BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
- QUESTION: When a buyer representation agreement renews in 90 days, do we have to create a new agreement or can we use an addendum?
ANSWER: Under the law, a buyer representation agreement cannot automatically renew. To extend the buyer representation agreement, an addendum can be used.
- QUESTION: Does the 90-day limitation on a buyer representation agreement apply to a trust or a limited liability company?
ANSWER: The 90-day limitation on a buyer representation agreement applies to a trust. The 90-day limitation does not apply to a corporation, limited liability company, or partnership.
- QUESTION: Would a photograph be considered digitally altered if you change the sky and add clouds? Add a fire to a fireplace? Use photographs prior to staging and then remove the staging? Add a virtual sunset?
ANSWER: The threshold for determining whether a photograph is digitally altered is whether the change affects the property itself. Therefore, the determination should be whether the change in the photograph materially affects the value or desirability of the property. Specifically, adding a cloud to the sky likely does not affect the property. Adding a fire to a fireplace may affect the property if the fireplace is not capable or fit for a fire. For example, if the fireplace is electric and a fire cannot be lit in it, or is in a jurisdiction which prohibits fireplace fires, such alteration could be problematic. Likewise, if the property is in a location where sunsets are not common, adding a sunset could be problematic.
- QUESTION: Regarding the statute requiring disclosure of smoke residue, does it include marijuana?
ANSWER: Technically, no, the new statute is specifically applicable solely to tobacco and nicotine products. However, prior marijuana use and cultivation at a property should be disclosed.
- QUESTION: How do we protect buyers who are sensitive to smoke residue if a seller claims that the seller did not smoke in the property?
ANSWER: It is a good idea when starting to work with a buyer to ask about any particular allergies or sensitivities. The Buyer Identification of Preferences and Priorities or Material Issues For a Specific Property (Forms BIPP and BMI-SP on zipForms) can be used for this purpose. If a buyer states a particular sensitivity, whether to smoke, mold, or other issues, a question should be asked of the seller as to whether those conditions exist. For example, ask the seller if anyone has ever smoked at the property. For mold sensitivity, ask the seller if there has been water intrusion or a history of mold
- QUESTION: If a seller delivers the TDS to the buyer prior to writing an offer, does the buyer have a right to cancel.
ANSWER: Yes, so long as the TDS is complete. A completed TDS includes the sellers answering all questions (including checking a box in Section I) and delivering the listing agents’ report of their visual inspection of the property.
- QUESTION: Given that the Seller Property Questionnaire (SPQ) is more comprehensive, why does it not have its own timeline for receipt or dispute similar to the TDS?
ANSWER: Unlike the TDS, the SPQ is not created by statute, but is required to be delivered within the time specified in the Residential Purchase Agreement. While the SPQ does not have an automatic statutory right of cancelation, it may include information which may give the buyer a right to cancel pursuant to the inspection contingency, assuming it is in place. If there is no property inspection contingency and the buyer objects to any new disclosure in the SPQ, refer the buyer to a qualified California real estate attorney.
- QUESTION: What is the timeline for delivery of an Agent Visual Inspection Disclosure?
ANSWER: The TDS Page 3 requires that both agents report their visual inspection. Most agents use the Agent Visual Inspection Disclosure (AVID) to report their inspection. The law requires that a visual inspection be performed as soon as practicable. However, a TDS is not considered complete until the listing agent provides the report of his/her visual inspection. Therefore, in a TDS transaction a buyer has an opportunity to cancel the contract within three or five days of delivery of the listing agent’s visual inspection. Therefore, it is within the fiduciary duty of a listing agent to deliver their AVID as soon as possible. The buyer’s agent should provide the AVID as soon as practicable.
- QUESTION: Regarding the TDS, does a landlord who does not live on the property have to complete the form?
ANSWER: Yes, if the landlord is selling the property. If the landlord is leasing the property, a TDS is not required unless it is a lease with an option to purchase or is a ground lease with improvements of any single family residence.
- QUESTION : Does the law require a landlord to provide a tenant with a dishwasher?
ANSWER: No. Pursuant to the new law, refrigerators and stovetops are required for rentals covered by this law. Dishwashers are not a requirement to consider a property to be habitable. See the tip for important details in this law.
- QUESTION: Other than property managers, what other types of businesses are affected by the antitrust algorithms?
ANSWER: That statute can apply to any business in the State of California, but as it relates to the real estate industry, real estate brokerages, if they are colluding to set prices or commissions.
- QUESTION: If you have a client who refuses to sign a buyer representation agreement, can you still represent them in the purchase of property?
ANSWER: No. That is a violation of the law and you cannot be paid by either the buyer or seller.
- QUESTION: Where do we find your website? Where do we find the videos? Can we share the videos with our clients or agents from other companies?
ANSWER: Our website is www.brokerriskmanagement.com. Videos are posted to the website. The website is password protected. Broker Risk Management’s materials are only available to its clients. Videos can be accessed by broker-owners and managers. It is imperative that the videos, tips, webinars, and other Broker Risk Management materials remain confidential. They are copyrighted and should not ever be distributed to the public domain outside of your brokerage. They contain attorney-client privileged materials which must be kept confidential.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry but rather are intended to suggest good risk management practice.