Keeping Current with Texas Real Estate MCE, 2014–2015
Download
Report
Transcript Keeping Current with Texas Real Estate MCE, 2014–2015
Chapter 3
Additional Legal Update and
Hot Topics
© 2014 OnCourse Learning
Sponsoring Broker’s
Executive Summary of
New TREC Regulations
“To Do” Lists
© 2014 OnCourse Learning
Advise sales people of scope of activities.
Review all advertising.
Establish team leader or supervisor.
Keep the following for at least FOUR years:
All Disclosures.
Compensation agreements, all work files,
contracts, exhibits, and addenda.
Receipts and disbursements.
All property management contracts.
All agent agreements
© 2014 OnCourse Learning
Prepare policy and procedure manual which:
Confirms four-year record-keeping policy.
Has procedure to maintain licenses current.
Compensation to be paid through broker.
Fees not be shared with unlicensed entity.
Trust account cannot be comingled.
REQUIRES USE OF TREC Form RSC-1,
DISCLOSURE OF RELATIONSHIP WITH
RESIDENTIAL SERVICE COMPANY.
© 2014 OnCourse Learning
Make sure all licensees disclose licensee is
engaging in a real estate transaction:
On his or her own behalf
On behalf of a business entity in which
licensee owns more than 10 %
On behalf of the licensee’s spouse, parent, or
child.
Set up a procedure for immediately delivering
all mail to sponsored salespersons.
© 2014 OnCourse Learning
Texas Contracts
The following Real Estate
Commission forms are currently
promulgated for use by all real estate
licensees, and their use is required in
all transactions to which the form is
applicable.
© 2014 OnCourse Learning
Texas Contracts
TREC 9-10 Unimproved Property Contract
TREC 20-12 One-to-Four Family Residential Contract
•
(Resale)
TREC 23-13 New Home Contract (Incomplete
Construction)
TREC 24-14 New Home Contract (Completed
Construction)
TREC 25-10 Farm and Ranch Contract
TREC 30-11 Residential Condominium Contract (Resale)
Addendums for the above-referenced forms are also
promulgated and required for use by licensees in all
transactions in which the form is applicable:
© 2014 OnCourse Learning
Texas Contracts
TREC 10-6 Addendum for Sale of Other Property by
Buyer
TREC 11-7 Addendum for “Back-Up” Contract
TREC 12-3 Seller’s Release of Liability and VA
Restoration of Entitlement
TREC 15-5 Seller’s Temporary Residential Lease
TREC 16-5 Buyer’s Temporary Residential Lease
TREC 26-6 Seller Financing Addendum
© 2014 OnCourse Learning
Texas Contracts
TREC 28-2 Environmental Assessment, Threatened
or Endangered Species, and Wetlands Addendum
TREC 32-3 Condominium Resale Certificate
TREC 33-2 Notice for Coastal Area Property
TREC 34-4 Addendum for Property Located Seaward
of the Gulf Intercoastal Waterway
TREC 36-7 Addendum for Property Subject to
Mandatory Membership in an Owners’ Association
TREC 37-4 Resale Certificate for Property Subject to
Mandatory Membership in an Owners’ Association
© 2014 OnCourse Learning
Texas Contracts
TREC 38-4 Notice of Termination of Contract
TREC 39-7 Amendment to Contract
TREC Consumer Information Form
TREC 40-5 Third-Party Financing Condition
Addendum for Credit Approval
TREC 41-2 Loan Assumption Addendum
TREC 44-1 Addendum for Reservation of Oil,
Gas, and Other Minerals
TREC 45-1 Short Sale Addendum
© 2014 OnCourse Learning
Other Forms Also Promulgated by TREC
TREC OP-C Notice to Prospective Buyer
TREC OP-H Seller’s Disclosure of Property Condition
TREC OP-I Texas Real Estate Consumer Notice
Concerning Recognized Hazards
TREC OP-K Information About Brokerage Services
TREC OP-L Lead-Based Paint Addendum
TREC OP-M Non-Realty Items Addendum
RSC 1 Disclosure of Relationship with Residential
Service Company
© 2014 OnCourse Learning
Computerized Forms
TREC regulations provide computer-driven
printers can print forms
Practicing Law – TREC requires all
licensees use promulgated forms or forms
prepared by owner or attorney
Pertinent Provisions
© 2014 OnCourse Learning
Specific Paragraphs
Paragraph 1. Parties
Paragraph 2. Property
Paragraph 4. Financing
Paragraph 5. Earnest Money
Paragraph 6. Title (C,D,E)
Humphrey v. Camelot Retirement
Community
© 2014 OnCourse Learning
Specific Paragraphs
Paragraph 7. Property Condition
Paragraph 8. Broker Fees
Paragraph 9. Closing
Paragraph 10. Possession
Paragraph 11. Special Provisions
Paragraph 12. Sales Expenses
Paragraph 14. Casualty Loss
Paragraph 15. Default
© 2014 OnCourse Learning
Specific Paragraphs
Paragraph 16. Mediation
Paragraph 17. Attorney’s Fees
Paragraph 18. Escrow
Paragraph 20. Federal Tax Requirement
Paragraph 21. Notices
Paragraph 22. Addenda
Paragraph 23. Option to Terminate
Paragraph 24. Consult and Attorney
© 2014 OnCourse Learning
Addenda
Third-Party Financing Addendum For
Credit Approval
Assumption
Seller Financing Addendum
Addendum for “Back-Up” Contract
Addendum for Sale of Other Property by
Buyer
© 2014 OnCourse Learning
Addenda
Addendum for Property Subject to
Mandatory Membership in an Owners’
Association
Subdivision Information, Including Resale
Certificate for Property Subject to
Mandatory Membership in an Owners’
Association
Addendum for Seller’s Disclosure of
Information on Lead-Based Paint and Lead
Based Paint Hazards
© 2014 OnCourse Learning
Addenda
Buyer’s and Seller’s Temporary
Residential Lease
Amendment
Notice of Termination of Contract
Non-Realty Items Addendum
Short Sale Addendum
Addendum for Reservation of Oil, Gas,
and Other Minerals
© 2014 OnCourse Learning
Effective Date
Broker is required to fill in date of final
acceptance and party’s addresses.
Extremely important because effective date
keys all time requirements.
If contract is tendered to title company 5 or
more days after effective date, it substantially
alters title company’s ability to issue the title
commitment and all other contingencies and
may create significant liability for brokers
© 2014 OnCourse Learning
Homestead Issues
Two Types of Homesteads, Urban or Rural
Liens
Judicial Foreclosure
Fees
Lines of Credit
Prepayment Penalty
Additional Collateral
Agricultural Property Exemption
Decrease in Market Value
© 2014 OnCourse Learning
Homestead Issues
One Debt
Substantially Equal Payments/Full Interest
Amortization
Cooling Off Period
Location of Closing
Cross Default
Authorized Lenders
© 2014 OnCourse Learning
Homestead Issues
See Section 50(a)(6)(P)
Anti-Flipping Provision
Anti-Redlining Provision
Home Improvement Loans
Reverse Mortgage Loans
Urban Homestead
Judgment Liens – do not attach to
homesteads
© 2014 OnCourse Learning
Homestead Issues
In re Henderson
Court noted decision in Tarrant Bank
demonstrated judicial lien does impair
homestead exemption
Property Code amended - judgment lien
may be discharged under Federal Bankruptcy
New Statute – Regarding judgment liens
Affidavit Not a Release
© 2014 OnCourse Learning
Homestead Issues
New Bankruptcy Rules
Federal Homestead Cap
$125,000 Homestead Cap
© 2014 OnCourse Learning
Recent Homestead Cases
In re Preston
In re Box
Norris v. Thomas, Texas Supreme Court
London v. London
Prudential Ins. Co. of America v. Italian
Cowboy Partners, Ltd
© 2014 OnCourse Learning
New Federal Landlord and Tenant Law!
Enables tenant leasing premises that are
foreclosed upon, to continue occupancy
unless new owner intends property as
primary residence.
Owner must give tenant 90 days notice.
Applies to a federally regulated mortgage.
Tenant can’t be mortgagor or their relatives.
Problems for creditors if there are long term
leases
© 2014 OnCourse Learning
Fair Housing
Adults Only, Familial Status
U.S. v. Fountainbleau
Housing Opportunities Project for
Excellence, Inc. v. Key Colony No. 4
Condominium Assoc., Inc.
In U.S. v. Matusoff Rental Co.
Lender Liability-----’Reverse red-lining’’
M & T Mortgage Corp. v. Foy
Sex Offenders - Doe v. Miller
© 2014 OnCourse Learning
Title Insurance
Closing Attorney’s - Referral Fees
Newington Limited v. Forrester
© 2014 OnCourse Learning
WATER RIGHTS
Surface Water Rights – In Texas,
government controlled use of water through
prior appropriation
Texas Supreme Court held vested right to
water only a usufructuary use of what
state owns
Surface Water Rights
State may authorize use of state water
Conflicting Claims
© 2014 OnCourse Learning
WIND FARMS
Texas has become nation’s leading source of
wind power.
Rankin vs. FPL Energy, LLC
© 2014 OnCourse Learning
Mortgage Fraud
The ‘‘Flip’’ - usually use of a straw man
established in the middle of the transaction
The Old Switch
The Contractor’s Scheme
The Ultimate Lie
“Trust Me’
Identity Theft
Fake Check/Fast Closing
© 2014 OnCourse Learning
Mortgage Fraud
Who’s Liable?
Brokers may have some potential liability
Title company seems to be in the middle
of everything!
Home Loan Corporation v. Texas American
Title Company
Red Flags
© 2014 OnCourse Learning
RESPA
Under new rules all third parties’ charges paid
by title agents must be separately itemized
and cannot exceed amount actually paid.
Another amendment provides for a new
good faith estimate of closing costs and
provides for “tolerances” for variations.
New rule publishes two new HUD-1 and
HUD-1A forms.
© 2014 OnCourse Learning
Texas Deceptive Trade
Practices Act
One Important Change
© 2014 OnCourse Learning
DTPA
Consumer can maintain DTPA action if it is a
producing cause of damages
The plaintiff only has to show producing
cause
“Economic damages”
Definitions:
Goods
Services
Consumer
Unconscionable action or course of action
© 2014 OnCourse Learning
Other Important Provisions
Section 17.42 Waivers now valid and
enforceable
Waiver of Consumer Rights - Does not
require signature of consumer’s attorney
New Section 17.49 prohibits a claim for
damages based on rendering of a
professional service
The Laundry List
Unconscionable Action or Course of
Action
© 2014 OnCourse Learning
Brokerage Cases Interpreting DTPA
Spradling v. Williams
Holloman v. Denson
Lerma v. Brecheisen
Henry S. Miller Management Corp. v.
Houston State Associates
Trenholm v. Ratcliff
Robertson v. United New Mexico Bank at
Roswell.
Cameron v. Terrell & Garrett, Inc
© 2014 OnCourse Learning
Brokerage Cases Interpreting DTPA
Pleasant v. Bradford
Ridco v. Sexton
Autohaus, Inc., v. Aguilar
Kelley v. TREC
Henry S. Miller v. Bynum
Ramsey v. Gordon
© 2014 OnCourse Learning
Other DTPA Cases
Weitzel v. Barnes
Prudential
Wyatt v. Petrila.
Canada v. Kearns
Miller v. Keyser
ECC Parkway Joint Venture v. Baldwin
O’Hern v. Hogard
© 2014 OnCourse Learning
Other DTPA Cases
Haney v. Purcell Company, Inc.
Chrysler Plymouth City, Inc., v. Guerrero.
Century 21 Page One Realty v. Naghad
Nix v. Born
Chastain v. Koonce
Sanchez v. Guerrero
© 2014 OnCourse Learning
Other DTPA Cases
Lefmark Management Company v. Old
Shapiro v. Sutherland
NUISANCE; diminished property value?
Smith v. Kansas Guest Service Co. et al,
Smith v. Herco, Inc
© 2014 OnCourse Learning
Other DTPA Cases
McFarland v. Associated Brokers
Brokers; Can you represent two buyers?
Zuazua v. Tibbles
Rivkin v Century 21 Teran Realty LLC
© 2014 OnCourse Learning
Defenses Under the DTPA
Statutory Defenses
Section 17.505
Section 17.5051 Compulsory Mediation
Section 17.555
Didn’t say it. Newsome v. Starkey;
Didn’t know. Robinson v. Preston Chrysler
Plymouth, Inc..
Not me. Baxter & Swinford, Inc., v. Mercier
© 2014 OnCourse Learning
Case Law Defenses
I told him. Zak v. Parks.
Too vague. Autohaus v. Aguilar, supra;
Not my job. Kubinsky v. Van Zandt Realtors,
“As Is.” The Prudential Insurance Company
of America v. Jefferson Associates
Smith v. Levine
Fletcher v. Edwards
In Larsen v. Langford & Associates, Inc.
© 2014 OnCourse Learning
Case Law Defenses
Cole v. Johnson
Cherry v. McCall
Boehl v Boley
Exceptions to “as is” rule
Kupchynsky v. Nardiello
© 2014 OnCourse Learning
Licensed Real Estate
Property Inspectors
Head v. U.S. Inspect DFW, Inc
Seller Disclosure Forms
Zak v. Parks;
Dubow v. Dragon;
Pfeiffer v. Ebby Halliday
Statute does not apply to transfers
Seller Disclosure Forms
© 2014 OnCourse Learning
Seller’s Disclosures in the Courts
Kessler v. Fanning
Seller Didn’t Know - Bynum v. Prudential
Residential Services, et al
Sherman v. Elkowitz
Structural Repairs - Robertson vs. Odom
© 2014 OnCourse Learning
Damages Under the DTPA
The amount of economic damages found by
the trier of fact.
An order adjoining such acts or failure of act.
Orders necessary to restore to any part of the
suit any money or property, real or personal,
which may have been acquired in violation of
this subchapter.
Any other relief court deems proper.
© 2014 OnCourse Learning
Negligent Misrepresentation
Another cause of action beginning to
permeate cases is negligent
misrepresentation
Hagans v. Woodruff
© 2014 OnCourse Learning
Real Estate Recovery Fund
Texas Real Estate Commission v.
Century 21 Security Realty, Inc..
Texas Real Estate Commission v.
Hood
Only actual damages (not treble
damages) may be recovered.
State v. Pace
St. Paul Ins. Co. v. Bonded Realty, Inc.
© 2014 OnCourse Learning