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LIS > Code of Virginia > 54.1-2130 10/27/08 11:05 AM

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§ 54.1-2130. Definitions.

As used in this article:

"Agency" means every relationship in which a real estate licensee acts for or represents a person by such person's express authority in a real estate transaction, unless a different legal relationship is intended and is agreed to as part of the brokerage relationship. Agency includes representation of a client as a standard agent or a limited service agent. Nothing in this article shall prohibit a licensee and a client from agreeing in writing to a brokerage relationship under which the licensee acts as an independent contractor or which imposes on a licensee obligations in addition to those provided in this article. If a licensee agrees to additional obligations, however, the licensee shall be responsible for the additional obligations agreed to with the client in the brokerage agreement. A real estate licensee who enters into a brokerage relationship based upon a written brokerage agreement that specifically states that the real estate licensee is acting as an independent contractor and not as an agent shall have the obligations agreed to by the parties in the brokerage agreement, and such real estate licensee and its employees shall have no obligations under §§ 54.1-2131 through 54.1-2135 of this article.

"Brokerage agreement" means the agreement by which a real estate licensee represents a client in a brokerage relationship.

"Brokerage relationship" means the contractual relationship between a client and a real estate licensee who has been engaged by such client for the purpose of procuring a seller, buyer, option, tenant, or landlord ready, able, and willing to sell, buy, option, exchange or rent real estate on behalf of a client.

"Client" means a person who has entered into a brokerage relationship with a licensee.

"Common source information company" means any person, firm, or corporation that is a source, compiler, or supplier of information regarding real estate for sale or lease and other data and includes, but is not limited to, multiple listing services.

"Customer" means a person who has not entered into a brokerage relationship with a licensee but for whom a licensee performs ministerial acts in a real estate transaction. Unless a licensee enters into a brokerage relationship with such person, it shall be presumed that such person is a customer of the licensee rather than a client.

"Designated agent" or "designated representative" means a licensee who has been assigned by a principal or supervising broker to represent a client when a different client is also represented by such principal or broker in the same transaction.

"Dual agent" or "dual representative" means a licensee who has a brokerage relationship with both seller and buyer, or both landlord and tenant, in the same real estate transaction.

"Licensee" means real estate brokers and salespersons as defined in Article 1 (§ 54.1-2100 et seq.) of Chapter 21 of this title.

"Limited service representative" means a licensee who acts for or represents a client with respect to real property containing from one to four residential units, pursuant to a brokerage agreement that provides that the limited service representative will not provide one or more of the duties set forth in subdivision A 2 of §§ 54.1-2131, 54.1- 2132, 54.1-2133, and 54.1-2134, inclusive. A limited service representative shall have the obligations set out in the brokerage agreement, except that a limited service representative shall provide the client, at the time of entering the brokerage agreement, copies of any and all disclosures required by federal or state law, or local disclosures http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+54.1-2130 Page 1 of 2 LIS > Code of Virginia > 54.1-2130 10/27/08 11:05 AM

expressly authorized by state law, and shall disclose to the client the following in writing: (i) the rights and obligations of the client under the Virginia Residential Property Disclosure Act (§ 55-517 et seq.); (ii) if the client is selling a condominium, the rights and obligations of the client to deliver to the purchasers, or to receive as purchaser, the condominium resale certificate required by § 55-79.97; and (iii) if the client is selling a property subject to the Property Owners' Association Act (§ 55-508 et seq.), the rights and obligations of the client to deliver to the purchasers, or to receive as purchaser, the association disclosure packet required by § 55-509.5. A limited service representative may act as the agent or representative of the client only by so providing in writing in the brokerage agreement. If the brokerage agreement does not so state, the limited service representative shall be deemed as acting as an independent contractor of the client.

"Ministerial acts" means those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee's own judgment.

"Standard agent" means a licensee who acts for or represents a client in an agency relationship. A standard agent shall have the obligations as provided in this article and any additional obligations agreed to by the parties in the brokerage agreement.

(1995, cc. 741, 813; 2006, c. 627; 2008, cc. 851, 871.)

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§ 54.1-2131. Licensees engaged by sellers.

A. A licensee engaged by a seller shall:

1. Perform in accordance with the terms of the brokerage relationship;

2. Promote the interests of the seller by:

a. Conducting marketing activities on behalf of the seller in accordance with the brokerage agreement. In so doing, the licensee shall seek a sale at the price and terms agreed upon in the brokerage relationship or at a price and terms acceptable to the seller; however, the licensee shall not be obligated to seek additional offers to purchase the property while the property is subject to a contract of sale, unless agreed to as part of the brokerage relationship or as the contract of sale so provides;

b. Assisting in the drafting and negotiating of offers and counteroffers, amendments, and addenda to the real estate contract pursuant to § 54.1-2101.1 and in establishing strategies for accomplishing the seller's objectives;

c. Receiving and presenting in a timely manner written offers and counteroffers to and from the seller and purchasers, even when the property is already subject to a contract of sale; and

d. Providing reasonable assistance to the seller to satisfy the seller's contract obligations and to facilitate settlement of the purchase contract.

3. Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential, unless otherwise provided by law or the seller consents in writing to the release of such information;

4. Exercise ordinary care;

5. Account in a timely manner for all money and property received by the licensee in which the seller has or may have an interest;

6. Disclose to the seller material facts related to the property or concerning the transaction of which the licensee has actual knowledge; and

7. Comply with all requirements of this article, all applicable fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this article.

B. Licensees shall treat all prospective buyers honestly and shall not knowingly give them false information. A licensee engaged by a seller shall disclose to prospective buyers all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee. As used in this section, the term "physical condition of the property" shall refer to the physical condition of the land and any improvements thereon, and shall not refer to: (i) matters outside the boundaries of the land or relating to adjacent or other properties in proximity thereto, (ii) matters relating to governmental land use regulations, and (iii) matters relating to highways or public streets. Such disclosure shall be made in writing. A licensee shall not be liable to a buyer for providing false information to the buyer if the false information was provided to the licensee by the seller or was obtained from a governmental entity or from a person licensed, certified, or registered to provide professional services in the Commonwealth, upon which the licensee relies, and the licensee did not (i) have actual knowledge that the information was false or (ii) act in reckless disregard of the truth. No cause of action shall arise against any http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+54.1-2131 Page 1 of 2 LIS > Code of Virginia > 54.1-2131 10/5/08 6:51 PM

licensee for revealing information as required by this article or applicable law. Nothing in this article shall limit in any way the provisions of the Virginia Residential Property Disclosure Act (§ 55-517 et seq.).

C. A licensee engaged by a seller in a real estate transaction may, unless prohibited by law or the brokerage relationship, provide assistance to a buyer or potential buyer by performing ministerial acts. Performing such ministerial acts that are not inconsistent with subsection A shall not be construed to violate the licensee's brokerage relationship with the seller unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage or agency relationship with such buyer or potential buyer.

D. A licensee engaged by a seller does not breach any duty or obligation owed to the seller by showing alternative properties to prospective buyers, whether as clients or customers, or by representing other sellers who have other properties for sale.

E. Licensees shall disclose brokerage relationships pursuant to the provisions of this article.

(1995, cc. 741, 813; 2006, c. 627; 2008, c. 741.)

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§ 54.1-2132. Licensees engaged by buyers.

A. A licensee engaged by a buyer shall:

1. Perform in accordance with the terms of the brokerage relationship;

2. Promote the interests of the buyer by:

a. Seeking a property of a type acceptable to the buyer and at a price and on terms acceptable to the buyer; however, the licensee shall not be obligated to seek other properties for the buyer while the buyer is a party to a contract to purchase property unless agreed to as part of the brokerage relationship;

b. Assisting in the drafting and negotiating of offers and counteroffers, amendments, and addenda to the real estate contract pursuant to § 54.1-2101.1 and in establishing strategies for accomplishing the buyer's objectives;

c. Receiving and presenting in a timely manner all written offers or counteroffers to and from the buyer and seller, even when the buyer is already a party to a contract to purchase property; and

d. Providing reasonable assistance to the buyer to satisfy the buyer's contract obligations and to facilitate settlement of the purchase contract.

3. Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the buyer consents in writing to the release of such information;

4. Exercise ordinary care;

5. Account in a timely manner for all money and property received by the licensee in which the buyer has or may have an interest;

6. Disclose to the buyer material facts related to the property or concerning the transaction of which the licensee has actual knowledge; and

7. Comply with all requirements of this article, all applicable fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this article.

B. Licensees shall treat all prospective sellers honestly and shall not knowingly give them false information. No cause of action shall arise against any licensee for revealing information as required by this article or applicable law. In the case of a residential transaction, a licensee engaged by a buyer shall disclose to a seller whether or not the buyer intends to occupy the property as a principal residence. The buyer's expressions of such intent in the contract of sale shall satisfy this requirement and no cause of action shall arise against any licensee for the disclosure or any inaccuracy in such disclosure, or the nondisclosure of the buyer in this regard.

C. A licensee engaged by a buyer in a real estate transaction may, unless prohibited by law or the brokerage relationship, provide assistance to the seller, or prospective seller, by performing ministerial acts. Performing such ministerial acts that are not inconsistent with subsection A shall not be construed to violate the licensee's brokerage relationship with the buyer unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage relationship with such seller.

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D. A licensee engaged by a buyer does not breach any duty or obligation to the buyer by showing properties in which the buyer is interested to other prospective buyers, whether as clients or customers, by representing other buyers looking at the same or other properties, or by representing sellers relative to other properties.

E. Licensees shall disclose brokerage relationships pursuant to the provisions of this article.

(1995, cc. 741, 813; 2006, c. 627.)

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§ 54.1-2138. Disclosure of brokerage relationship.

A. Upon having a substantive discussion about a specific property or properties with an actual or prospective buyer or seller who is not the client of the licensee and who is not represented by another licensee, a licensee shall disclose any broker relationship the licensee has with another party to the transaction. Further, except as provided in § 54.1-2139, such disclosure shall be made in writing at the earliest practical time, but in no event later than the time when specific real estate assistance is first provided. Such disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. Any disclosure which complies substantially in effect with the following shall be deemed in compliance with this disclosure requirement:

DISCLOSURE OF BROKERAGE RELATIONSHIP

The undersigned do hereby acknowledge disclosure that:

The licensee ......

Name of Firm

represents the following party in a real estate transaction:

...... Seller(s) or ...... Buyer(s)

...... Landlord(s) or ...... Tenant(s)

......

Date Name

......

Date Name

B. A licensee shall disclose to an actual or prospective landlord or tenant, who is not the client of the licensee and who is not represented by another licensee, that the licensee has a brokerage relationship with another party or parties to the transaction. Such disclosure shall be in writing and included in all applications for lease or in the lease itself, whichever occurs first. If the terms of the lease do not provide for such disclosure, disclosure shall be made in writing no later than the signing of the lease. Such disclosure requirement shall not apply to lessors or lessees in single or multifamily residential units for lease terms of less than two months.

C. If a licensee's relationship to a client or customer changes, the licensee shall disclose that fact in writing to all clients and customers already involved in the specific contemplated transaction.

D. Copies of any disclosures relative to fully executed purchase contracts shall be kept by the licensee for a period of three years as proof of having made such disclosure, whether or not such disclosure is acknowledged in writing by the party to whom such disclosure was shown or given.

E. A limited service representative shall also make the disclosure required by § 54.1-2138.1.

(1995, cc. 741, 813; 1997, cc. 86, 119; 2006, c. 627.)

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§ 54.1-2138.1. Limited service representative, contract disclosure required.

A. A licensee may act as a limited service representative only pursuant to a written brokerage agreement in which the limited service representative (i) discloses that the licensee is acting as a limited service representative; (ii) provides a list of the specific services that the licensee will provide to the client; and (iii) provides a list of the specific duties of a standard agent set out in subdivision A 2 of § 54.1-2131, subdivision A 2 of § 54.1-2132, subdivision A 2 of § 54.1-2133, or subdivision A 2 of § 54.1-2134, as applicable, that the limited service representative will not provide to the client. Such disclosure shall be conspicuous and printed either in bold lettering or all capitals, and shall be underlined or in a separate box. In addition, a disclosure that contains language that complies substantially in effect with the following shall be deemed in compliance with this disclosure requirement:

"By entering into this brokerage agreement, the undersigned do hereby acknowledge their informed consent to the limited service representation by the licensee and do further acknowledge that neither the other party to the transaction nor any real estate licensee representing the other party is under any legal obligation to assist the undersigned with the performance of any duties and responsibilities of the undersigned not performed by the limited service representative."

B. A licensee engaged by one client to a transaction and dealing with an unrepresented party or with a party represented by a limited service representative and who, without additional compensation, provides such other party information relative to the transaction or undertakes to assist such other party in securing a contract or with such party's obligations thereunder, shall not incur liability for such actions except in the case of gross negligence or willful misconduct. A licensee does not create a brokerage relationship by providing such assistance or information to the other party to the transaction. A licensee dealing with a client of a limited service representative may enter into an agreement with that party for payment of a fee for services performed or information provided by that licensee. Such payment shall not create a brokerage relationship; however, the licensee providing such services or information for a fee shall be held to the ordinary standard of care in the provision of such services or information.

(2006, c. 627.)

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§ 54.1-2139. Disclosed dual or designated representation authorized.

A. A licensee may act as a dual representative only with the written consent of all clients to the transaction. Such written consent and disclosure of the brokerage relationship as required by this article shall be presumed to have been given as against any client who signs a disclosure as provided in this section.

B. Such disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. Any disclosure which complies substantially in effect with the following shall be deemed in compliance with this disclosure requirement:

DISCLOSURE OF DUAL REPRESENTATION

The undersigned do hereby acknowledge disclosure that:

The licensee ......

(Name of Broker, Firm or Salesperson as applicable)

represents more than one party in this real estate transaction as indicated

below:

...... Seller(s) and Buyer(s)

...... Landlord(s) and Tenant(s).

The undersigned understands that the foregoing dual representative may not

disclose to either client or such client's designated representative any

information that has been given to the dual representative by the other client

within the confidence and trust of the brokerage relationship except for that

information which is otherwise required or permitted by Article 3 (§

54.1-2130 et seq.) of Chapter 21 of Title 54.1 of the Code of Virginia to be

disclosed. The undersigned by signing this notice do hereby acknowledge their

informed consent to the disclosed dual representation by the licensee.

......

Date Name (One Party)

......

Date Name (One Party)

......

Date Name (Other Party)

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......

Date Name (Other Party)

C. No cause of action shall arise against a dual representative for making disclosures of brokerage relationships as provided by this article. A dual representative does not terminate any brokerage relationship by the making of any such allowed or required disclosures of dual representation.

D. In any real estate transaction, a licensee may withdraw, without liability, from representing a client who refuses to consent to a disclosed dual representation thereby terminating the brokerage relationship with such client. Such withdrawal shall not prejudice the ability of the licensee to continue to represent the other client in the transaction nor to limit the licensee from representing the client who refused the dual representation in other transactions not involving dual representation.

E. A principal or supervising broker may assign different licensees affiliated with the broker as designated representatives to represent different clients in the same transaction to the exclusion of all other licensees in the firm. Use of such designated representatives shall not constitute dual representation if a designated representative is not representing more than one client in a particular real estate transaction; however, the principal or broker who is supervising the transaction shall be considered a dual representative as provided in this article. Designated representatives may not disclose, except to the affiliated licensee's broker, personal or financial information received from the clients during the brokerage relationship and any other information that the client requests during the brokerage relationship be kept confidential, unless otherwise provided for by law or the client consents in writing to the release of such information.

F. Use of designated representatives in a real estate transaction shall be disclosed in accordance with the provisions of this article. Such disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. Any disclosure which complies substantially in effect with the following shall be deemed in compliance with such disclosure requirement:

DISCLOSURE OF THE USE OF DESIGNATED REPRESENTATIVES

The undersigned do hereby acknowledge disclosure that:

The licensee ......

(Name of Broker and Firm)

represents more than one party in this real estate transaction as indicated

below:

...... Seller(s) and Buyer(s)

...... Landlord(s) and Tenant(s).

The undersigned understands that the foregoing dual representative may not

disclose to either client or such client's designated representative any

information that has been given to the dual representative by the other client

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within the confidence and trust of the brokerage relationship except for that

information which is otherwise required or permitted by Article 3 (§

54.1-2130 et seq.) of Chapter 21 of Title 54.1 of the Code of Virginia to be

disclosed. The undersigned by signing this notice do hereby acknowledge their

informed consent to the disclosed dual representation by the licensee.

The principal or supervising broker has assigned

...... to act as Designated Representative

(Licensee/Sales Associate)

for the one party as indicated below:

...... Seller(s) or ...... Buyer(s)

...... Landlord(s) or ...... Tenant(s).

and

...... to act as Designated Representative

(Licensee/Sales Associate)

for the other party as indicated below:

...... Seller(s) or ...... Buyer(s)

...... Landlord(s) or ...... Tenant(s)

......

Date Name (One Party)

......

Date Name (One Party)

......

Date Name (Other Party)

......

Date Name (Other Party)

(1995, cc. 741, 813.)

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http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+54.1-2139 Page 3 of 3 Legal Corner

Permit Me, If You Will, To Inspect; or, A Brief History of the Universe

Let us consider for a moment the universe of problems we experience between buyers and sellers. Surely that universe would consist in large part of the undiscovered‐and‐ undisclosed dark matter of condition problems unknown to everyone, but I would like to focus the Lytlubble telescope on that part of our universe where I think we could make a significant contribution towards avoiding such disputes and keeping agents out of trouble: known and agreed repairs.

In my experience it isn’t so much that agents and parties don’t find out about problems, it is that we do such a poor job of clearly stating what we expect to be done about it and then ensuring that gets done correctly. Clauses such as “Seller requests Buyer to replace or repair HI item #5” regularly appear in a PICRA when item number 5 in the home inspection might say “HVAC to be inspected by a licensed contractor” or “Roof near the end of its useful life.” What in the world does it mean when you say what you said? How could a court (or the parties, or a contractor, or a settlement agent) possibly understand what you meant by general language such as “Seller requests Buyer to replace or repair?” And for what it is worth, stop using the word “requests” unless you are going to add “pretty please” afterwards.

Similarly, I am greatly concerned that too many in our profession – and if this is an indictment it is one against all of us – simply blithely ignore the fact that many, many repairs routinely done in residential real estate transactions require a permit from the City or County and an inspection. Personally, I would like to see that stopped – so that all termite and moisture companies get the required permit and inspection when they sister or replace joists, replace the sill, band, etc., all roofers get the required permit and inspection where 10% or more of the shingles are replaced (differs in some localities), and all plumbers are required to get a permit and an inspection when a gas furnace or gas stove is replaced. These are but a few examples.

© Brian D. Lytle, Esq., Lytle Law, P.C. www.lytlelaw.com Reprinted with permission of the author. This article was originally published in the Realtor Update, a publication of the Virginia Peninsula Association of Realtors® The law may have changed since this article was written and published so caution is advised.

Page 1 of 2 Legal Corner

I do not believe a listing agent has a duty to inquire about permits (and I would not want you to assume such a duty), but if you learn and have actual knowledge that work has been done without a permit, or that it required a licensed contractor instead of the unlicensed jackleg who is doing it, then I think your duty may well change and you should seek the assistance of your broker and legal counsel regarding your disclosure requirements under a specific set of facts.

Nor do I believe a buyer’s agent has a duty to inquire about permits (and I would not want you to assume such a duty), but I think a buyer’s agent has a duty to do a good job of writing repair requests, and I question whether that should include a contractual requirement for, and closing evidence of, a permit and city inspection as part of the PICRA repair request. For example, many agents now write “receipts at closing” for repairs. Would you say it is part of your job to ensure receipts are produced at closing? If so, would you not then also say you should follow up to ensure evidence of permit and inspection were produced at closing? We are in the process of re‐drafting the VPAR Standard Clauses (on sale now!) and those standard, suggested, clauses have affirmative language regarding permits, inspections, licensed contractors, etc.

It may well be that you are from Mars and I am from Venus. Your client, however, is from Earth and I suspect you know what he or she would want. Please feel free to email me – Brian “Hawking” Lytle at [email protected] if you have any questions about this article or have a topic to suggest for a future article.

© Brian D. Lytle, Esq., Lytle Law, P.C. www.lytlelaw.com Reprinted with permission of the author. This article was originally published in the Realtor Update, a publication of the Virginia Peninsula Association of Realtors® The law may have changed since this article was written and published so caution is advised.

Page 2 of 2 Legal Corner

Shhhh. Don’t Tell Anyone. Promise?

Does a listing agent violate her duty to a seller by disclosing in the MLS or the contract that the seller’s ability to perform is dependent “on the consent or approval of any third party”?

Virginia law requires (absent a written agreement to the contrary) a listing agent to “maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential, unless otherwise provided by law or the seller consents in writing to the release of such information.”

So, it seems to me that in order to answer the question we need to decide whether the types of things we are talking about are (a) “personal and financial information received from the client;” (b) if no then did the client otherwise request them to be kept confidential, (c) does the law require them to be disclosed; and finally, (d) did the client consent in writing to the release?

There is no question but that financial difficulty, bankruptcy, divorce, short sales, judgments, etc. are personal and financial. One might well learn these things from the public record and argue they were not “received from the client,” but I simply do not believe you should allow that to trump the fact that these sorts of things are very personal and probably not common knowledge. I recognize that perhaps they are going to come out anyway, but let’s save that thought for a moment.

Next, we consider whether the client “requested [the information] to be kept confidential.” Obviously, this is mutually exclusive with “consent in writing to the release” but it does highlight the fact the Virginia law pretty much starts with the presumption that you are going to keep your client’s confidences and only disclose them when you have written consent to do so.

© Brian D. Lytle, Esq., Lytle Law, P.C. www.lytlelaw.com Reprinted with permission of the author. This article was originally published in the Realtor Update, a publication of the Virginia Peninsula Association of Realtors® The law may have changed since this article was written and published so caution is advised.

Page 1 of 3 Legal Corner

So, are any of these things required to be disclosed because it is “otherwise provided by law”? No, I do not believe so. I think this provision really addresses the situation also found in the same Virginia code section, oft discussed by us, which is that a listing agent has to disclose certain material adverse facts to prospective buyers whether the seller objects or not. I do think you could make a pretty good argument that there is a legal obligation to disclose the seller is in bankruptcy (um, going to jail if it is hidden and permission not obtained is usually a pretty convincing legal argument), but I am not aware of any “provision of law” that would obligate you as a listing agent to disclose a short sale, for example.

As we have worked through this I pretty much think we can all agree that these things are confidential and should not be disclosed unless the client consents.

But I think seller clients do consent in local practice, and I think they should – both from a practical and legal standpoint.

Until recently REIN required MLS disclosure of such third‐party consent items, and that box still remains. Required or not, recall though that clients sign the data input form that is submitted to REIN. I believe this is sufficient written consent provided there is a discussion about it – after all, consent is never valid unless it is freely, voluntarily and knowingly given. So, if you don’t really have a discussion with your seller about what is really being disclosed and that it does not have to be disclosed there (in the MLS) then you might have a problem. I recognize that noting this type of problem in the listing somewhat stigmatizes the property and might cause prospective buyers not to make offers. Your recommendation to your client whether to disclose them in the MLS is strictly up to you and I make no suggestion in that regard. Talk to your broker for guidance and policy.

But, we all know that the REIN contract has a boilerplate provision whereby the seller affirmatively represents that there are no such contingencies and that if there are then they need to be disclosed. And here, I firmly believe such third‐party consent items

© Brian D. Lytle, Esq., Lytle Law, P.C. www.lytlelaw.com Reprinted with permission of the author. This article was originally published in the Realtor Update, a publication of the Virginia Peninsula Association of Realtors® The law may have changed since this article was written and published so caution is advised.

Page 2 of 3 Legal Corner

should in fact be disclosed and made a contingency because if they are not then the seller will be in breach of contract if they are unable to close. And as we discussed previously, I believe that the seller signing the contract containing the disclosure is sufficient written consent to disclose provided the seller understands he or she has a theoretical choice – after all, you could strike out that language from the contract and stand silent (which of course is tantamount to screaming I HAVE A SHORT SALE SO WITHDRAW YOUR OFFER!) or you could have your client make an affirmative misrepresentation, lose your license and get you both sued.

Please feel free to email me at [email protected] if you have any questions or have a topic to suggest for a future article.

© Brian D. Lytle, Esq., Lytle Law, P.C. www.lytlelaw.com Reprinted with permission of the author. This article was originally published in the Realtor Update, a publication of the Virginia Peninsula Association of Realtors® The law may have changed since this article was written and published so caution is advised.

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Summary of Protected Classes

Virginia's Fair Housing Law makes it illegal to discriminate in residential housing on the basis of race, color, religion, national origin, sex, elderliness, familial status and disability. In addition, the law prohibits applying one standard to one class of individuals while applying a different standard to another class of individuals. For example, it would be illegal to ask a disabled individual applying for an apartment to provide a credit report if non disabled applicants did not have to provide one.

Virginia's Fair Housing Law applies to rental transactions, trying to rent an apartment or house, to sales transactions, trying to purchase a home, to financing transactions, trying to obtain a mortgage, to insurance transactions, trying to obtain homeowners or rental insurance and to advertising transactions, how individuals, companies and newspapers advertise about rental vacancies or homes for sale.

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Description of the protected classes

Race

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It would be illegal to deny someone a housing opportunity because they are black or white.

Color

Some people have darker complexions than others. If would be illegal to deny someone a housing opportunity on that basis.

Religion

A housing provider could not refuse to sell or rent to someone because they practice Islam or Christianity.

National origin

A housing provider could not refuse to sell or rent to someone because they are Asian or Jewish.

Sex

Except for shared living spaces it would be illegal to rent to one sex and not the other. For more information on sexual discrimination, visit the Sexual and Non-Sexual Discrimination page.

Elderliness

Elderliness means over 55. Under this protected class a housing proving could not deny a housing opportunity to someone because they are older than 55.

Familial status

Familial status means having children who are under eighteen. Unless a facility is a senior/retirement facility it may not refuse to rent to families with children. Senior and retirement faculties for individuals over 55 or 62 may however lawfully refuse to rent to families with children.

In terms of occupancy standards as they relate to families and children, the general guideline is that housing providers should allow at least two people per bedroom. In some circumstances landlords should allow more than two people per bedroom while in other circumstance a bedroom and the total living space would not accommodate two people in every bedroom. Housing providers should also not dictate which bedrooms younger children on different sexes sleep as this is a parental matte. Nor should a housing provider dictate what floor families with children should live on. Again this is a parental matter.

Disability

The law also makes it illegal to deny a housing opportunity to individuals with disabilities. For information about housing and disabilities see Housing and Disabilities.

For information on design and construction of multi-family housing with accessible features, see the Design and Construction page.

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Historically most housing complaints have been based on race. Complaints based on disability however continue to increase and may eventually displace race as the number one protected class. Complaints based on familial status are usually the third most frequent type of housing complaint.

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Non protected classes

There are several groups that are not protected under either the state or federal fair housing law. For example students and smokers are not protected. Income status, sexual orientation, marital status, that is unmarried couples and age are also not protected groups. However these classes may be protected under a local ordinance. Therefore before drafting a fair housing policy a housing provider should determine if local ordinances protect certain classes that are not protected by the state or federal law.

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Links to related pages

Housing and Disabilities

Sexual and Non-Sexual Discrimination

Design and Construction

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Start of Page Start of Content Site Map Web Policy Get Plug-ins referenced on this web site: Adobe Acrobat PDF Reader, Word Viewer, etc. Copyright © 2000 Virginia Department of Professional and Occupational Regulation This web page was last updated: 08/30/2007 09:44:37 AM

http://www.dpor.virginia.gov/dporweb/fho_protectedclasses.cfm Page 3 of 3 PART 109--FAIR HOUSING ADVERTISING

Sec. 109.5 Policy. 109.10 Purpose. 109.15 Definitions. 109.16 Scope. 109.20 Use of words, phrases, symbols, and visual aids. 109.25 Selective use of advertising media or content. 109.30 Fair housing policy and practices.

APPENDIX I TO PART 109—FAIR HOUSING ADVERTISING

AUTHORITY: Title VIII, Civil Rights Act of 1968, 42 U.S.C. 3600-3620; section 7(d), Department of HUD Act, 42 U.S.C. 3535(d).

SOURCE: 54 FR 3308, Jan. 23, 1989, unless otherwise noted.

§ 109.5 Policy.

It is the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States. The provisions of the Fair Housing Act (42 U.S.C. 3600, et seq.) make it unlawful to discriminate in the sale, rental, and financing of housing, and in the provision of brokerage and appraisal services, because of race, color, religion, sex, handicap, familial status, or national origin. Section 804(c) of the Fair Housing Act, 42 U.S.C. 3604(c), as amended, makes it unlawful to make, print, or publish, or cause to be made, printed, or published, any notice, statement, or advertisement, with respect to the sale or rental of a dwelling, that indicates any preference, limitation, or discrimination because of race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination. However, the prohibitions of the act regarding familial status do not apply with respect to housing for older persons, as defined in section 807(b) of the act.

§ 109.10 Purpose.

The purpose of this part is to assist all advertising media, advertising agencies and all other persons who use advertising to make, print, or publish, or cause to be made, printed, or published, advertisements with respect to the sale, rental, or financing of dwellings which are in compliance with the requirements of the Fair Housing Act. These regulations also describe the matters this Department will review in evaluating compliance with the Fair Housing Act in connection with investigations of complaints alleging discriminatory housing practices involving advertising.

§ 109.15 Definitions.

As used in this part:

(a) Assistant Secretary means the Assistant Secretary for Fair Housing and Equal Opportunity.

(b) General Counsel means the General Counsel of the Department of Housing and Urban Development.

(c) Dwelling means any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure, or portion thereof.

(d) Family includes a single individual.

(e) Person includes one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustees in cases under Title 11 of the United States Code, receivers, and fiduciaries.

(f) To rent includes to lease, to sublease, to let and otherwise to grant for a consideration the right to occupy premises not owned by the occupant.

(g) Discriminatory housing practice means an act that is unlawful under section 804, 805, 806, or 818 of the Fair Housing Act.

(h) Handicap means, with respect to a person--

(1) A physical or mental impairment which substantially limits one or more of such person's major life activities,

(2) A record of having such an impairment, or

(3) Being regarded as having such an impairment.

This term does not include current, illegal use of or addiction to a controlled substance (as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802)). For purposes of this part, an individual shall not be considered to have a handicap solely because that individual is a transvestite.

(i) Familial status means one or more individuals (who have not attained the age of 18 years) being domiciled with--

(1) A parent or another person having legal custody of such individual or individuals; or

(2) The designee of such parent or other person having such custody, with the written permission of such parent or other person. The protections afforded against discrimination on the basis of familial status shall apply to any person who is pregnant or is in the process of securing legal custody of any individual who has not attained the age of 18 years. § 109.16 Scope.

(a) General. This part describes the matters the Department will review in evaluating compliance with the Fair Housing Act in connection with investigations of complaints alleging discriminatory housing practices involving advertising. Use of these criteria will be considered by the General Counsel in making determinations as to whether there is reasonable cause, and by the Assistant Secretary in making determinations that there is no reasonable cause, to believe that a discriminatory housing practice has occurred or is about to occur.

(1) Advertising media. This part provides criteria for use by advertising media in determining whether to accept and publish advertising regarding sales or rental transactions. Use of these criteria will be considered by the General Counsel in making determinations as to whether there is reasonable cause, and by the Assistant Secretary in making determinations that there is no reasonable cause, to believe that a discriminatory housing practice has occurred or is about to occur.

(2) Persons placing advertisements. A failure by persons placing advertisements to use the criteria contained in this part, when found in connection with the investigation of a complaint alleging the making or use of discriminatory advertisements, will be considered by the General Counsel in making a determination of reasonable cause, and by the Assistant Secretary in making determinations that there is no reasonable cause, to believe that a discriminatory housing practice has occurred or is about to occur.

(b) Affirmative advertising efforts. Nothing in this part shall be construed to restrict advertising efforts designed to attract persons to dwellings who would not ordinarily be expected to apply, when such efforts are pursuant to an affirmative marketing program or undertaken to remedy the effects of prior discrimination in connection with the advertising or marketing of dwellings.

[54 FR 308, Jan. 23 1989, as amended at 55 FR 53294, Dec. 28, 1990.]

§ 109.20 Use of words, phrases, symbols, and visual aids.

The following words, phrases, symbols, and forms typify those most often used in residential real estate advertising to convey either overt or tacit discriminatory preferences or limitations. In considering a complaint under the Fair Housing Act, the Department will normally consider the use of these and comparable words, phrases, symbols, and forms to indicate a possible violation of the act and to establish a need for further proceedings on the complaint, if it is apparent from the context of the usage that discrimination within the meaning of the act is likely to result.

(a) Words descriptive of dwelling, landlord, and tenants. White private home, Colored home, Jewish home, Hispanic residence, adult building.

(b) Words indicative of race, color, religion, sex, handicap, familial status, or national origin--

(1) Race--Negro, Black, Caucasian, Oriental, American Indian.

(2) Color--White, Black, Colored.

(3) Religion--Protestant, Christian, Catholic, Jew.

(4) National origin--Mexican American, Puerto Rican, Philippine, Polish, Hungarian, Irish, Italian, Chicano, African, Hispanic, Chinese, Indian, Latino.

(5) Sex--the exclusive use of words in advertisements, including those involving the rental of separate units in a single or multi-family dwelling, stating or tending to imply that the housing being advertised is available to persons of only one sex and not the other, except where the sharing of living areas is involved. Nothing in this part restricts advertisements of dwellings used exclusively for dormitory facilities by educational institutions.

(6) Handicap--crippled, blind, deaf, mentally ill, retarded, impaired, handicapped, physically fit. Nothing in this part restricts the inclusion of information about the availability of accessible housing in advertising of dwellings.

(7) Familial status--adults, children, singles, mature persons. Nothing in this part restricts advertisements of dwellings which are intended and operated for occupancy by older persons and which constitute housing for older persons as defined in Part 100 of this title.

(8) Catch words--Words and phrases used in a discriminatory context should be avoided, e.g., restricted, exclusive, private, integrated, traditional, board approval or membership approval.

(c) Symbols or logotypes. Symbols or logotypes which imply or suggest race, color, religion, sex, handicap, familial status, or national origin.

(d) Colloquialisms. Words or phrases used regionally or locally which imply or suggest race, color, religion, sex, handicap, familial status, or national origin.

(e) Directions to real estate for sale or rent (use of maps or written instructions). Directions can imply a discriminatory preference, limitation, or exclusion. For example, references to real estate location made in terms of racial or national origin significant landmarks, such as an existing black development (signal to blacks) or an existing development known for its exclusion of minorities (signal to whites). Specific directions which make reference to a racial or national origin significant area may indicate a preference. References to a synagogue, congregation or parish may also indicate a religious preference.

(f) Area (location) description. Names of facilities which cater to a particular racial, national origin or religious group, such as country club or private school designations, or names of facilities which are used exclusively by one sex may indicate a preference.

§ 109.25 Selective use of advertising media or content.

The selective use of advertising media or content when particular combinations thereof are used exclusively with respect to various housing developments or sites can lead to discriminatory results and may indicate a violation of the Fair Housing Act. For example, the use of English language media alone or the exclusive use of media catering to the majority population in an area, when, in such area, there are also available non-English language or other minority media, may have discriminatory impact. Similarly, the selective use of human models in advertisements may have discriminatory impact. The following are examples of the selective use of advertisements which may be discriminatory:

(a) Selective geographic advertisements. Such selective use may involve the strategic placement of billboards; brochure advertisements distributed within a limited geographic area by hand or in the mail; advertising in particular geographic coverage editions of major metropolitan newspapers or in newspapers of limited circulation which are mainly advertising vehicles for reaching a particular segment of the community; or displays or announcements available only in selected sales offices.

(b) Selective use of equal opportunity slogan or logo. When placing advertisements, such selective use may involve placing the equal housing opportunity slogan or logo in advertising reaching some geographic areas, but not others, or with respect to some properties but not others.

(c) Selective use of human models when conducting an advertising campaign. Selective advertising may involve an advertising campaign using human models primarily in media that cater to one racial or national origin segment of the population without a complementary advertising campaign that is directed at other groups. Another example may involve use of racially mixed models by a developer to advertise one development and not others. Similar care must be exercised in advertising in publications or other media directed at one particular sex, or at persons without children. Such selective advertising may involve the use of human models of members of only one sex, or of adults only, in displays, photographs or drawings to indicate preferences for one sex or the other, or for adults to the exclusion of children.

§ 109.30 Fair housing policy and practices.

In the investigation of complaints, the Assistant Secretary will consider the implementation of fair housing policies and practices provided in this section as evidence of compliance with the prohibitions against discrimination in advertising under the Fair Housing Act.

(a) Use of Equal Housing Opportunity logotype, statement, or slogan. All advertising of residential real estate for sale, rent, or financing should contain an equal housing opportunity logotype, statement, or slogan as a means of educating the homeseeking public that the property is available to all persons regardless of race, color, religion, sex, handicap, familial status, or national origin. The choice of logotype, statement or slogan will depend on the type of media used (visual or auditory) and, in space advertising, on the size of the advertisement. Table I (see Appendix I) indicates suggested use of the logotype, statement, or slogan and size of logotype. Table II (see Appendix I) contains copies of the suggested Equal Housing Opportunity logotype, statement and slogan.

(b) Use of human models. Human models in photographs, drawings, or other graphic techniques may not be used to indicate exclusiveness because of race, color, religion, sex, handicap, familial status, or national origin. If models are used in display advertising campaigns, the models should be clearly definable as reasonably representing majority and minority groups in the metropolitan area, both sexes, and, when appropriate, families with children. Models, if used, should portray persons in an equal social setting and indicate to the general public that the housing is open to all without regard to race, color, religion, sex, handicap, familial status, or national origin, and is not for the exclusive use of one such group.

(c) Coverage of local laws. Where the Equal Housing Opportunity statement is used, the advertisement may also include a statement regarding the coverage of any local fair housing or human rights ordinance prohibiting discrimination in the sale, rental or financing of dwellings.

(d) Notification of fair housing policy--

(1) Employees. All publishers of advertisements, advertising agencies, and firms engaged in the sale, rental or financing of real estate should provide a printed copy of their nondiscrimination policy to each employee and officer.

(2) Clients. All publishers or advertisements and advertising agencies should post a copy of their nondiscrimination policy in a conspicuous location wherever persons place advertising and should have copies available for all firms and persons using their advertising services.

(3) Publishers' notice. All publishers should publish at the beginning of the real estate advertising section a notice such as that appearing in Table III (see Appendix I). The notice may include a statement regarding the coverage of any local fair housing or human rights ordinance prohibiting discrimination in the sale, rental or financing of dwellings.

APPENDIX I TO PART 109--FAIR HOUSING ADVERTISING

The following three tables may serve as a guide for the use of the Equal Housing Opportunity logotype, statement, slogan, and publisher's notice for advertising:

Table I

A simple formula can guide the real estate advertiser in using the Equal Housing Opportunity logotype, statement, or slogan.

In all space advertising (advertising in regularly printed media such as newspapers or magazines) the following standards should be used:

Size of advertisement Size of logotype in inches ½ page or 2x2 larger……………………………….. 1/8 page up to ½ page………………………… 1x1 4 column inches to 1/8 page…...... … ½ x ½ Less than 4 column inches (1) 1Do not use.

In any other advertisements, if other logotypes are used in the advertisement, then the Equal Housing Opportunity logo should be of a size at least equal to the largest of the other logotypes; if no other logotypes are used, then the type should be bold display face which is clearly visible. Alternatively, when no other logotypes are used, 3 to 5 percent of an advertisement may be devoted to a statement of the equal housing opportunity policy.

In space advertising which is less than 4 column inches (one column 4 inches long or two columns 2 inches long) of a page in size, the Equal Housing Opportunity slogan should be used. Such advertisements may be grouped with other advertisements under a caption which states that the housing is available to all without regard to race, color, religion, sex, handicap, familial status, or national origin.

Table II

Illustrations of Logotype, Statement, and Slogan. Equal Housing Opportunity Logotype:

Equal Housing Opportunity Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin.

Equal Housing Opportunity Slogan: "Equal Housing Opportunity."

Table III

Illustration of Media Notice--Publisher's notice: All real estate advertised herein is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, or discrimination because of race, color, religion, sex, handicap, familial status, or national origin, or intention to make any such preference, limitation, or discrimination."

We will not knowingly accept any advertising for real estate which is in violation of the law. All persons are hereby informed that all dwellings advertised are available on an equal opportunity basis. Fair Housing letters 10/26/08 8:28 PM

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An Ohio appeals court has ruled buyer agents need not provide racial data to client home buyers, even if the clients demand it. Both sides in the case used a 1996-97 exchange of letters between HUD and The Buyer’s Agent national franchise in Memphis to bolster their positions. Here are the letters that were used in the case:

Letter 1

U.S. Department of Housing and Urban Development Office of the Assistant Secretary for Fair HousinG Washington, D.C. 20410-2000

October 2, 1996

Jill D. Levine, Esq. Legal Counsel The Buyer's Agent Inc.

Dear Ms. Levine:

Thank you for your April 10, 1995 letter to Roberta Achtenberg, former Assistant Secretary for Fair Housing and Equal Opportunity, concerning the prohibition against steering prospective homebuyers, on the basis of a protected class, as it applies to buyer's agents, under the Fair Housing Act ("Act") 42 U.S.C. Sections 3601-19. Specifically, you inquired as to the duties of a buyer's agent when a client instructs the agent to limit the scope of a search for properties by requesting to inspect, or exclude from inspection, dwellings in a neighborhood which the client identifies with reference to a classification based on a protected class status. While there is nothing in the Act to exclude the actions of a buyer's agent from the Act's coverage, the Department of Housing and Urban Development ("HUD") concludes that, with the various provisos discussed more fully below, a buyer's agent would not violate the Act merely by mutely accommodating the client's request to limit, on a protected class basis, the search for dwellings.

HUD's final rule implementing the Act broadly defines "broker" or "agent" to include "any person authorized to perform an action on behalf of another person regarding any matter related to the sale or rental of dwellings, including offers, solicitations or contracts and the administration of matters regarding such offers, solicitations or contracts or any residential real estate-related transactions." 24 C.F.R. Section 100.20 (1995) (definition of "broker" or "agent"). See also 24 C.F.R. Subtitle B, Ch.1, Subch. A, App. 1 at 934 (1995) (definition of "broker" or "agent"). Buyer's agents easily fit within this definition, e.g., they are authorized to perform actions on behalf of buyers regarding matters relating to the sale and rental of dwellings, such as making offers, etc. Accordingly, this definition includes brokers or agents, whether authorized to act on behalf of a seller or a buyer. See also Steptoe v. Beverly Area Planning Ass'n, 674 F. Supp. 1313, 1319-20 (N.D. 111. 1987) (Act covers persons or entities which "directly provide housing or those that are integrally involved in the sale or financing of real estate" provided that "the discriminatory action directly affects] the availability of housing.")

There are no administrative or judicial opinions respecting the Act of which we are aware in which a buyer's agent was a party or which specifically address the duties of buyer's agents under the Act. Without distinguishing between buyers' and sellers' agents, however, courts have interpreted subsection 804(a) of the Act, 42 U.S.C. Section 3604(a), to prohibit "real estate agents" from engaging in steering practices. See Dwivedi, 895 F.2d at 1529-30 (evidence that sellers' agents, without prompting http://www.reintel.com/letters.htm Page 1 of 5 Fair Housing letters 10/26/08 8:28 PM

See Dwivedi, 895 F.2d at 1529-30 (evidence that sellers' agents, without prompting from prospective buyers, showed white homeseekers dwellings primarily in white suburbs, while showing black homeseekers dwellings primarily in integrated suburbs established prima facie case of steering); and Zuch v. Ussey, 394 F. Supp. 1028, 1048 (E.D. Mich. 1975) (real estate agent violates subsection 804(a) of the Act when he or she "actively undertakes an effort to influence housing choice of a prospective home buyer on a racial basis"), affd, 547 F.2d 1168 (6th Cir. 1997). While those cases involved sellers' brokers and agents, given HUD's definition of the terms "broker" and "agent," HUD believes the teachings of those cases also apply to buyer's agents.

Consequently, HUD concludes that a buyer's agent would engage in steering in violation of subsection 804(a), when, without any stated preference or instruction from a buyer client, the agent took any action or made any statement that, based on, e.g., the protected class of residents of a particular neighborhood, renders, or tends to render, dwellings in that neighborhood unavailable to the prospective buyers. On the other hand, when prospective buyers, on their own initiative, explicitly inform their agent of a preference or a dispreference for particular neighborhoods with reference to a classification based on a protected class status, the agent would not make housing unavailable and, thus, would not violate subsection 804(a), merely by accommodating the clients' stated preference or dispreference. See Dwivedi, 895 F2d at 1530 ("[Act] does not place on individual brokers the duty to solve the collective-action problem that results when brokers serving (but not encouraging) the preferences of individual customers cumulatively affect the overall racial pattern in housing."). Such accommodation by the buyer's agent, however, is strictly limited to accommodating the client's self-initiated preference, and may not include any actions or statements that might encourage the client to have or to express such a preference. For example, if a buyer were on his/her own initiative to state to his/her agent a preference for living or not living in a neighborhood based on a protected class, the buyer's agent would violate the Act if, e.g., he/she openly voiced approval of the buyer's protected class preference/dispreference. Zuch, 394 F. Supp. At 1048. And an agent might well incur liability by inducing a buyer to state such a preference. For example, if a white buyer had not expressed a self-initiated preference for a particular neighborhood based on race and an agent said, "If you want to live in a predominately white neighborhood, you must ask me to show you dwellings in such neighborhoods only, because I cannot do that without your request," the agent would violate the Act. See id. At 1047 (real estate agent's language "intended to influence the choice of a prospective property buyer on a racial basis" violates Act). See also United States v. Robbins, 1974 P-H EOH Paragraph 13,655 at 14,264 (S.D. Fla. 1974).

Similarly, an agent's refusal, based on a client's protected class, e.g., race, to show the client homes in neighborhoods of a particular racial composition which the client specifies, would violate subsection 804(a) of the Act. For example, if a black couple were to tell their agent, "We want to live in a predominately white neighborhood," or "We will not buy a home unless it's in a predominately black neighborhood," the agent would make housing unavailable to the client in violation of subsection 804(a) of the Act were he/she to refuse to show them dwellings in the neighborhoods of the type the clients specified.

Your specific inquiry included a buyer's agent's duties under the Act when a client states that he/she is an Orthodox Jew, does not drive a car on the Sabbath, and would therefore like to live very close to a synagogue. By honoring the client's request by showing the client dwellings only in neighborhoods that met the client's description, the agent would not "make unavailable or deny" a dwelling to the prospective buyer on any protected class basis. Accordingly, the agent's accommodation of the client's request, e.g., by excluding from the housing search neighborhoods that do not satisfy the client's requirement of a nearby synagogue and by showing the client dwellings only in those which do, would not violate subsection 804(a) of the Act. If, on the other hand, the client had mentioned to the agent that he/she was an Orthodox Jew, but had not requested to be shown dwellings only in predominately Jewish neighborhoods, the agent would violate subsection 804(a) by, on his/her own accord, showing the client dwellings only in predominately Jewish neighborhoods, thus making dwellings in other neighborhoods unavailable to the client.

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You also inquired specifically as to a buyer's agent's duties under the Act when the prospective buyer says to the agent, "I would like to live in an Asian neighborhood." As in the preceding example, the agent, in honoring the client's request by eliminating from the search all non-Asian neighborhoods and by showing the client dwellings only in those which meet the client's requirement, would not "make unavailable or deny" a dwelling on any basis and, therefore, would not violate subsection 804(a) of the Act. In other words, if a white buyer said to his/her agent, "I want to live in a white neighborhood," or "Don't show me any houses where a lot of minorities live," the agent would not violate the Act if he/she acted upon his/her client's instruction. On the other hand, the agent would violate the Act if he/she said, "I don't blame you for wanting to live in a white neighborhood," "I would never do that [i.e., show a white homebuyer houses where a lot of minorities live]," or something similar that indicated the agent shared or encouraged the buyer's preference/dispreference.

In sum, the Act does not interfere with an agent's delivery of services, as long as agents themselves do not indicate their own discriminatory preferences/dispreferences or, without instructions from their clients, limit the scope of the search, or otherwise make dwellings unavailable to them. In merely obeying a client's request to limit the scope of the search based on protected class status, however, the agent would not make housing unavailable to the client and, thus, would not violate the Act.

I hope the information provided is helpful.

Sincerely, Elizabeth K. Julian Assistant Secretary

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Here is HUD’s second letter to The Buyer’s Agent

Letter 2

Jill D. Levine, Esq. Legal Counsel The Buyer's Agent Inc.

Dear Ms. Levine:

This is in response to your letter of October 28, 1996 thanking me for my reply to your earlier letter. To prevent misunderstanding of HUD's position on your issues, I'd like to take this opportunity to make clear what the letter did and did not say.

The reply to your letter was an attempt to answer your narrowly articulated questions in a helpful and accurate manner. However, it is important you understand the answers to the hypothetical situations you posed reflect an interpretation of the law as it applies only in those specific circumstances. The letter does not represent HUD policy or guidance on the general issues.

The answer to your specific questions regarding the legal import of the accommodation of buyer stated preferences was given after extensive examination of the issue by the Office of General Counsel and the Office of Fair Housing and Equal Opportunity. While under a strict 804(a) (Fair Housing Act) analysis such accommodation may, under a limited set of facts, not violate that provision of the Act, I do not endorse that sort of accommodation as good

policy, nor as keeping within the spirit of the Fair Housing Act.

You express concern that the "exclusive buyer agent who wants to practice real estate ethically and legally" has been hampered by laws that have been designed and interpreted from the viewpoint that the real estate agent always represents the seller. Please understand that I think the ethical obligations are the same, and I do not believe that accommodating a buyer who indicates preference for housing on a racial basis constitutes ethical conduct.

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In fact, the National Association of Realtors, in a training manual recommends "that a buyer's agent include language in his or her buyer's representation agreement indicating a commitment to equal housing opportunity and a statement that the agent has no duty to disclose information regarding race or other protected classes."

Based on these concerns, as well as responses from the real estate industry, fair housing advocates, and other concerned parties, I have asked legal counsel to further consider the implications of such an accommodation

from the standpoint of 804(b) and (c) of the Fair Housing Act. Further, I have referred your letter and HUD's response to the Department of Justice, Civil Rights Division, for review.

I want to emphasize that there is nothing in the Fair Housing Act that requires an agent to accommodate an expressed desire to limit housing search based on race. Therefore, doing so reflects a conscious decision by the broker. The proof that an individual buyer, without encouragement or solicitation, insisted on such a limitation as a condition of the agent receiving the buyer's business would be fact intensive and require extensive investigation involving not only the agent but the buyer. Moreover, the investigation would necessarily require inquiry into the agent's practices (in

what manner do they maintain and make available location records based on race as part of their service?) and any independent judgments that the agent might have made in accommodating the request (what racial composition caused a particular neighborhood [to be] determined to be appropriate for inclusion/exclusion from the search?).

In short, from the standpoint of legally prudent, as well as ethical, considerations, I would strongly advise against any agent or broker putting themselves in that position by accommodating a request that a housing search be limited based on race, or other protected-class terms. The fact that Section 804(a) of the Fair Housing Act may, under limited

circumstances, not prohibit such accommodation does not make it right, does not make it ethical, and it is not the policy of the Department of Housing and Urban Development to endorse such conduct.

Finally, I would point out that your hypothetical questions focused on an individual act of a buyer and a broker's response. It did not assume any action on the part of the real estate broker, agency, or other entity to solicit or encourage buyers to express locational preferences in racial terms. I mention that because of your statement that "The Buyer’s Agent and The Buyer's Broker Institute train hundreds of exclusive buyer brokers each year." To the extent that you intend to use my earlier letter to help them conduct their professional duties in a legal and ethical manner, you should also share this letter with them.

Thank you for your interest in fair housing and equal opportunity.

Sincerely, Elizabeth K. Julian, Assistant Secretary

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Here is a third letter, this one written to a Fair Housing advocate in which the first letter is rescinded. (HUD never impaneled a group to develop the guidance.)

Letter 3

U.S. Department of Housing and Urban Development Office of the Assistant Secretary for Fair Housing Washington, D.C. 20410-2000

December 3, 1996

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Ms. Aurie Pennick Leadership Council for Metropolitan Open Communities Chicago

Dear Aurie:

Thank you for your letter concerning the "buyer's agent" issue. Of course, I share your concern that real estate agents who accommodate a buyer's direction to limit a search for housing on the basis of race are not acting in the spirit of the Fair Housing Act, and I agree that the Act, taken in its entirety, ought to prohibit such conduct. My conversations with numerous real estate professionals over the past month indicate they do not intend to alter their position that it is both legally prudent and ethically responsible to refuse to accommodate a buyer's request to conduct a housing search based on race, a position which I, of course, support. They have also expressed a desire to make clear that such conduct is prohibited by the Fair Housing Act.

However, I take your criticisms to heart about the message that the letter sent. While my second letter

was an attempt to address my own concerns in that regard, I have determined that this issue cannot be effectively addressed by responding piecemeal to hypothetical inquiries. In light of the obvious "slippery slope" down which my letter has apparently invited some to slide, and my agreement with you that my letter sent the "wrong message," I have decided to rescind the Oct. 2 letter, as you requested, and develop comprehensive guidance that will address the issue more broadly, with specific attention to Section 805 of the Fair Housing Act which speaks more directly to the responsibility of real estate professionals engaging in residential real estate-related transactions.

I truly regret that my earlier letter, which tried to limit the application of the legal conclusion reached, has been interpreted to do so much harm, and it is my intention to rectify that as much as legally possible. I appreciate your comments, as always.

Sincerely, Elizabeth K. Julian, Assistant Secretary

Articles About us Contact us Advertising

http://www.reintel.com/letters.htm Page 5 of 5

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D.C. 20410-2000

January 9, 1995

OFFICE OF THE ASSISTANT SECRETARY FOR FAIR HOUSING AND EQUAL OPPORTUNITY

MEMORANDUM FOR: FHEO,Office Directors, Enforcement Directors, Staff, Office of Investigations, Field Assistant General Counsel

FROM: Roberta Achtenberg, Assistant Secretary for Fair Housing and Equal Opportunity, E

SUBJECT: Guidance Regarding Advertisements Under §804(c) of the Fair Housing Act

The purpose of this memorandum is to provide guidance on the procedures for the acceptance and investigation of allegations of discrimination under Section 804(c) of the Fair Housing Act (the Act) involving the publication of real estate advertisements.1

Recently, the number of inquiries involving whether or not potential violations of the Act occur through use of certain words or phrases has increased, and these issues cannot, in some situations, be answered by referring to decided cases alone. In some circumstances, the Advertising Guidelines, published at 24 C.F.R. Part 109, have been interpreted (usually by persons outside of HUD) to extend the liability for advertisements to circumstances which are unreasonable.

This guidance is meant to advise you of the Department's position on several of these issues.

Previous guidance already requires that Intake staff review a potential complaint, gather preliminary information to ascertain whether the complaint states a claim under the Act, and consult with counsel on any legally questionable matters before the complaint is filed. Likewise, jurisdictional issues such as standing and timeliness should also be established prior to filing.

1 This memorandum does not address fair housing issues associated with the publication of advertisements containing human models, and does not address 804(c) liability for making discriminatory statements. 2

If the Advertising Guidelines, this memorandum, or a judicial decision clearly indicate that the language used in the advertisement is a potential violation of Section 804(c) and the criteria for establishing jurisdiction are met, the complaint should be filed and processed. Any complaint concerning an advertisement which requires an assessment of whether the usage of particular words or phrases in context is discriminatory, requires the approval of Headquarters FHEO before a complaint is filed. If the advertisement appears to be discriminatory, but the Advertising Guidelines, this memorandum, or a judicial decision do not explicitly address the language in question, supervisory staff must also obtain approval of Headquarters FHEO before the complaint is filed. Potential complaints regarding advertisements which do not meet the above descriptions should not be filed.

Where there is a question about whether a particular real estate advertising complaint should be filed, relevant information regarding the factual and/or legal issues involved in the complaint should be gathered, and counsel should be consulted prior to contacting the potential respondent publisher. The matter should then be referred to the Office of Investigations for review. Such referrals may take the form of a short memo, reciting the applicable advertisement language, and any factual or legal analysis which is appropriate.

Section 804(c) of the Act prohibits the making, printing and publishing of advertisements which state a preference, limitation or discrimination on the basis of race, color, religion, sex, handicap, familial status, or national origin. The prohibition applies to publishers, such as newspapers and directories, as well as to persons and entities who place real estate advertisements. It also applies to advertisements where the underlying property may be exempt from the provisions of the Act, but where the advertisement itself violates the Act. See 42 U.S.C. 3603(b).

Publishers and advertisers are responsible under the Act for making, printing, or publishing an advertisement that violates the Act on its face. Thus, they should not publish or cause to be published an advertisement that on its face expresses a preference, limitation or discrimination on the basis of race, color, religion, sex, handicap, familial status, or national origin. To the extent that either the Advertising Guidelines or the case law do not state that particular terms or phrases (or closely comparable terms) may violate the Act, a publisher is not liable under the Act for advertisements which, in the context of the usage in a particular advertisement, might indicate a preference, limitation or discrimination, but where such a preference is not readily apparent to an ordinary reader. Therefore, complaints will not be accepted against publishers concerning advertisements where the language might or might not be viewed as being used in a discriminatory context.

For example, Intake staff should not accept a complaint against a newspaper for running an advertisement which includes the phrase female roommate wanted because the advertisement does not indicate whether the requirements for the shared living exception have been met. Publishers can rely on the representations of the individual placing the ad that shared living arrangements apply to the property in question. Persons placing such 3 advertisements, however, are responsible for satisfying the conditions for the exemption. Thus, an ad for a female roommate could result in liability for the person placing the ad if the housing being advertised is actually a separate dwelling unit without shared living spaces. See 24 CFR 109.20.

Similarly, Intake staff should not file a familial status complaint against a publisher of an advertisement if the advertisement indicates on its face that it is housing for older persons. While an owner-respondent may be held responsible for running an advertisement indicating an exclusion of families with children if his or her property does not meet the "housing for older persons" exemption, a publisher is entitled to rely on the owner's assurance that the property is exempt.

The following is policy guidance on certain advertising issues which have arisen recently. We are currently reviewing past guidance from this office and from the Office of General Counsel and will update our guidance as appropriate.

1. Race, color, national origin. Real estate advertisements should state no discriminatory preference or limitation on account of race, color, or national origin. Use of words describing the housing, the current or potential residents, or the neighbors or neighborhood in racial or ethnic terms (i.e., white family home, no Irish) will create liability under this section.

However, advertisements which are facially neutral will not create liability. Thus, complaints over use of phrases such as master bedroom, rare find, or desirable neighborhood should not be filed.

2. Religion. Advertisements should not contain an explicit preference, limitation or discrimination on account of religion (i.e., no Jews, Christian home). Advertisements which use the legal name of an entity which contains a religious reference (for example, Roselawn Catholic Home), or those which contain a religious symbol, (such as a cross), standing alone, may indicate a religious preference. However, if such an advertisement includes a disclaimer (such as the statement "This Home does not discriminate on the basis of race, color, religion, national origin, sex, handicap or familial status") it will not violate the Act. Advertisements containing descriptions of properties (apartment complex with chapel), or services (kosher meals available) do not on their face state a preference for persons likely to make use of those facilities, and are not violations of the Act.

The use of secularized terms or symbols relating to religious holidays such as Santa Claus, Easter Bunny or St. Valentine's Day images, or phrases such as "Merry Christmas", "Happy Easter", or the like does not constitute a violation of the Act.

3. Sex. Advertisements for single family dwellings or separate units in a multi-family dwelling should contain no explicit preference, limitation or discrimination based on sex. Use of the term master bedroom does not constitute a violation of either the sex 4 discrimination provisions or the race discrimination provisions. Terms such as "mother-in-law suite" and "bachelor apartment" are commonly used as physical descriptions of housing units and do not violate the Act.

4. Handicap. Real estate advertisements should not contain explicit exclusions, limitations, or other indications of discrimination based on handicap (i.e., no wheelchairs). Advertisements containing descriptions of properties (great view, fourth-floor walk-up, walk-in closets), services or facilities (jogging trails), or neighborhoods (walk to bus-stop) do not violate the Act. Advertisements describing the conduct required of residents ("non-smoking", "sober") do not violate the Act. Advertisements containing descriptions of accessibility features are lawful (wheelchair ramp).

5. Familial status. Advertisements may not state an explicit preference, limitation or discrimination based on familial status. Advertisements may not contain limitations on the number or ages of children, or state a preference for adults, couples or singles. Advertisements describing the properties (two bedroom, cozy, family room), services and facilities (no bicycles allowed) or neighborhoods (quiet streets) are not facially discriminatory and do not violate the Act.

LYTLE LAW TIPS ON HIRING A CONTRACTOR OR BUILDER

1. The single most important thing you can do when hiring a builder or contractor is to hire one with a good reputation for quality, honesty and pride in his or her work. Everything else below is really an attempt to determine whether you are getting that at a price you can afford and to protect you should you not. So: 2. Get at least two bids, three is better. Get one of those bids from a contractor with the best reputation – one that is known for being expensive but known for doing quality work – it will give you a yard stick to truly measure the cheap one. As in most things, you get what you pay for. 3. Hire only licensed contractors. Note that Virginia has different classes for scope and value of job – so verify the contractor has the proper license. You may check the contractor’s license at www.dpor.virginia.gov or (804) 367-8511. Frankly, you ought to require proof of insurance as well. 4. Evaluate the contractor: a. ask the contractor for references and check with former customers to see if they were satisfied with the quality of work performed. Actually call them. Since most contractors aren’t going to give you bad references you need to actually look at the work. b. Doesn’t hurt to check with the Better Business Bureau. You can also check DPOR for Board complaints. c. Ask how long the contractor has been in business and where. Also ask for a local phone number where the contractor can be reached during normal business hours. Call that number and see who answers and how long it takes. If a receptionist or someone answers professionally, great. If instead a girlfriend answers “Hello” and then says he’s sleeping, well, that might tell you something else. d. Avoid hiring any contractor who: i. wants to do the work under someone else’s license ii. arrives in an unmarked truck or van; iii. appears to be willing to do the job at an unusually low price; iv. requires full or substantial payment before work begins (note the 10% rule discussed below); v. refuses to provide you with a written estimate or contract; vi. refuses to provide you with a license number issued by Virginia; vii. refuses to provide you with references; viii. shows up at your door unsolicited; or ix. uses high-pressure sales tactics. 5. Get a written contract that at a minimum states (these are the Board’s of Contractor’s requirements: see http://leg1.state.va.us/cgi- bin/legp504.exe?000+reg+18VAC50-22-260 a. When work is to begin and the estimated completion date;

Lytle Law Tips, Page 1 of 3

b. b. A statement of the total cost of the contract and the amounts and schedule for progress payments including a specific statement on the amount of the down payment; c. c. A listing of specified materials and work to be performed, which is specifically requested by the consumer; d. A "plain-language" exculpatory clause concerning events beyond the control of the contractor and a statement explaining that delays caused by such events do not constitute abandonment and are not included in calculating time frames for payment or performance; e. A statement of assurance that the contractor will comply with all local requirements for building permits, inspections, and zoning; f. Disclosure of the cancellation rights of the parties; g. For contracts resulting from a door-to-door solicitation, a signed acknowledgment by the consumer that he has been provided with and read the Department of Professional and Occupational Regulation statement of protection available to him through the Board for Contractors; h. Contractor's name, address, license number, class of license, and classifications or specialty services; and i. Statement providing that any modification to the contract (i.e. a change order), which changes the cost, materials, work to be performed, or estimated completion date, must be in writing and signed by all parties j. Not required but recommended: specific timelines and provisions that address what will happen if the contractor fails to meet the contractual deadlines. 6. Pay 10% down, or $1,000, whichever is less. If the contractor says he needs more to buy materials and get started then consider having the materials purchased and controlled by you, delivered to you. An excess amount to start is a red flag that something is awry or the contractor will be robbing Peter to pay Paul. Typically reputable and sound contractors have accounts at supply houses and don’t need to pay cash for materials. 7. Don’t make any further payments until you see a building permit. If the contractor says one isn’t needed then call the City or County and verify that information. 8. Don’t let payments get ahead of work. Keep record of payments. Require a mechanic’s lien waiver not only from your contractor but from any subs and suplly houses before you make a payment. You can get a suitable form online or from Lytle Law. 9. Don’t make final payment until you’re satisfied with the job. 10. Don’t pay cash. Again, never pay cash (first, they are cheating us by not paying taxes, second, you have no good record) 11. Keep a job file of all papers relating to your project. 12. Warning signs of a scam: a. Provides a credential or reference that can't be verified.

Lytle Law Tips, Page 2 of 3

b. Offers a special price only if you sign today, or use other high-pressure sales techniques. c. Only accepts cash, require large deposits or the entire costs up front, or asks you to make the payment in their name. d. Does not provide a written contract or complete bid. e. Asks you to get the building permit. In most instances, if you have hired a contractor, the contractor is required to take out the permits. Permits are your protection and help ensure that work will meet local building codes. f. Offers exceptionally long warranties. g. Wants to do most or all the work on weekends and after hours h. Gives you an offer that sounds "too good to be true."

Lastly, please know that Virginia has a contractor recovery fund if you are defrauded by a contractor. See a lawyer for help on that or call the Board of Contractors.

Brian D. Lytle, Esq. Lytle Law, P.C. 757.595.5655 [email protected] www.lytlelaw.com

Lytle Law Tips, Page 3 of 3

LYTLE LAW TIPS ON HIRING A CONTRACTOR OR BUILDER

1. The single most important thing you can do when hiring a builder or contractor is to hire one with a good reputation for quality, honesty and pride in his or her work. Everything else below is really an attempt to determine whether you are getting that at a price you can afford and to protect you should you not. So: 2. Get at least two bids, three is better. Get one of those bids from a contractor with the best reputation – one that is known for being expensive but known for doing quality work – it will give you a yard stick to truly measure the cheap one. As in most things, you get what you pay for. 3. Hire only licensed contractors. Note that Virginia has different classes for scope and value of job – so verify the contractor has the proper license. You may check the contractor’s license at www.dpor.virginia.gov or (804) 367-8511. Frankly, you ought to require proof of insurance as well. 4. Evaluate the contractor: a. ask the contractor for references and check with former customers to see if they were satisfied with the quality of work performed. Actually call them. Since most contractors aren’t going to give you bad references you need to actually look at the work. b. Doesn’t hurt to check with the Better Business Bureau. You can also check DPOR for Board complaints. c. Ask how long the contractor has been in business and where. Also ask for a local phone number where the contractor can be reached during normal business hours. Call that number and see who answers and how long it takes. If a receptionist or someone answers professionally, great. If instead a girlfriend answers “Hello” and then says he’s sleeping, well, that might tell you something else. d. Avoid hiring any contractor who: i. wants to do the work under someone else’s license ii. arrives in an unmarked truck or van; iii. appears to be willing to do the job at an unusually low price; iv. requires full or substantial payment before work begins (note the 10% rule discussed below); v. refuses to provide you with a written estimate or contract; vi. refuses to provide you with a license number issued by Virginia; vii. refuses to provide you with references; viii. shows up at your door unsolicited; or ix. uses high-pressure sales tactics. 5. Get a written contract that at a minimum states (these are the Board’s of Contractor’s requirements: see http://leg1.state.va.us/cgi- bin/legp504.exe?000+reg+18VAC50-22-260 a. When work is to begin and the estimated completion date;

Lytle Law Tips, Page 1 of 3

b. b. A statement of the total cost of the contract and the amounts and schedule for progress payments including a specific statement on the amount of the down payment; c. c. A listing of specified materials and work to be performed, which is specifically requested by the consumer; d. A "plain-language" exculpatory clause concerning events beyond the control of the contractor and a statement explaining that delays caused by such events do not constitute abandonment and are not included in calculating time frames for payment or performance; e. A statement of assurance that the contractor will comply with all local requirements for building permits, inspections, and zoning; f. Disclosure of the cancellation rights of the parties; g. For contracts resulting from a door-to-door solicitation, a signed acknowledgment by the consumer that he has been provided with and read the Department of Professional and Occupational Regulation statement of protection available to him through the Board for Contractors; h. Contractor's name, address, license number, class of license, and classifications or specialty services; and i. Statement providing that any modification to the contract (i.e. a change order), which changes the cost, materials, work to be performed, or estimated completion date, must be in writing and signed by all parties j. Not required but recommended: specific timelines and provisions that address what will happen if the contractor fails to meet the contractual deadlines. 6. Pay 10% down, or $1,000, whichever is less. If the contractor says he needs more to buy materials and get started then consider having the materials purchased and controlled by you, delivered to you. An excess amount to start is a red flag that something is awry or the contractor will be robbing Peter to pay Paul. Typically reputable and sound contractors have accounts at supply houses and don’t need to pay cash for materials. 7. Don’t make any further payments until you see a building permit. If the contractor says one isn’t needed then call the City or County and verify that information. 8. Don’t let payments get ahead of work. Keep record of payments. Require a mechanic’s lien waiver not only from your contractor but from any subs and suplly houses before you make a payment. You can get a suitable form online or from Lytle Law. 9. Don’t make final payment until you’re satisfied with the job. 10. Don’t pay cash. Again, never pay cash (first, they are cheating us by not paying taxes, second, you have no good record) 11. Keep a job file of all papers relating to your project. 12. Warning signs of a scam: a. Provides a credential or reference that can't be verified.

Lytle Law Tips, Page 2 of 3

b. Offers a special price only if you sign today, or use other high-pressure sales techniques. c. Only accepts cash, require large deposits or the entire costs up front, or asks you to make the payment in their name. d. Does not provide a written contract or complete bid. e. Asks you to get the building permit. In most instances, if you have hired a contractor, the contractor is required to take out the permits. Permits are your protection and help ensure that work will meet local building codes. f. Offers exceptionally long warranties. g. Wants to do most or all the work on weekends and after hours h. Gives you an offer that sounds "too good to be true."

Lastly, please know that Virginia has a contractor recovery fund if you are defrauded by a contractor. See a lawyer for help on that or call the Board of Contractors.

Brian D. Lytle, Esq. Lytle Law, P.C. 757.595.5655 [email protected] www.lytlelaw.com

Lytle Law Tips, Page 3 of 3

Virginia Peninsula Association of Realtors® Standard Clauses – 2008 edition

HOLD HARMLESS AGREEMENT...... 2

SHORT SALE...... 2

SELLER REPAIRS, REPLACEMENTS & FURTHER INSPECTIONS...... 3

PURSUANT TO REIN ¶ 11 OR PICRA...... 3

SELLER(S) PROVIDING HOME WARRANTY...... 5

EARNEST MONEY DEPOSIT NOT HELD BY AGENT...... 5

SETTLEMENTS TO COINCIDE ...... 6

DISCLOSURE OF INTEREST ...... 6

APPROVAL OF INTENDED OR SPECIFIC USE...... 7

THIRD-PARTY APPROVAL...... 7

BACK UP OFFERS...... 8

SELLER CONCESSIONS...... 8

REPLACEMENT HOME FOR SELLER ...... 9

ESCALATION CLAUSE...... 9

SELLING AS IS CLAUSE ...... 10

MISCELLANEOUS ...... 11

1

Hold Harmless Agreement

Uses: One would consider using this when you think the client is making a mistake or taking a significant risk, e.g. buying sight unseen, and you are concerned about your liability.

Note: This is between you and your client – do not insert in the Standard Purchase Agreement! You should discuss with your broker and/or company attorney as this is more of a company form.

Clause: Client acknowledges and agrees that Client has been advised of the benefits of [describe your advice here, subject examples: no survey, no home inspection, no termite and moisture, buying sight unseen, etc.] by [Listing Firm and Agent, Selling Firm and Agent] and that Client has decided not to accept the advice and recommendation. Accordingly, Client agrees to release [Listing Firm and Agent, Selling Firm and Agent] from any and all liability in connection with Client’s decision, and to hold harmless, defend and indemnify [Listing Firm and Agent, Selling Firm and Agent] in connection therewith and from any and all claims, causes of action, demands, losses, costs, damages and expenses in any way arising from items or liabilities that would be revealed if Client followed [Listing Firm and Agent, Selling Firm and Agent] recommendation.

Caveat: These types of things are lawsuits waiting to happen so be careful. Make sure your client really, really understand the ramifications and your advice. The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Short Sale

Uses: This clause, or one similar, is used when the seller has a VA compromise or short sale. As of May 1, 2008 the Standard Purchase Agreement requires the disclosure of a short sale so you need something to (a) disclose it and (b) ensure your seller is not in default under the because he or she cannot close.

Note: There are many, many variations of this clause – from two page addenda to the simple clause noted here.

Clause: Seller’s duty to close is contingent upon Seller’s lender approving a [short sale, VA compromise, etc.] on terms and conditions agreeable to Seller.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

2

Seller Repairs, Replacements & Further Inspections Pursuant to REIN ¶ 11 or PICRA

Uses: Use this clause when the seller is to make repairs, whether pursuant to REIN ¶ 11 or the REIN PICRA.

Notes: Fundamentally agents go awry in this area by not being specific enough: what is to be done, when it is to be done, how it is to be done, who is to do it, and how everyone will know it was done right? Think about how a dispute might ensue and try to ensure your language covers it. Don’t use mealy words like “Buyer requests” or “repair or replace” – these are particularly troublesome when referring to mealy language in a home inspection. Be mindful of the distinction between the words “repair” and “replace” and use the correct word. In my view, in those situations where a home inspector calls for further inspection, on an HVAC system for example, I am of the view that both the listing and buyer’s agents do a disservice to their client if they try to wrap a further inspection and repair/replace clause based on that alone: you know far too little at that point to request or agree to anything. The suggested clauses below make distinctions between repair, replace and inspect.

Clause (Repair): Seller shall make repairs noted below, at Seller’s sole expense, no less than ten (10) days prior to Settlement. Repairs shall be performed by a licensed contractor (if a license is required) in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through. The repairs to be made are as follows [list the repairs here, and be as specific as possible about what you want to have happen].

Clause (Replace): Seller shall replace the items noted below, at Seller’s sole expense, no less than ten (10) days prior to Settlement. Replacement shall be performed by a licensed contractor (if a license is required) in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and labor and material shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through. The items to be replaced are as follows [list the components/items to be replaced here, and be as specific as possible about what you want to have happen].

Clause (Further Inspection): Seller shall permit Buyer or Buyer’s designees to perform a further inspection of the systems or items noted below, at  Seller’s  Buyer’s expense not to exceed $ on or before . In the event the parties are unable to reach an agreement (a) on the need for repair or replacement and the scope thereof (b) by then the parties agree to terminate this contract, agree to execute a written release for that purpose, and agree to return Buyer’s deposit to Buyer. The systems or components to be inspected are as follows [list the components/systems/items to be inspected here, and be as specific as possible].

3

Sample Clause (Replace Exterior Moisture Damaged Items): Seller shall replace the items noted below, at Seller’s sole expense, no less than ten (10) days prior to Settlement. Replacement shall be performed by a licensed contractor (if a license is required) in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and labor and material shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through. The items to be replaced are noted on the home inspection report by Building Specs dated March 13, 2008 as Items Numbered 2, 3 and 4, and further described as follows: Window trim and sill; door trim; fascia and rake trim boards to be replaced and painted.

Sample Clause (Shingles): Seller shall replace the items noted below, at Seller’s sole expense, no less than ten (10) days prior to Settlement. Replacement shall be performed by a licensed contractor (if a license is required, typically 10% of the roof) in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and labor and material shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through. The items to be replaced are noted on the home inspection report by Building Specs dated March 13, 2008 as Items Numbered 2, 3 and 4, and further described as follows: all damaged and missing shingles to be replaced with like-kind shingles, plumbing vent boot to be replaced, and any damaged roof sheathing is to be replaced.

Sample Clause (Crawlspace Termite & Moisture Damaged Items): Seller shall replace the items noted below, at Seller’s sole expense, no less than ten (10) days prior to Settlement. Replacement shall be performed by a licensed contractor (if a license is required) in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and labor and material shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through. The items to be replaced are noted on the home inspection report by National’s Termite and Moisture Report dated March 13, 2008 and further described as follows: sub-floor, bandboard and sill plate underneath the master bath.

Sample Clause (Replace or Repair Electrical Items): Seller shall replace (or if appropriate and so noted, corrected to Electrical Code) the items noted below, at Seller’s sole expense, no less than ten (10) days prior to Settlement. Replacement shall be performed by a licensed electrician (if a license is required) in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and labor and material shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through. The items to be replaced or corrected are noted on the home inspection report by Building Specs dated March 13, 2008 as Items Numbered 2, 3 and 4, and further described as follows: GFCI receptacles and circuit in master bath shall be corrected or re-wired; reverse polarity at receptacles in the den shall be corrected; loose receptacles in garage shall be corrected or replaced; open or missing junction boxes in the attic shall be corrected; main panel double taps at circuit breakers,

4 unmarked white hots, and missing knock-outs shall be corrected or the panel replaced to Code; and open spliced wires under the kitchen sink at the disposal shall be corrected.

Sample Clause (Chimney): Seller shall have the chimney inspected, cleaned and certified as functional and operable by a licensed chimney sweep [or here indentify the one you want] no less than ten (10) days prior to Settlement. In the event the chimney sweep identifies problems that need repair then Seller agrees to have them repaired; provided, however, that the cost of said repairs shall not exceed [insert amount, e.g. $1,000.00]. In the event that said repairs exceed [insert same amount, e.g. $1,000.00] then Seller may (a) refuse to pay any excess above [insert same amount, e.g. $1,000.00] and void this contract if Purchaser does not pay the excess or agree to accept the Property without the repairs or (b) pay the entire cost of repairs, including the excess, and require Purchaser to close. Inspection and any repairs shall be performed in a workmanlike manner so as to pass without objection in the trade, shall be permitted and inspected by the locality if required, and labor and material shall be warranted for a period of no less than ninety (90) days after Settlement. Permit, inspection, receipt, warranty and certification to be provided to Purchaser at walk-through.

Seller(s) Providing Home Warranty

Uses: When the seller will provide a home warranty.

Note: There are a number of home warranty companies and they each have different plans, deductibles, coverage, etc., so be as specific as possible. Make sure you get the application submitted to the settlement agent and that the fee is collected on the HUD-1. If the Buyer writes this clause then the Buyer should be specific

Clause: Seller agrees to provide a one-year home warranty contract for Buyer at Seller’s expense. The home warranty shall be with [insert name of warranty company – describe plan, deductible, and coverage, or attach a copy and make reference to it], shall be effective on the date of Settlement, and shall be delivered to Buyer(s) at Settlement.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Earnest Money Deposit Not Held by Agent

Uses: When the seller – usually a builder – wants to hold the deposit instead of the agent.

Note: Typically when the deal falls through the builder will not release the deposit (or has used it), so this clause is intended to make sure the agent is protected from a claim that this should not have occurred. Do not forget to strike through any language suggesting the broker holds the deposit in the form contract. Note that the new construction contract, which should be used on new construction, even when the house is done at the time of the offer, has language that covers this. 5

Clause: Buyer acknowledges that Seller is holding the earnest money deposit and that the Broker has no control over the disposition of funds in the event the transaction is not consummated.

Caveat: This is a lawsuit waiting to happen. Be careful. Make sure your client really, really understand the ramifications. The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Settlements to Coincide

Uses: When you have closings that need to occur together for qualification, funding, move, etc.

Note: Simultaneous, or back-to-back, closings can be difficult to coordinate. This clause at least makes sure the parties are legally obligated to coordinate at least one of the closings. Bear in mind, the other contract may not be so worded. Planning and communication is key. Consider being more specific, i.e. making reference to the other contract, what you expect or want to happen, etc.

Clause: Settlement on this Standard Purchase Agreement shall coincide with settlement on a certain other real estate purchase contract located at [describe other property] upon which this Standard Purchase Agreement is contingent. All parties to this Standard Purchase Agreement agree to cooperate so that settlement pursuant to both contracts will occur simultaneously.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Disclosure of Interest

Uses: Use this clause, or a variant thereof, when an agent, her firm or a member of it, her family or any entity in which she has an ownership, is involved in the transaction.

Note: Under the regulations effective April 1, 2008, 18 VAC135-20-210 provides as follows: “If a licensee knows or should have known that he, any member of his family, his firm, any member of his firm, or any entity in which he has an ownership interest, is acquiring or attempting to acquire or is selling or leasing real property through purchase, sale or lease and the licensee is a party to the transaction, the licensee must disclose that information to the owner, Buyer or lessee in writing in the offer to purchase, the application, the offer to lease or lease. This disclosure shall be made to the Buyer, seller or lessee upon having substantive discussions about specific real property.” Clause: The parties acknowledge that [Buyer or Seller] is a licensed real estate [broker, salesperson] in the Commonwealth of Virginia.

6

Relationship Variant:

The parties acknowledge that [insert your name] is a licensed real estate [broker, salesperson] in the Commonwealth of Virginia and that [Buyer, Seller] is a [choose one or more: member of his family, his firm, any member of his firm, or any entity in which he has an ownership interest].

Future Interest Variant:

The parties acknowledge that [insert your name] is a licensed real estate [broker, salesperson] in the Commonwealth of Virginia and that [insert your name] may acquire an ownership interest in the Property in the future.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Approval of Intended or Specific Use

Uses: This clause would be used when the Buyer has a specific or intended use for the property not presently permitted, or are uncertain whether it is permitted and want to ensure it.

Note: Draft the use carefully. Make the Buyers sign off on the language, and consider consulting with counsel.

Clause: This Standard Purchase Agreement is contingent upon Buyer obtaining final approval from the appropriate governmental authorities [or homeowner’s association, etc.] for Buyer’s intended use of the real property as [describe the intended use]. In the event approval has not been obtained by [insert date and time] then this Contract is voidable, at either party’s option, upon delivery of written notice; provided, however, that in the event neither party voids the contract within seven (7) days of the date provided above [better, re-write the date again] then this contigency shall be deemed waived.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Third-Party Approval

Uses: This clause would be used when a third-party, e.g. a parent or an attorney, needs to approve the contract.

Note: Obviously this is not what we would like to see in a contract but is sometimes necessary under circumstances where one party is retuctant to sign until someone else has approved everything.

Clause: This Standard Purchase Agreement is contingent upon approval by [insert names and 7 title]. Buyer [or seller] alone shall pursue this approval and unless Seller and Seller’s Broker are notified in writing to the contrary on or before [insert date and time], this contingency shall be deemed automatically satisfied and this Standard Purchase Agreement shall be in full force and effect.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Back Up Offers

Uses: This clause would be used in a contract that will be a back-up contract.

Notes: None except be careful in this area!

Clause: This Standard Purchase Agreement is a back-up contract to that certain contract dated [identify the contract] (the “Primary Contract”). Upon a release of the Primary Contract, this Standard Purchase Agreement will assume primary position and will be then in full force and effect. Any and all “trigger” dates (e.g. home inspection, loan application, association disclosures, etc.) provided by this Standard Purchase Agreement shall run from the date that Selling Firm is notified in writing that the Primary Contract was terminated and this Standard Purchase Agreement elevated to primary contract status. Buyer reserves the right to withdraw and terminate this Standard Purchase Agreement at any time prior to it being upgraded to primary contract status by providing Listing Firm with written notice of withdrawal and termination. If this Standard Purchase Agreement is withdrawn, terminated or the Primary Contract closes then the parties shall execute a written release agreement and the earnest money deposit shall be refunded to Buyer forthwith.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Seller Concessions Uses: This clause would be used in a contract where the Buyer desires closing cost concessions from the Seller.

Notes: Generally sellers want to specify an amount and Buyers want to say all costs. A smart agent can avoid this tension by accurately calculating the contribution and recognizing maximum concessions. Avoid ambiguity about what may be “normal” costs by being specific. Do not leave money on the table (excess funds do not benefit the Buyer)! Check with the lender to make sure proposed concessions are allowable.

Clause: Seller to pay [$x,xxx.xx of] [up to, but not to exceed, $x,xxx,xx of] [all of] Buyer’s costs of closing, which costs shall include but not be limited to points, pre-paids, and owner’s title

8 insurance, to be used and allocated at Buyer’s discretion subject only to loan-type maximum seller concessions.

Caveat: Making a mistake in this area occurs frequently. Be careful and thoughtful. The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Replacement Home for Seller

Uses: This clause would be used in a contract where the Seller needs to have the contract contingent on finding a replacement home.

Notes: The tension created by this negotiating point is between the Seller wanting to take as much time as possible to find a home and make sure she can close on it, and the Buyer not wanting to be subject to the Seller’s arbitrary discretion and timing. This clause seeks to strike a reasonable balance between those two extremes. Sellers should be forewarned that if their contract falls through they well may be obligated to rent post-closing; and Buyers likewise should be counseled regarding possible undesirable outcomes. This clause may also serve, with slight modification, in a situation where the replacement home is under construction.

Clause: Seller’s duty to perform hereunder is contingent upon Seller contracting to purchase a suitable replacement home. In the event Seller has not contracted for the purchase of a suitable replacement home by 12:00 noon on [insert date] then Seller shall have the right to terminate this contract without further obligation and refund Buyer’s deposit; provided, however, that if Seller does not exercise this right to terminate the contract in writing by 12:00 noon on [same date as before] then this contingency shall be deemed waived and satisfied, and Seller shall be obligated to perform hereunder. Any and all “trigger” dates (e.g. home inspection, loan application, association disclosures, etc.) provided by this Standard Purchase Agreement shall run from (a) the date that Selling Firm is notified in writing by Listing Firm that Seller has contracted to purchase a suitable replacement home or (b) 12:00 noon on [same date as before], whichever first occurs.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Escalation Clause

Uses: An escalation clause is used in a seller’s market where multiple offers are expected, your buyer wants to make sure they do not lose the property over realtively minor amounts of money, and there is no time to negotiate in the traditional fashion.

Note: An escalation clause should only be used in a situation where the Buyers have been fully advised of the consequences of an escalating offer. They should be fully prepared to purchase at

9 a higher number. Note particularly the “net of concessions” language so there is an apple-to- apple comparison.

Clause: Purchase Price to be [insert number, e.g. $500.00] higher than the highest bona fide offer, net of concessions, received by Seller, not to exceed [insert cap number, e.g. $5,000.00]. The parties intend this agreement to be a binding contract, and not an offer to enter into a contract at a later date. The price determination will take place as set forth herein, but the fact that the price is not determined as of the time this contract is fully executed by both parties shall not defeat the existence of a contract. Listing Firm to provide Selling Firm with a copy of the next highest bona fide purchase agreement offer.

Caveat: Have a cap!!!! The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

Selling As Is Clause

Uses: An “as is” clause is used when a seller desires to really, really sell “as is.” For example, where the property is in a substantial state of disrepair.

Note: Bear in mind that the REIN Standard Purchase Agreement calls for any number of inspections and possible repair items. Distinguish between a situation where the seller simply has no money to make any repairs (upside down or short sale for example) and so won’t make any, in which case you are probably better served with a zero cap in paragraph 13 thus allowing the buyer to have inspections, and a situation where the property is in a substantial state of disrepair and the seller is simply unwilling to take on any repairs, in which case you would consider this clause. It would be best to use it in conjunction with the REIN form blank addendum. Sellers might consider language obligating the Buyer to pay for any repairs (but Buyers should place a cap on that obligation).

Clause: The Property is sold strictly AS IS, WHERE IS. Accordingly, paragraph 13 of the Standard Purchase Agreement is deleted in its entirety. Seller makes no warranty, express or implied, concerning the condition of the Property. Seller will not make or pay for any repairs to the Property whatsoever. In the event the Property is damaged after ratification and “not in substantially the same condition” as noted in paragraph 11 of the Standard Purchase Agreement, then Seller may, in Seller’s sole discretion, elect to repair or replace such damage or elect to terminate this agreement and refund Buyer’s deposit, in which latter case the parties agree to promptly execute a release; provided, however, that Seller’s election must be made in writing and communicated to Buyer within forty-eight (48) hours after notice of the paragraph 11 damage.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

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Miscellaneous

Uses: These mini-clauses are self-explanatory. They may be inserted in these clauses or elsewhere.

Notes: None.

Clauses:

• Buyer, at Buyer’s expense, shall have the right to have an additional inspection of the property for termites and other wood destroying insects and moisture. • Seller is not responsible for any of Buyer’s lender’s fees. • In the event property does not appraise for Purchase Price and Seller elects not to reduce price to appraised value, Seller agrees to reimburse Buyer for cost of appraisal and home inspection. • Buyer reserves the right to terminate this Standard Purchase Agreement not later than [specify date] if Buyer’s loan interest rate exceeds ___% [or … if Buyer’s discount points exceed ____ points]. • Buyer reserves the right to select the loan type at loan application. • Buyer reserves the right to select a VA or Conventional loan [or specify loan types] at loan application. • Buyer reserves the right to select the lender at loan application. • Financing is subject to the attached Private Party Financing Addendum. • Financing is subject to the attached Firm Equity Assumption Addendum. • Buyer to take early possession of the Property as specified in the attached Buyer Possession Agreement. • Seller to retain post-settlement possession of the Property as specified in the attached Seller Possession Agreement. • Buyer to be granted limited access to the Property as specified in the attached Limited Access Agreement. • Buyer reserves the right, within three days of receipt of the Update, to terminate this Standard Purchase Agreement by written notification to the Seller if the HOA/POA Update discloses a material change. • The Selling Firm is not authorized to receive the [Condominium Resale Disclosure Package or Property Owners’ Association Disclosure Package] on behalf of the Buyer. The package is to be delivered [or mailed] directly to the Buyer [specify delivery instructions]. • Tenant to vacate the Property not later than ______. • The Agreement is subject to the existing lease dated ______between [name] and [name]. The Agreement is contingent upon Seller delivering a copy of the current lease [and/or other tenant information] within [insert no] days of ratification for Buyer’s review and approval. Buyer reserves the right to terminate this Agreement by written notification to the Seller within [insert no] days of receipt of the [lease and other requested information]. 11

• Buyer is a party to a written brokerage agreement with Selling Firm in which Buyer has agreed to pay Selling firm a brokerage fee. Buyer requests, and Seller agrees, that Seller is to pay Selling Firm an additional % of the Purchase Price as a brokerage fee, which is exclusive of the brokerage fee agreement between Listing Firm and Selling Firm, at Settlement.

Caveat: The use of generic clauses in specific situations can lead to unintended consequences. Consult with your broker.

12 Summary of changes made to the Real Estate Regulations

18 VAC 135-20-10 added definition for “actively engaged in the brokerage business”.

18 VAC 135-20-30 amended qualifications for licensure to include the need for a high school diploma or its equivalent and clarified language regarding disclosure of convictions.

18 VAC 135-20-60 amended qualifications for licensure to include the need for a high school diploma or its equivalent and clarified language regarding disclosure of convictions.

18 VAC 135-20-100 amended to reflect changes in education requirements for license renewal.

18 VAC 135-20-101 added to reflect changes in education requirements for license renewal.

18 VAC 135-20-105 amended to require salespersons licensed by reciprocity to take the state portion of the salesperson’s exam before license renewal when upgrading to broker’s license.

18 VAC 135-20-160 amended to clarify posting requirements for branch office license and roster of brokers and salespersons assigned to branch office and to clarify supervising broker responsibilities.

18 VAC 135-20-170 amended to clarify use of a professional name and reporting changes in firm name.

18 VAC 135-20-180 amended to require principal brokers to report all instances where they believe that escrow accounts are not being properly maintained.

18 VAC 135-20-190 amended to clarify requirements for on-line advertising and include the disclosure required by § 54.1-2138.1 when applicable.

18 VAC 135-20-210 amended to clarify disclosure requirements for licensees (or family members or business associates) who have an ownership interest in property they are buying, selling or leasing.

18 VAC 135-20-220 amended to comply with statutory provisions.

18 VAC 135-20-280 amended to require prior written consent of the principal broker for performing certain acts.

18 VAC 135-20-300 amended to clarify actions constituting misrepresentation or omission.

18 VAC 135-20-345 added to allow the board to suspend, revoke or fail to renew all licenses held by an individual broker at once.

18 VAC 135-20-360 amended provisions for pre-license instructor qualifications, proprietery school and course requirements.

18 VAC 135-20-370 amended provisions for renewal of proprietary school and instructor certificates.

18 VAC 135-20-390 amended provisions for which the Board can withdraw its education approval.