Due Diligence in Seller(s) Representation in Residential

Real Estate Transactionswith

kate lanagan macGregor

RE97R15

Why Do We Care?

How hard to we have to work…

I mean...Homes are selling like hotcakes!

So many Options!

You Are Responsible!

❏ Yourself❏ Principal (Seller)

❏ Broker/Owner To reduce the risk of liability for themselves, their company, and the consumers they represent relative to the following a

❏ Real Estate licensees are NOT attorneys

❏ Do not mistake diligence for legal representation!

Warning!

Why Verify?

❏ Real Estate licensees deal with contracts every day.

❏ Verifying available data will:

❏ Avoid confusion❏ Promote trust❏ Avoid litigation❏ Respect time

Legal ‘Help’?❏ Establish if Seller has legal

representation. If not, suggest they consider having an attorney.

❏ What does that mean?❏ Ensure accurate information

Objective is to Reduce Risk

What Information?❏ Check all the data

Who Does Due Diligence?

❏ Advise clients & customers to perform their own due diligence.

❏ Why not YOU?

‘Higher Authority’

❏ Advise clients & customers to get legal representation

❏ Why not YOU?

❏ NAR Legal Pulse❏ MAR Legal Hotline

Resources & Examples

Quinlan vs Clasby

❏ “Should Have Known”❏ Broker. Consumer Protection Act,

Unfair or deceptive act.

M.G.L. c 93A

A Superior Court judge erred in ruling that the defendant real estate broker was liable for unfair and deceptive acts or practices under G. L. c. 93A, based on her having advertised a house as a three-family dwelling when, in actuality and without the broker's knowledge, the home as configured violated zoning requirements, where there was little, if any, reason for the broker to suspect that the property was not lawfully a three-family residence, and where the broker did all that was legally required of a real estate broker in the sale of the property to the plaintiffs. [102-104]

DeWolfe vs Hingham Center, LTD

Broker. Negligence, Real estate broker, Misrepresentation. Zoning.

464 Mass. 795In an action brought in Superior Court alleging that the defendants (a real estate agency and broker) misrepresented the zoning classification of a property offered for sale, the judge erred in granting summary judgment in favor of the defendants, where the broker owed a duty to exercise reasonable care in making representations to prospective buyers, and where the evidence could support a finding that the broker, who was on notice that the information provided by the seller regarding the zoning classification might be unreliable, did not exercise reasonable care when making written representations without further investigation [799-802]; further, the warranties and representations clause of the purchase and sale agreement, which permitted reliance on prior written representations not set forth or incorporated in the agreement, did not relieve the defendants of any liability [802-806].

Verification of Ownership of Property❏ Registry of Deeds❏ Why not the one

they provide you?

Agent Responsibilities to Seller & Broker/Owner

Deed Review

❏ Right of way or easements❏ Life Estates❏ Restrictions or Covenants

❏ Registry of Deeds overview❏ Liens on property❏ $$

Agent Responsibilities

Orders of Notice

❏ The foreclosure process has two parts.

Servicemember

❏ In the first, the lender files a complaint in the Land Court seeking a declaration that the borrower is not entitled to the protection of the Servicemembers’ Civil Relief Act of 2003.

Land Court

❏ The Land Court issues the lender an Order of Notice intended to notify the borrower of the complaint and the procedure for responding.

Recorded or Registered?

❏ Registered versus recorded❏ Hybrid-parcels fall within both

categories of recorded and registered

❏ Field card review ❏ What can this show you?

Agent responsibilities

Permits filed & fully executed

❏ Building, plumbing, electrical etc.❏ Completed and signed off

❏ Horror stories?

Zoning Board of Appeals

❏ Special Permits or variances❏ Know your Town Hall!

Online Vs In Person

❏ Assessors Card vs Building Department

❏ Variations

Mandatory?

❏ Sellers Statements❏ Who fills it out❏ Full disclosure of known defects

❏ Lead Paint Disclosure

Property Transfer Lead Paint Notification

Proper completion of the form ~up to 10k

When is this done?❏ Before signing

❏ Checks, x’s and initials

❏ Who signs?

1600’s-1978

❏ Lead paint & new construction?

Don’t Assume it’s Deleaded!

❏ Lead paint & rehab liability❏ ( Piers vs Wheeler)

Verification

❏ Certificate of Compliance❏ Letter of Interim Control

❏ Home Inspection❏ Attend or not❏ Actual Knowledge

Agents’ responsibilities

Affirmative disclosure?

❏ Proprietary information

Sitting at the Table?

❏ Actual knowledge & subsequent disclosure

❏ Heresay knowledge

❏ Condominiums❏ Check approval for FHA

Approval on HUD.gov❏ Look up by state, town and condo

name

Condos

Keep on ‘File’

❏ Condominium Documents❏ Declaration of trust❏ Master deed❏ Unit deed

Update regularly

Read to Understand

❏ By laws, Rules & Regulations

Financial Stability

❏ Budget, Owner occupancy❏ Reserves, special assessments

❏ Reserve study

What Is their Financial Picture?

Ownership Policies

❏ Number of units owned by a single person

The Condo Crisis of the Recession

❏ # of Condo owners whose fees in arrears

Additional Information

❏ Certificate of Insurance

Fees to Association Paid?

❏ 6D Certificate❏ [MGL c. 183A s. 6(d)] ❏ When do you request it?

Policies

❏ Rental restrictions

❏ Pet policy

❏ Professional Management or Owner Managed

❏ List of TrusteesWhy is this relevant?

Legally Speaking...

❏ Any litigation?❏ Why?

Condo Questionnaire

❏ Who gets it filled out❏ Who pays for it❏ What if the association has no

documents❏ What if management refuses to fill

out the form

❏ Copies of leases❏ Ask their preference

Selling a Multi family

This is their Home..

❏ Names and contact info of the tenants

❏ Notice needs to be given to the tenants

❏ How to secure cooperation

Bank Requirements

❏ Rental history❏ Litigation or evictions in place❏ Security deposits or last month rent

information❏ Occupancy Certificates

City Records

❏ Verification of legal use❏ Assessors records❏ Building department❏ utilities

❏ Note items such as:❏ electrical system, ❏ heating system, ❏ fuel, ❏ hot water (owned or leased),

Walk through & Data collection

Inspect for possible items to disclose to eliminate surprises.

❏ water stains, ❏ freshly painted basements, ❏ sheds & outbuildings

Disclose or No?

Stigmatized properties

https://malegislature.gov/laws/generallaws/

part1/titleXXV/chapter93/section114

For Further Information

RE91R14 (ce class on disclosure)

❏ Environmental Issues❏ Department of

Environmental Protection

Walk Through & Data Collection

“Moisture Penetration”

❏ Contamination, ❏ mold, ❏ discoloration

Can They ‘Make it Their Own’?

❏ Conservation commission

Outstanding Permits

Orders of condition

Conservation

Rivers Protection Act

Soil Pollution?

Underground tanks

Hazardous Materials

❏ Asbestos, ❏ Radon, ❏ Lead

Title 5

Well & Septic (if applicable)

❏ GIS Mapping ❏ (Geographic Information

System)

Owned or Leased?Solar panels

❏ In law and Accessory units❏ Community zoning bylaws vary by town❏ Restrictions❏ Transferability

Walk through & Data collection

Note specific clauses & the origins

Contracts to Purchase-Purchase & Sale

Don’t Be Creative

Use preset addenda when available

Attorney Oversight

❏ Use extreme caution when writing contingencies❏ We are not attorneys!

❏ The challenge of language

Registry of Deeds Online❏ Verification of accuracy of the information

❏ Deed description

Silva~ Silvia

❏ Correct sellers names and address❏ Full Legal Name

Clarify Early!

❏ Excluded or included items❏ Real vs Personal Property❏ Encourage to remove

Lawyer’s Favorite (NOT!)

❏ As Is, Where IsIf willful non-disclosure of known defect is found, clause may not survive in court

❏ Final utility readings❏ Allow for time❏ Who is buying oil?❏ TILA-RESPA Guidelines

Pre closing & Closing

Time for Fire Department

❏ Smoke & CO Certificate from the fire department

❏ Building Permits?

❏ (Excise) tax stamps ($4.56 per thousand)

❏ They won’t remember you told them!

Septic?

Title 5 (if applicable)

Turn around Times

❏ TRID (CE course RE93R15) ❏ CFPB effect on RE closings.

Walk through

❏ What is the purpose?❏ When do you do it?

❏ Know the laws of Agency❏ Commonwealth of MA ❏ MGL ch. 112, Section 87

Walking the line!Licensee or Attorney

OLD CAR

Learn to recognize red flags

Guide sellers to the proper authority

❏ City Hall❏ Websites for Town❏ Lawyer

❏ If you don’t know, say so! ❏ Know where to find the info.

❏ “Let Me Double check!”

Review!

❏ Recognize the limits of your knowledge. Don’t guess!

❏ OLD CAR❏ Learn to recognize red flags and guide

Sellers to the proper authoritative source

Do your homework & research

❏ 1. Lana Schroeder, Esq., Claims Specialist for Rice Insurance Services Company, LLC

❏ 2. According to Lana, Breach of Duty was the second highest cause of suits reported by their company between 1/1/2001 and 7/31/2010

❏ 3. Example cited: Client reported the real estate agent breached her duty by failing to verify the lot she contracted to purchase was the same lot she showed her.

Be the source of the source

You are not an attorney unless you passed the bar!

Questions?

For the Slides and Curriculum Outlinevisit:

www.agentrising.com

Thank You!WE are here to help you…. Rise to the TOP!

Agent Rising Real Estate School and Training CentersEducator

Instructor Training InstituteCertified Distance Educator InstituteCertified Trainer, zipFormsOwner/Instructor- Agent Rising Presenter/Trainer - NAR,MAR, NEAR, SEMAR, RASEM,NSARePro, ABR, Notary, B.A. 2018 VolunteerMassachusetts RealtorⓇ of the YearPresident RASEM 2018MAR Chairperson Pro Development 2016Member- Professional Standards 2016Dean- Leadership Academy 2016

101

Thank You!WE are here to help you…. Rise to the TOP!

Agent Rising Real Estate School and Training Centers

Let’s Get Social!Find Me! Friend Me! Like Me! Share!Kate Lanagan MacGregor508-728-3648Kate@KateLanaganMacGregor.com

102