With so many changes happening throughout 2020–2021, people seem to be more sensitive to those things that may impact their life. Real estate agents are often taught to be extremely careful about providing information regarding legal issues to avoid the unauthorized practice of law. However, as the real estate professional representing another person, there are also obligations to provide information to avoid problems that may lead to legal issues. Therefore, every agent should be diligent in communicating the information around a legal issue, while recommending a client speak with an attorney for actual legal advice. Clients count on their real estate professional to give them the information to help them make the best decision in their real estate purchases. A few of the areas to pay attention to include the proper handling of offers in competitive markets, copyright infringement and disclosure of defects.
Offers in competitive markets
In competitive markets, real estate agents have been extremely creative in helping their buyers identify ways to make their offer shine above others. Things like appraisal-gap clauses, waiving of inspections and non-refundable deposits have become more common, but provide less protection for a buyer in the purchase of a home. (However, these practices provide more protection for a seller who has the only home for sale in the area.) For the real estate agent, it is important to communicate the disadvantages and potential harms when using some of these negotiation tactics. Yes, the strategies will further the opportunity to purchase the home, but the agent should make sure they also know at what price they have paid. It would be prudent to have some type of written disclosure for the buyer to sign when an agent discusses the positives and negatives of these creative offers.
Copyright infringement
Copyright infringement is nothing new to the real estate industry, but the complete adoption of online technology and the genius of search engines have allowed people to better track the unauthorized use of their copyrighted property. Image usage is one of the bigger issues agents face. Real estate agents often hire a professional to take photos of a property. When a professional is used, pay close attention to the agreement entered into for the photos. Is the photographer providing all rights to the photos to the agent, some limited rights or just a license to use once? Do the rights provided allow the publication online (syndication websites)? Is there a time limit to the right of use? Did the photographer retain rights to use the photos themselves, and can thus sell to another agent? Be sure and have a written agreement and discuss what is being purchased from the photographer upfront before any photos are taken.
Disclosure of defects
Finally, there are still disclosure issues during the sale of real estate. Each state has different laws regarding disclosure, and it is important for everyone to understand their specific state’s rules and regulations. One of the bigger issues in many states is the non-disclosure of a known latent defect. A latent defect is one that would require a special inspection or investigation to discover (something that is not obvious). In many of the lawsuits we see, sellers are not disclosing known latent defects and the buyers (or new owners) bring suit when the defects are discovered after the purchase. In many cases the courts are ruling in favor of the buyers, and are communicating that known latent defects should be disclosed.
Check out the “Window to the Law” monthly video series at NAR.realtor/legal for tips on how to navigate timely legal issues.
Photo: iStock.com/DNY59
