, it is best to draft it yourself.

Sign Installation

The Division of Utility and Railroad Safety of the Virginia State Corporation Commission (SCC) has begun a campaign to educate the real estate industry about compliance with the Underground Utility Damage Prevention Act. The Act essentially provides that notification must be made to “Miss Utility,” who then is to mark utility lines, when excavating on another’s property. Excavation had been interpreted to include placing any real estate sign into the ground, including wire signs inserted by hand.

VAR relayed its concerns about the strict interpretation of the Act to staff at the SCC. In response, they proposed adopting advisory language to make clear that real estate agents or sign installers inserting wire signs by hand do not have to notify Miss Utility. At a recent meeting of the SCC Damage Prevention Advisory Committee, VAR’s Associate Counsel Blake Hegeman spoke in support of this language. After minor revisions, the Committee approved the following:

A person who inserts a wire sign holder into the ground by hand is not required to notify the notification center. However, the State Corporation Commission’s Damage Prevention Advisory Committee encourages contacting the notification center to avoid the potential for utility line damage and/or physical injury. (July 13, 2009)

As you can see, this language does not change the statute and only includes wire signs inserted by hand. Placing any other real estate sign still requires a call to Miss Utility. If you have any questions about this or any other matter please don’t hesitate to contact Blake, Lem or John.

Form Changes

The Virginia Association of REALTORS® has made the following changes to its forms:

Form 600 (Residential Contract of Purchase) has been updated. Section 18 has been revised to include statutorily required Consumer Real Estate Settlement Protection Act (CRESPA) disclosure language. Section 22 dealing with lead paint issues has been amended slightly to bring it into compliance with EPA requirements.

The Virginia Real Estate Board has updated the Residential Property Disclosure Statement to reflect a statutory notice requirement concerning stormwater detention facilities. VAR has amended the SUM1 Form (Summary of Rights and Obligations of Sellers and Purchasers Under the Virginia Residential Property Disclosure Act) to conform to changes in the Residential Property Disclosure Statement.

Form 200 (Lease) has been amended to modify Section 30 as to a tenant’s holding over. The new section incorporates a recent amendment to the VRLTA that permits landlords to elect, as liquidated damages from a tenant’s holding over, a rent in the amount of 150% of the current rent.

These changes will be effective July 1.

There’s a new residential disclosure statement in town

As you may know, the Virginia Real Estate Board (VREB) recently amended the Virginia Residential Disclosure Statement to comply with the provisions of House Bill 1856, enacted at the 2009 General Assembly. HB 1856 requires the following language to be included in the Disclosure Statement:

The owner makes no representations with respect to the presence of any stormwater detention facilities located on the property and purchasers are advised to exercise whatever due diligence they deem necessary to determine the presence of any stormwater detention facilities on the property, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement pursuant to that contract.

This language imposes no additional obligations on sellers, and simply advises purchasers to exercise whatever due diligence they deem necessary to determine if there are stormwater detention facilities located on the seller’s property. The purchaser can determine the location of stormwater detention facilities by contacting the local zoning or planning office where the property is located.

The new form is currently available for download on the VREB’s website and is effective on July 1, 2009; VAR will add it to our forms library soon. It must be given to all prospective buyers, from and after July 1, 2009, unless the seller is exempt from the requirements of the statute (exemption rules have not changed). This means that Realtors who took listings before July 1, 2009, will have to get their sellers to sign new Disclosure forms and these new forms must be given out beginning July 1. You do not have to give the new form to buyers who received the old form before July 1. Simply replace the old form with the new form starting July 1 and you’re good to go. Remember: It doesn’t matter when you took the listing. If you are giving a form to a prospective buyer on or after July 1, it must be the new Disclosure form, regardless of when you took the listing.

Earnest Money Deposits

Blogmaster’s note: Please welcome VAR’s Associate Counsel, Blake Hegeman, as the newest VARbuzz contributor!

Did you know that VAR has a library of commonly asked legal questions? It’s called the Legal Resources Center, and VAR members can access it on VARealtor.com after logging in.

As calls come in to our Legal Hotline, Lem Marshall and I track the questions and, as new topics bubble up, write  explanations for the things that are most commonly asked of us. One of the most frequently asked questions on VAR’s Legal Hotline these days is the disposition of earnest money deposits.  Here’s an overview.

Please note that this and other useful materials are available in the Legal Resources Center, so I encourage you to add it to your favorites.  I’ll be back on VARbuzz from time to time to let you know about new additions.