PROPERTY II CLASS #1 BROKER, AGENTS, AND LAW OF REAL ESTATE Real Estate Sales Residential Commercial 1) House 1) Apartments 2) Townhome 2) Vacant Land 3) Condos 4) Office Buildings *Some legal concepts apply to both types of transactions Basic Timeline of Typical Real Estate Transaction Seller lists property with Broker Broker(s) facilitate negotiations Written K K Executory Period Escrow and closing Post-Closing Precontract Executory Period Closing Post-Closing Selection of Broker; Execution of listing; Due Diligence Tender of performance Recording Negotiation and Execution Satisfaction of contingencies Issuance of Title Policies Marketing Secure financing “Gap” issue Escrow—Holding place for things. Land Sale Contracts Most transfers of land are preceded by Ks of sale. Land Sale Ks—Must meet SoF, written and signed Constructive—Give you access. Livery of Seisin—Delivery matters. Conveying dirt (symbolic delivery) Had to have witnesses What the Writing Must Have Essential terms: Price, names, description Must be signed by party to be charges Must be signed by the party to be charged Transactional Planning Transactional costs—attorney can add fee to closing costs. Caveat Emport—All on the buyer—Buyer beware Primary Considerations; Risk Management (“IRS”) Identify Reduce Shift Shifting risk—Higher deposit, lawyers risk What type of deed used MLS—Buyer can look anything up on the internet now FSBO—For Sale By Owner
The Executory Period Excl Identifying Risk More than just a home inspection. Other Risks: Environmental hazards Title defect Zoning change, taking Survey of legal description Fraud Loss Managing and Reducing Risk Property inspections Surveys Environmental Audits Title Abstract Loan Commitment Letter Saling Broker Benefits—Pre-screening Have more contracts Only get paid if they sale (Even 6 months out) 3 Basic Types of Brokerage 1) Open Listing Agreement 2) Exclusive Agency 3) Exclusive Right to sale Any broker can sell and earn full commission Owner can’t use another broker, but owner can sell by own efforts and avoid commission Commission due for any sale during the term of the agreement Brokers’ Duties to Clients Broker is a fiduciary, owing client 3 primary duties 1) Loyalty 2) Disclosure 3) Confidentiality Honesty & Fidelity Must disclose facts or information that are material to the client’s interests Cannot disclose information regarding client’s position w/o consent Must work to advance client’s interests Duty to protect client’s privacy Must try to obtain highest possible price Broker-Client Relationships Listing broker—List home for Sell Selling broker—Bring buyer to the table Traditionally viewed as subagent requirement Dual agency Most jurisdictions don’t allow this Broker represents no one Middle man to close deal Disclosure and consent requirement
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- Fall '08