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Excerpts from the Tennessee REALTORS® Digest

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Excerpts from the Tennessee REALTORS® Digest Legal & Ethics Hotline Need Help with Legal and/or Ethical Questions? Use the TAR Legal & Ethics Hot Line to Help You with the LAW & the CODE! The Tennessee Association of REALTORS® is very pleased to provide this service to its members! The TAR Legal & Ethics Hot Line service is designed to answer members’ real estate related legal questions, as well as questions concerning the REALTOR® Code of Ethics. It is designed for members to have direct toll-free access to a qualified attorney and intended to provide legal preventative maintenance to all TAR members. There are 3 WAYS to access: 1. Phone 2. Email 3. Online Help Desk • Hours of Operation: M-F, 9:00am – 5:00pm CST • Local to Nashville: 244-3344 • Not Local: 800-899-5297 • Email: [email protected] • Members HELP DESK - ( You must be Logged In to use this “Member Only” service) EMAIL INSTRUCTIONS: To email a legal or ethics question to TAR’s Hot Line, you must include your full name, firm name, broker’s name, and local association name and then send your question to: [email protected] ATTENTION: Put “Hot Line Question” in the Subject line of your email! And do NOT email attachments with any Hot Line questions. Any attachments may cause your email to be deleted without being read. ADVANTAGES OF HELP DESK TAR encourages members to use “HELP DESK” for communicating with both the Legal & Ethics Hot Line Staff and TAR Staff. The Help Desk’s largest advantages are: 1. Online Communication via email may result in faster responses 2. All of your help requests received through the Help Desk are archived for your “personal review” at any time 3. Documentation of Frequently Asked Questions and Knowledge base of articles and many more resources are all now easily searchable. You may find the answer to your questions quicker as a result. Caveat: Please note that your Managing Broker will always be copied on the response to any help request forwarded to the TAR Legal & Ethics Hotline. In addition, any inquiry handled by the TAR Legal & Ethics Hot Line does not result in attorney-client relationship. The Hot Line is simply a source of legal and ethical information for members, and no attorney-client relationship is intended or implied when a Hot Line attorney responds to an inquiry. Questions submitted to the hotline are NOT IMMEDIATELY answered but can take anywhere from 24-48 hour response time. 1 Excerpts from The Digest …… 5.20.19 Source: Tennessee REALTORS® Legal Counsel Can You Change Wording of TN Forms? Question: I have a client who wishes to make changes to CF701. Is this allowed? Answer: The client may alter Commercial Form 701 (CF701) to fit their needs. However, they should consult an attorney on making any wording changes. You will need to change the font of the document to sans serif so it will be distinguishable from a Tennessee REALTORS® form. You will also need to remove the Tennessee REALTORS® logo and copyright information at the bottom of the document. Note that by altering a Tennessee REALTORS® form, Tennessee REALTORS® will no longer accept legal responsibility from any claim arising out of the use of the form. 5.6.19 Source: Tennessee REALTORS® Legal Counsel Make Agent's Compensation Part of Offer? Question: Is it permissible for a buyer to make compensation for the buyer’s agent part of their offer to the seller? Example: In the special stipulations section of the Purchase & Sale Agreement, “Seller will pay buyer’s agent broker 3% of the purchase price at closing” OR “Seller will pay buyer’s agent broker 50% of the real estate commissions paid at closing.” Answer: It is not advisable for commissions to be stated in the contract itself, since the agents are not parties to the contract. It would be better to have this outlined in an agreement between the parties which are paying and receiving the commission. The closing company will look at the listing agreement to see what the seller has agreed to pay the listing broker, and then will ask for a compensation agreement to determine the split. You would be wise to have the broker enter into a compensation agreement, since neither of you are parties to the contract and cannot be bound by the contract. 4.29.19 Source: Tennessee REALTORS® Legal Counsel Commercial Property & Real Estate Taxes Question: I have a client who is not able to close on a commercial property due to the legal description of that property. He has been told that Tennessee has a state law that makes payment of real estate taxes a presumption of ownership. Is this the case? If so, how does he get his deed corrected? Answer: There is a statute related to this issue, provided below, but we do not believe it would apply to the exact facts described in your question. If the buyer has questions concerning his legal rights and obligations, he should speak to his own attorney. 2 The related state law is 28-2-109. Presumption of ownership from payment of taxes. Any person holding any real estate or land of any kind, or any legal or equitable interest therein, who has paid, or who and those through whom such person claims have paid, the state and county taxes on the same for more then twenty (20) years continuously prior to the date when any question arises in any of the courts of this state concerning the same, and who has had or who and those through whom such person claims have had, such person's deed, conveyance, grant or other assurance of title recorded in the register's office of the county in which the land lies, for such period of more than twenty (20) years, shall be presumed prima facie to be the legal owner of such land. 4.22.19 Source: Tennessee REALTORS® Legal Counsel Are Confirmation & Disclosure Forms Required? Question: It is my understanding that confirmation form 302 and disclosure form 304 are no longer required to be presented with an offer or shared with the opposing brokerage. As I represent the buyer, I am constantly asked by the listing brokerage to supply these forms, because they require them for the file. Must I comply and supply the forms? Answer: The Confirmation of Agency Status form (302) is required. The requirements for the agency Disclosure Notice (304) differ under the Broker’s Act and the REALTOR® Code of Ethics. Disclosures are not required in writing under the Broker’s Act unless one of the parties is unrepresented; confirmation of agency is required to be done verbally, and then in writing if the other side is not represented by an agent: a) If a licensee personally assists a prospective buyer or seller in the purchase or sale of a property, and such buyer or seller is not represented by this or any other licensee, the licensee shall verbally disclose to such buyer or seller the licensee’s facilitator, agent, subagent or designated agent status in the transaction before any real estate services are provided. Known adverse facts about a property must also be disclosed under the Tennessee Residential Property Disclosure Act, title 66, chapter 5, part 2, but licensees shall not be obligated to discover or disclose latent defects in a property or to advise on matters outside the scope of their real estate license. (b) The disclosure of agency status pursuant to subsection (a) must be confirmed in writing with an unrepresented buyer to the preparation of an offer to purchase. The disclosure of agency status must be confirmed in writing with an unrepresented seller prior to execution of a listing agreement or presentation of an offer to purchase, whichever comes first. Following delivery of the written disclosure, the licensee shall obtain a signed receipt for such disclosures from the party to whom it was provided. The signed receipt shall contain a statement acknowledging what the buyer or seller, as applicable, was informed that any complaints alleging a violation or violations of § 62-13-312 must be filed within the applicable statute of limitations for the violation set out in § 62-13-313(e). The acknowledgment shall also include the address and telephone number of the commission. Tenn. Code Ann. § 62-13-405(a, b). 3 You will notice that a signed receipt is required from the party to whom it was provided if that party is unrepresented. Part (d) requires that agency disclosure be made verbally if the other side is represented by an agent. However, if the agent is a REALTOR®, he must still make these disclosures in writing even if the other side is represented, as detailed in the Code of Ethics, Standard of Practice 16-10: REALTORS®, acting as buyer or tenant representatives or brokers, shall disclose that relationship to the seller/landlord’s representative or broker at first contact and shall provide written confirmation of that disclosure to the seller/landlord’s representative or broker not later than execution of a purchase agreement or lease. The disclaimer notice, however, is not required to be presented to the other side of a transaction. This is why the signature blocks were cut down last year; you only need your client to sign your disclaimer, and the other agent is responsible for having their client sign their disclaimer. This is to protect you with your client, and vice versa. 4.15.19 Source: Tennessee REALTORS® Legal Counsel Business Cards & Franchises: What is Permitted? Q: TREC rules say business cards are not advertising, but also say franchises are required to include specific details on business cards.
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