Legal Tips

COVID-19

During these challenging times, GHAR’s Legal Awareness Committee would like to share some helpful tips with you.

First, as you know, CTR has been actively working hard to bring you important information to help you conduct your real estate business during this unprecedented time. All of their information, including the newly created Coronavirus Advisory and Addendum, can be found by going to https://www.ctrealtors.com/coronavirus/.

The advisory should be used when you first meet with a buyer or seller and the addendum should be used when writing a contract. It’s important to note that these forms are completely voluntary and are there to be used only if you need or want them. You should also check with your broker first before using these forms because they may have a preferred form your firm is using.

Second, in these days of social distancing, more contracts are being sent digitally. Please don’t let this prevent you from fully explaining these documents to your clients. You can use a platform such as Zoom for a “face to face” meeting and use “screen sharing” to go over these documents.

Lastly, NAR has put together a document called “Coronavirus Advocacy Frequently Asked Questions”. This document has questions on all Covid-19 related topics from buyer questions and independent contractor questions to business loan and/or grants. You can view this document by going to https://narfocus.com/billdatabase/clientfiles/172/26/3594.pdf.

Completing the Lead-Based Paint and Lead-Based Paint Hazards Disclosure:

The Department of Consumer Protection (DCP) has been auditing listing and sale files at brokerage offices. The DCP found that the Lead-Based Paint and Lead-Based Paint Hazard Disclosure form is not consistently completed correctly. The DCP has issued fines to both agents and brokers for incorrectly completed Lead-Based Paint Disclosure forms. Below are several tips to improve compliance with Lead-Based Paint disclosure requirements and the accurate completion of those forms.

Lead-Based Paint and Lead-Based Paint Hazard Disclosure forms are required for the sale and rental of housing built prior to 1978.
1. There are two different Lead-Based Paint Disclosures; one for purchases/sale to be completed by the Seller(s) and Buyer(s) and another form for rentals to be completed by the Landlord(s) (also known as Lessors) and Tenant(s) (also known as Lessees).
2. A Lead-Based Paint and Lead-Based Paint Hazard Disclosure form may be required for housing built after 1977 IF the housing contains any reclaimed materials from a home built prior to 1978. For example, fireplace mantles, barn wood, moldings. etc.
3. When completing the Seller's or Landlord's Disclosure section of the Lead-Based Paint Disclosure form, the Seller or Landlord may complete questions (a) and (b) with either a check mark or an "x".
4. In the Purchaser's or Lessee's Acknowledgement section, the Buyer(s) or Lessee(s) MUST use their initials when responding to (c) and (d). They CANNOT complete (c) or (d), with a check mark or "x". They can only respond to item (e) with a check mark or an "x".
5. Please remember to provide the Buyer(s) or Tenant(s) with a copy of the blue booklet - "Protect Your Family From Lead in Your Home" or the PDF version of that booklet which can be downloaded from https://www.epa.gov/lead/protect-your-family-lead-your-home.
6. If the Seller or Landlord does not check (i) to question (b), the Buyer(s) or Lessee(s) do NOT have to initial (c) in the Purchase's or Lessee's Acknowledgement section of the Lead-Based Paint Disclosure form.
7. ALL signatures on the Lead-Based Paint Disclosure MUST be dated on or before the contract date.

Concrete Foundation Inspections:

"REMEMBER -- ON ANY CLOSING ON OR AFTER FEBRUARY 1, 2019:
In order for a buyer to get future financial assistance for a crumbling foundation through the indemnity company set up through the State of CT, the buyer or seller needs to have a visual inspection or a core sample test done prior to closing. If a core sample test is done, this information can be transferred to a future buyer of that home. If a visual inspection is done, it will protect that buyer but will not protect future buyers of that home. They would have to have another visual inspection. For more information for you and your clients, please go to https://crumblingfoundations.org."

Escalation Clauses:

In situations where there are multiple offers on a property, contracts are often drafted to include an “escalation clause” which is designed to have the purchase price automatically increase to a certain amount above any higher offer, up to a specified limit. There is no standard language for these clauses and it seems that the general practice is to include them in Section 9 under “Other Conditions”. Suggested language could be as simple as: “Buyers hereby agree to increase their offer by $____ over the highest offer received (notwithstanding any Seller concessions) by Sellers from any other buyer(s), but not to exceed a maximum offer of $__________. Seller shall provide Buyer’s agent with satisfactory proof of such competing offers.” Two common issues warrant mention. First, you will want to be clear whether or not the other offer(s) take into account any seller concessions or closing cost credits. Second, you will want to be careful to include any verbal offers that have not yet been reduced to writing, for example if the seller asks a competing buyer for their “highest and best” offer.

Hubbard Clause:

When a Hubbard clause is accepted with a sales contract on a property using the “Sale of Buyer’s Property Contingency (aka Hubbard Clause)” form and the Hubbard buyer receives a bona fide sales contract on their property, they can remove the “Hubbard” and replace it with the “Sale of Buyer’s Property Contingency (Under Contract)” form by choosing option 4 on the “Sale of Buyer’s Property Contingency Removal” form. This allows the seller’s property to be put under SHOW status, and there is a date inserted for the Hubbard buyer’s and the Hubbard buyer buyer’s contingencies to be met. This is the same form a buyer submits with his/her sales contract when they have found a house to purchase, after they have gotten a deposit on their house. This allows for more definitive dates to be used in going forward with the transaction. This form is available online in the GHAR Library on zipForm Plus.

It is important to note that the Contract associated with the “Sale of Buyer’s Property Contingency (Under Deposit)” form remains in full force and effect as a valid and binding agreement unless and until it is terminated in accordance with the provisions of this Rider.  As a result, any additional offers received while a Contract including this Rider is in effect may only be considered to be back-up offers.

Initial Deposits:

Once a purchase contract is fully executed the initial deposit is due immediately, time is of the essence. According to section 6 of the GHAR Purchase Contract the buyer is in default if any deposit is not received within 3 calendar days of the date for payment specified in the contract. Therefore, if the initial deposit has not been received on or before day 4, the seller would have the right to declare the buyer in default and terminate the contract.

Leased Equipment:

It is important to remember to check with your sellers to see if they have any leased items of equipment that may be transferred over with the sale of the property. Some common leased equipment could include: propane tanks, hot water heaters, gas boilers and furnaces, and solar panels. Remember to document, in the Connecticut Residential Property Condition Disclosures, any and all leased equipment, specifically the lease payment amount, the payment frequency, and the duration of the lease. If you are representing the buyers, you will want to determine the process by which any such leases may be transferred or assumed.

Listing Contract Effective Dates:

Listing Agents: Be careful to protect yourself with the dates you put on your listing agreements!

It doesn't matter when a seller fills out the listing paperwork, you do not have a legal listing until the "effective date" at the top of the GHAR Exclusive Right to Sell Agreement.

 

 

 

 

 

On another note, SmartMLS has brought to our attention that some agents are confusing "effective listing date" with the "go active" date on the Delayed Listing Addendum. If you have a need to use the SmartMLS "Delayed Listing Addendum" because a property isn't ready to be shown and marketed yet but you want to secure the listing, then your "effective listing date" on the Exclusive Right to Sell should be an earlier date than the "go active date" on the Delayed Listing Addendum.

 

 

 

 

 

 

 

  

Service Animals White Paper:

If you haven’t already, chances are good that you will encounter a situation in conjunction with the sale or rental of housing where an individual may assert certain rights to have either a service animal or an assistance animal. These issues are both complicated and sensitive and must be handled carefully in order to avoid inadvertent violation of federal laws or regulations. The principal laws that might apply are the Americans With Disabilities Act (“ADA”) or the Fair Housing Act. These laws apply to different situations and create different sets of rights and obligations. READ MORE.

Short Sale Rider:

The last sentence of Section 3 of the Short Sale Rider provides that the "Buyer understands that until the Notice Receipt Date, some lienholder(s) may entertain other offers." While most short sale lenders (the Seller's lender) may only consider one offer at a time, there are some short sale lenders who will consider multiple offers. If a listing agent receives one or more subsequent offers after the initial offer has been accepted by the Seller and presented to the short sale lender, the listing agent should contact both the party processing the short sale and the Seller's attorney regarding the subsequent offer(s) and should request direction on how to proceed with regard to the subsequent offer(s).

Title:

In June 2017 new language was added to Section 10. You can explain this paragraph to your buyers and sellers by telling them it addresses a buyer’s ability to obtain a title insurance policy, or for a buyer’s lender to obtain a title insurance policy. The title insurance company regularly requests a seller sign an affidavit stating that, to the best of their knowledge, for example that there wasn’t any work done at the property recently that has gone unpaid, there are no tenants and there’s no one the seller knows of claiming an interest in the property. The affidavit would be reviewed with the sellers by their attorneys at the closing and is not something the REALTOR would need to be involved in.