Legal Tips/Risk Reduction
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The below legal tips have been created for REALTORS® by the Legal Awareness Committee and are intended for general information purposes and are not intended to provide legal advice on any specific facts. If you have specific questions concerning your own situation, please consult an attorney. The CTR legal hotline is the number to call for specific legal issues: 860-566-8333.
Addendums & Riders - Know the Difference
An “Addendum” is an addition to the Purchase and Sale Agreement after the contract has already been fully executed. For example, when you need to change the purchase price or add a closing cost credit or extend the mortgage contingency date. It amends the contract to incorporate new terms agreed to by all parties.
A “Rider” is a document that addresses additional details, conditions, or terms to supplement the standard Purchase and Sale Agreement.
Audio/Video Surveillance Equipment
Please remember to disclose the presence of any audio/video surveillance equipment on your listings in the agent to agent remarks on the MLS. This includes video doorbells such Ring devices.
Buyer Love Letters
During these busy times, while listing inventory is low, agents are running into many multiple offer situations and some of these offers include personal “love” letters from buyers. Sellers should be cautious in accepting these buyer “love” letters, as these letters have the potential to expose a seller to a claim of discrimination under the Federal Fair Housing Act. READ MORE...
Buyer Representation Agreements
Be sure to check your Buyer Representation Agreements to make sure they fully disclose the obligations of you and your buyer. Buyer representation agreements should have a clearly stated percentage or flat fee the buyer is responsible for paying the buyer broker. You should disclose to all buyers that in the event the seller isn't willing to pay all or some of your fee, the buyer will be responsible for paying all of the fee or a portion of it. Here are a few FAQs that NAR recently released to help you review and/or update your Buyer Representation Agreements.
Changes to the Landlord-Tenant Statutes
The 2023 session of the Connecticut General Assembly enacted Public Act 23-207 which made several important changes to the landlord-tenant statutes. READ MORE...
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."
Dual/Variable Rate Commissions
Although the NAR Settlement precludes agents from disclosing commission amounts and dual/variable commission rate arrangements on the MLS, the Code of Ethics, Article 3, Standards of Practice 3-1 and 3-4 have not changed and provide the following: READ MORE...
Hard Money Loans
A Hard Money Loan is a type of loan that is secured by real property. Hard money loans are considered loans of "last resort" or short-term bridge loans. These loans are primarily used in real estate transactions, with the lender generally being individuals or companies and not banks. READ MORE...
Homeowners/Hazard Insurance
If a mortgage commitment letter lists homeowners/hazard insurance as a condition of the mortgage, you may need to extend the mortgage contingency date to protect your buyer's deposit(s). READ MORE...
Hubbard Clause & Under Contract Riders
When a Hubbard clause is accepted with a sales contract on a property using the “Sale of Buyer’s Property Contingency (“Hubbard”)” 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. READ MORE...
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.
Lead-Based Paint Disclosures
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. READ MORE...
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 Date
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. READ MORE...
Multiple Offer Best Practices
As a listing agent, remember all directives come from the seller. Set these expectations in advance and list those in the agent-to-agent remarks in the MLS. If using Showing Time to communicate with other agents, please note this in the agent-to-agent remarks. READ MORE...
Residential Purchase Contract and CHFA Loans
CHFA is a first-time home buyer program that is packaged with traditional mortgage programs like Conventional, FHA VA, etc. CHFA also offers secondary mortgage programs for downpayment assistance - DAP and TTO. Paragraph 5(d) of the Real Estate Purchase Contract provides options for multiple different types of mortgages and it is permissible to check more than one box. After “Types of mortgage” in this section it states CHECK THE FOLLOWING AS APPLICABLE. Therefore, when completing this section for a CHFA loan you should check the CHFA box and the underlying types of financing that apply i.e. Conventional, FHA, or VA. You should also use the “Other” line to indicate any secondary loan details such as DAP and/or TTO. READ MORE...
Second Deposit Due Dates
A recurring issue among agents is the timing of the payment of the second deposit under Section 4(b) of the purchase contract. Contracts frequently call for that deposit to be made at or near the same time as the completion of the inspections under Section 17. However, some agents have taken the position that, in the case where the same number of calendar days has been inserted in both places, that the second deposit is not due until all inspection issues have been resolved. It is important to remember that the obligations under Section 4(b) are independent of the rights and obligations under Section 17, so the second deposit is due on the date contained in Section 4(b) regardless of the status of negotiations over inspection issues. If the buyer wants to delay making the second deposit until all of those issues have been resolved, the buyer’s agent should request an extension to the date in Section 4(b).
Service Animals
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).
Smoke & Carbon Monoxide Detectors
Beginning on October 1, 2023, the requirements for notifying buyers of operable smoke and carbon monoxide detectors in one and two-family residential homes or containing a unit in a residential common interest community being sold in CT have been updated. The new requirements are compliant with the state law requiring “all properties have operable smoke and carbon monoxide detection and warning equipment”. READ MORE...
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.