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NAR General Counsel Laurie Janik Top 10 Legal Issues for 2010

Wednesday, February 24, 2010
by Les Sulgrove

I want to start this blog with a disclaimer.  The photograph of Laurie is one that I took.  It belongs to me.  I have the original image data from my digital camera recorded and any re-use of this image without my expressed written permission is prohibited.  Yes it’s a lousy photo, but I did not want to run the risk of surfing the Internet for a better picture of Laurie for fear of litigation!

The blog material below was taken from personal video and notes taken during a speech given by Ms. Janik to the Iowa Association of REALTORS annual Legislative luncheon.

Thank you for taking time to come to speak to the Iowa Association of REALTORS, Laurie.  (All comments above were intended as humor Laurie.. really!)

Top 10 Legal Issues for REALTORS in 2010

  1. RESPA. Receiving increased attention by HUD and the Plaintiff’s Bar.  Two hot topics investigated now are Transaction Fees/Administrative Fees.  8th Circuit has established that this practice is lawful.  2nd area being litigated is the Home Building Industry where Builders are offering to pay buyers costs if the buyer uses a builder affiliated mortgage company.  Remember that it’s illegal for REALTORS to accept anything of value or pay anything of value in exchange for a “naked” referral.  Meal in a restaurant, green fees, tickets to an event are not allowed.
  2. Misrepresentation in the sale of a property. Failure to disclose material facts.  Most common plaintiff is a buyer of a home.  Best defense is use of a property condition disclosure form.  Must be filled out BY the seller, not the agent.  You want it to be what the seller has to say about the property.  Agent has a duty to disclose knowledge of falsities made by sellers on forms and will be held liable.  Disclose and give buyers the opportunity to complete their own independent inspections.
  3. Agency.  NAR statistic: 23% of buyers recall being talked to about Agency at the beginning of the home buying process.  Litigation is increasing regarding agents putting their interests ahead of the client.  You can NEVER put your interests ahead of your client.  It’s very expensive to breach your fiduciary duties.  Make your disclosures more memorable.
  4. Fair Housing.  The law is over 40 years old and we are still seeing discrimination in the housing market.  Disability is 43% of claims.  37% on Race.  13% on Familial Status.  Seeing complaints against agents based on remarks in listings on MLS.  “Cottage suitable for Singles”  “Single Professional Preferred”.  Advice: ALWAYS describe Property, NOT the prospective occupant.
  5. Unauthorized Practice of Law.  Seeing increased complaints against real estate agents alleging that agents are engaging in the unauthorized practice of law stemming from your conduct in guiding and assisting home sellers who are facing foreclosure.  And you engaging in negotiations or advising these home sellers who are facing foreclosure on the strategy for their negotiations with their lenders.  Keep in mind you are licensed to broker property, to market the property, to bring buyers and sellers together.  You should not be attempting to represent the legal interests of these home sellers in their negotiations with their lenders.  You shouldn’t be advising them of their legal rights during their negotiations with their lenders.  Be cautious, this is an emerging issue.
  6. Anti Trust.  FTC and USDOJ have taken a keen interest in the real estate industry.  Watching that “Traditional Brokers” are not doing anything to impede the ability of new innovative brokers from coming into a market.  Don’t discuss commission rates, etc.  Be prepared to explain your fees and tell consumers what services you provide for the services you provide them.
  7. Social Media.  When on the Internet the Code of Ethics and Laws of the Land DO apply.  You have to be responsible for what you post.  Do not steal others copyright… text, photos, statistics, etc.  Be careful of what you post in comments.  If you have a Blog and/or Website, check with your E&O carrier to see if they cover claims that arise from Blogs & Websites.  New Rules propagated by the FTC:  Testimonials on Blogs must disclose if you have been paid to disclose.  This is a whole new area for us to get into trouble so proceed with caution.
  8. Independent Contractor Status.  The Federal and State governments are beginning to take a closer look at Independent contractors as potential sources of taxes.  Obama administration is searching for Misclassified Workers looking to crackdown and yield at least 7 Billion dollars over the next 10 years.  Appraisal firms are now being audited for this issue.
  9. Private Transfer Fees.  Not a transfer tax, but rather a private fee that goes to someone (a developer for example) that is filed and runs with the land that says every time this land gets sold, a fee gets paid.  So every subsequent sale of the property generates this fee.  These fees can be up to 1% in some cases.  Four states have banned this practice.  Florida, Oklahoma, Kansas and Missouri.  NAR is firmly on record as opposed to this practice.
  10. Mortgage Interest Deductibility.  The Obama Administration is proposing taking away the Mortgage Interest deduction for the top 33% & 35% of tax bracket.  NAR is opposing this and working to get this out of the budget proposals.  The housing market can not take any more bad news at this time.

From a speech given by Laurie Janik, NAR Legal Counsel on February 23rd, 2010 in Des Moines Iowa.

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