STAY CONNECTED - GET THE FACTS: DECEMBER 30, 2014

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Patrick Carter
5 years ago
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2014 LEGAL HOTLINE QUESTION: This question concerns

prospective customers of the new housing know of the

But as a site agent, who needs to sell inventory, this

new houses. Hence the dilemma on my hands.

ANSWER: The answer to this question must be drawn from

1 Having trouble viewing this ? Click here STAY CONNECTED - GET THE FACTS: DECEMBER 30, 2014 LEGAL HOTLINE QUESTION: This question concerns disclosure of a level III sex offender living in a house surrounded by a new housing project. As a REALTOR, I would feel uncomfortable not letting prospective customers of the new housing know of the situation. But as a site agent, who needs to sell inventory, this would seem counterproductive to my mission to sell the new houses. Hence the dilemma on my hands. I would appreciate some advice on walking this tight rope. ANSWER: The answer to this question must be drawn from guidance given in the Agency Law and other governing authority. The Agency Law mandates that brokers disclose "Material Facts." The specific definition of material facts must be considered in answering this question. The Agency Law defines "Material Facts" as follows: 1 of 9 12/30/14, 1:06 PM

2 "Material fact" means information that substantially adversely affects the value of the property or a party's ability to perform its obligations in a real estate transaction, or operates to materially impair or defeat the purpose of the transaction. The fact or suspicion that the property, or any neighboring property, is or was the site of a murder, suicide or other death, rape or other sex crime, assault or other violent crime, robbery or burglary, illegal drug activity, gang-related activity, political or religious activity, or other act, occurrence, or use not adversely affecting the physical condition of or title to the property is not a material fact. RCW (9). The presence of the sex offender in a neighboring home is not a "material fact". Next, this analysis should consider the duties owed to both parties. Each party is entitled to the duty of loyalty from the broker representing the party and the duties of reasonable skill and care as well as honesty and good faith from both brokers. The duty of loyalty, owed from the broker to the party or parties the broker represents, requires the broker to take no action that is adverse or detrimental to the interests of the principal or principals in the transaction. The duty of reasonable skill and care requires broker to act without negligence and the duty of honesty and good faith means precisely what the words imply. Finally, it is helpful to consider the Seller Disclosure Act in this analysis. While the Seller Disclosure Act speaks primarily to the duties of the seller, the statute does involve brokers. Brokers are required, under the Seller Disclosure Act, to correct known errors, inaccuracies or omissions in the Seller's Disclosure Statement. The Seller's Disclosure Statement does NOT require sellers to disclose the presence of known sex offenders but rather, puts buyers on notice that buyers should protect their own interests by researching the presence of registered sex offenders. With all of this as background, each broker and each DB, in setting office policy, must figure out how to walk this tight rope on a case by case basis. As with so many topics in this industry, there is not a one-size-fits-all answer to this question. Assume broker is the listing broker. Broker owes a duty of loyalty to the seller and the duties of reasonable skill and care and honesty and good faith to both parties. Assuming the seller does not want listing broker to volunteer information regarding the presence of the sex offender, the listing broker should endeavor to honor the seller's instruction. First, recall that the presence of the sex offender is not a material fact and thus, broker is not compelled to make the disclosure. However, if asked directly, listing broker must answer the question with honesty and in good faith. Now assume that broker is the buyer's broker. If broker has actual knowledge of the presence of the sex offender and wants to disclose the information to buyer, there is no reason that broker cannot do so. The fact that the definition of material fact does not mandate disclosure does not mean that broker cannot choose to disclose the information if broker wants to disclose the information. Moreover, broker may be compelled to disclose the information to buyer if circumstances warrant. For example, if buyer instructs broker to inform buyer of any known hazards in the area or unsafe conditions, etc. In other words, if buyer puts broker on notice that buyer wants information that buyer's broker may have about such things as the location of known sex offenders, broker should make the disclosure if broker has actual knowledge. A buyer's broker should always, however, without exception, educate buyers to research this information for themselves. Broker should point out the information on the Seller Disclosure Statement referencing sex offender research. Buyer brokers may provide buyer with a separate handout identifying the local Sheriff's website and/or the address or phone 2 of 9 12/30/14, 1:06 PM

number for local law enforcement. One thing that buyer brokers should never do, however, is volunteer to research the whereabouts of sex offenders for buyers.

3 number for local law enforcement. One thing that buyer brokers should never do, however, is volunteer to research the whereabouts of sex offenders for buyers. If broker takes on this task, then broker becomes liable for the accuracy of the results of the research and frankly, the information can change daily. Brokers should never make assurances to buyers regarding research results but rather, should empower buyers to conduct the research for themselves. All of this information is provided to assist brokers and managing brokers in making decisions, for themselves and their offices, about how to balance all of the competing interests that factor into determining how to walk this tight rope. There are few absolutes in answering this question. Rather, the best answer for each situation will have to be determined by the brokers involved in the situation, based on the Agency Law and, to some degree, the Seller Disclosure Act. Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to or call (800) Please have your NRDS number ready when you call or the Hotline with your question. The Legal Hotline lawyer does not represent Washington Association of REALTORS members or their clients and customers. Research this topic and thousands of others online. CAREER HELP 3 of 9 12/30/14, 1:06 PM

4 Scientifically Develop the Habit of Lead Generation Techniques from YPN Blogger Alex Cavelli to develop habits of lead generation. Part 1: "Do Not Fail" - Choosing your daily contact goal. Part 2: "The Seinfeld Method" Forming consistency. Part 3: "Definite Purpose" Envisioning your purpose. Part 4: "Simplify" It's a Wrap (1000WattBlog)We're about to close out a monumental year in real estate.more housing markets heated up - some wayyyyy up. Zillow bought Trulia. News Corp. bought Move. Realogy bought ZipRealty. The first Berkshire Hathaway HomeServices brokerages showed up, as well as a growing group of independent brokers. At 1000watt, we helped clients dig deep, rebrand, reposition and create things altogether new. We're grateful for the opportunity to jam with such great people. We leave 2014 full of optimism and ambitions for the year ahead. Before we sign off to don some holiday sweaters, eat sweet stuff and avoid politics with relatives, we pulled a list of notable posts from the 1000watt blog this year. 8 Extras that help sell a home... (Inman.com) There are plenty of posts that share advice agents should give to sellers as they prepare a home for sale. By now, most agents understand the wisdom of obtaining high-resolution photos, featuring homes online, designing professional property fliers, a possible open house here or there, and everything else that goes into good marketing. Yet, the most important factor still is what the buyer sees when visiting a home in person. TOP STORIES 4 of 9 12/30/14, 1:06 PM

5 National House Price Index increased 4.6% year-over-year in October (CalculatedRiskBlog) S&P/Case-Shiller released the monthly Home Price Indices for October ("October" is a 3 month average of August, September and October prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. Buers Say Price, Not Inventory, Is the Problem... (REALTORMag) Home buyers say that affordability is a bigger concern than the lack of homes for sale - the first time since early 2012 that price has trumped inventory in buyers' minds, according to a new survey. Nearly 33 percent of 1,300 home buyers say that "affordability in the area I want to buy" was the biggest obstacle to a home purchase in November, according to results from Redfin's Real-Time Buyer Survey. That compares to 11 percent of buyers who cited the biggest obstacle as "not enough homes for sale." 5 of 9 12/30/14, 1:06 PM

MORTGAGE RATES National Averages 30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM Average Rates 3.83% 3.10% 3.01% 2.39% Change (from prior week) +0.03% +0.01% +0.06% +0.01% Fees & Points 0.6 0.6 0.5 0.

6 MORTGAGE RATES National Averages 30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM Average Rates 3.83% 3.10% 3.01% 2.39% Change (from prior week) +0.03% +0.01% +0.06% +0.01% Fees & Points Margin N/A N/A Regional Breakdown (West) 30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM Average Rates Change (from prior week) +0.01% ----% +0.06% ----% Fees & Points Margin N/A N/A Source: Freddie Mac - Weekly mortgage rates released every Thursday GOVERNMENT AFFAIRS Registration is Open - Early Bird Discount Don't forget to register for Hill Day 2015! Registration is now open. Join us January 21 and 22 for our annual event. Click to register or for more information. See you there! 6 of 9 12/30/14, 1:06 PM

7 EDUCATION Regional Professional Standards Jan CE Olympia Current Issues in WA Residential RE - CORE Jan CE Webinar Current Issues in WA Residential RE - CORE Feb CE The Dalles, OR ipad Tips, Tricks & Must Have Apps Feb CE The Dalles, OR NAR Code of Ethics Feb CE Tri-City Professional Standards Express Feb CE Tri City Statewide Forms Full Day Feb CE Bothell Wow, What Just Happened? Mar CE Tri City Statewide Forms 1/2 Day May CE Tri City Best of the Legal Hotline May CE Tri City Current Issues in WA Residential RE Sept CE Clarkston View all classes and register. BEST OF THE LEGAL HOTLINE Question Broker was licensed with a firm when broker put a transaction together. The transaction has not yet closed. Broker moved to another firm. Broker's independent contractor agreement with original firm is no longer in effect. Though broker has tried to get the pending transaction released from the first firm, the firm is non-responsive. What should broker do to gain release of the file? Answer When buyer and seller entered the agreement with the assistance of broker, broker was acting on behalf of broker's firm. In fact, broker's firm represented and continues to represent the party in the transaction. Broker only represented a party in the transaction by designation from broker's firm. Now that broker is no longer with the firm, the firm continues to represent the party to the transaction but broker does not. The firm has no obligation to ""release"" the file to broker or to broker's new firm. In fact, it is not even clear what such a release would look like. It would have to be signed by buyer and seller, at a minimum. 7 of 9 12/30/14, 1:06 PM

Perhaps it would release the first firm from all liability in the transaction?

whatever commission is owing to broker, based on the terms of the recently

IF the party to the transaction seeks a different outcome, the party should be

Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of

8 Perhaps it would release the first firm from all liability in the transaction? There is no standardized form for such a release because typically, firms do not release pending transaction files. Rather, the usual approach is that the firm will close the transaction and then pay whatever commission is owing to broker, based on the terms of the recently terminated independent contractor agreement, to broker. IF the party to the transaction seeks a different outcome, the party should be advised to seek legal counsel. Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org or call (800) Please have your NRDS number ready when you call or the Hotline with your question. The Legal Hotline lawyer does not represent Washington Association of REALTORS members or their clients and customers. Research this topic and thousands of others online. MEMBERSHIP RESOURCES HOME SIGN UP LEGAL HOTLINE CONTACT US Washington REALTORS advocates for REALTORS and their clients and provides services to help members prosper Company Name. All Rights Reserved. 8 of 9 12/30/14, 1:06 PM

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STAY CONNECTED - GET THE FACTS: January 6, 2014

Having trouble viewing this email? Click here STAY CONNECTED - GET THE FACTS: January 6, 2014 LEGAL HOTLINE QUESTION: Buyer makes offer and identifies, on line 17 of Form 21, that Form 35 is part of buyer's