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Legal Question and Answers Part 6-BMC #3 – Supervision – Dodd School of Real Estate
Legal Question and Answers Part 6-BMC #3 – Supervision
You must first complete The Due Diligence Process-BMC #3 – Supervision before viewing this Lesson
Listing Broker Must Promptly Present to Seller All Offers
Buyer #1 makes an offer on the home. The listing broker, and the buyer’s broker representing buyer #1, then enter into extensive negotiations with multiple counter offers. Buyer #2 makes an offer on the home. The listing broker tells the buyer’s broker representing buyer #2 that, until negotiations are completed one way or the other with buyer #1, the listing broker will not present buyer #2’s offer. Can the listing broker delay the presentation to the seller of buyer #2’s offer to the seller?
Probably not. The listing broker must promptly present all offers to the seller. A.A.C. R4-28-1101(C); Standard of Practice 1-6. If the seller specifically instructs the listing broker that the seller does not want to receive any new offers until the negotiations with buyer #1 are resolved, the listing broker would not be required to promptly present buyer #2’s offer to the seller. Arizona REALTOR® June 2009
Listing Broker’s Obligation to Produce Transaction File
A land transaction closed six months ago. The buyer is now claiming that the seller failed to disclose an environmental problem with the land. The listing broker has now received a letter from the buyer’s attorney demanding a copy of the listing broker’s transaction file. Should the listing broker deliver a copy of the listing broker’s transaction file to the buyer’s attorney?
No. First, the listing broker has a fiduciary duty to the seller, and should only release a copy of the transaction file with the seller’s written consent. Second, even if the seller grants consent to release the transaction file, the listing broker should contact their own attorney for guidance, e.g., there may be privileged communications in the documents which should not be made available to the buyer’s attorney.
Note: If the listing broker receives a subpoena, the listing broker is required to comply with the subpoena even if the seller does not grant written permission. If there are any subpoenaed documents in the transaction file which should not be delivered to the buyer’s attorney, the listing broker’s attorney can file a motion for protective order with the court to request a court order that those documents should not be delivered to the buyer’s attorney. Arizona REALTOR® May 2007
If the broker receives a subpoena, the listing broker is required to comply with the subpoena even if the seller does not grant written .
Neither Listing Broker Nor Buyer’s Broker Required to Reduce Commission at Closing
The Seller agreed to pay a six percent commission to the listing broker, and the listing broker agreed to pay a co-broke commission of three percent to the Buyer’s broker. At the time of closing the Seller refuses to close unless the listing broker reduces the listing commission from six percent to four percent. Neither the listing broker nor the Buyer’s broker will reduce their commissions. Are the listing broker and the Buyer’s broker entitled to demand their commissions even though the closing of the transaction is jeopardized?
Yes. A listing agreement is a contract, and the listing broker is entitled to enforce the contract. Similarly, a co-broke agreement under M.L.S. is a contract which the Buyer’s broker is entitled to enforce. Therefore, neither the listing broker nor the Buyer’s broker is required to reduce their contractual claim for commission, even if the result is that the transaction fails to close. Note: A real estate licensee cannot allow a commission dispute with another real estate licensee to jeopardize the closing of a transaction. (Emphasis added) A.A.C. R4-28-1101(D). Arizona REALTOR® Digest April 2004
No Obligation of Broker to Disclose Fraud Lawsuit
After the closing of the transaction, the buyer files a lawsuit against the buyer’s broker for fraud and misrepresentation. Does the buyer’s broker have to disclose to the Arizona Department of Real Estate the filing of this lawsuit for fraud and misrepresentation?
No. A.A.C. R4-28-301(A)(1) and 303(D)(1) require a real estate licensee to disclose to the Arizona Department of Real Estate within ten days, any judgment for “fraud, etc”. Therefore, the filing of a lawsuit for fraud and misrepresentation does not have to be disclosed to the Arizona Department of Real Estate.
Therefore, the filing of a for fraud and misrepresentation does not have to be disclosed to the Arizona Department of Real .
Provided The Broker Has No Involvement, It Is Not Required to Maintain A File On An Agent’s Personal Home Purchase
Is the brokerage required to maintain a file for a real estate agent’s personal purchase of a residential investment property without any involvement of the brokerage?
The brokerage is generally not responsible for an agent who is not acting “for another,” i.e., the agent is acting personally either as a buyer or seller, unless the agent expressly or apparently represents to other parties in the transaction that the brokerage firm is involved in the transaction. The apparent authority could include conducting business from the brokerage office, e.g., making telephone calls or meeting prospective buyers in the brokerage office or handing out business cards with the brokerage name or using transactional documents with the brokerage name. Here, as long as the brokerage is not involved in the transaction or identified in the transaction, the brokerage is not required to maintain a file for a transaction involving an agent who is acting in their personal capacity.
Real Estate Broker Can Act as the Trustee Under a Seller Carryback Deed of Trust
The seller owns a parcel of land free and clear. The buyer is purchasing the parcel of land with a small down payment and seller carryback financing, i.e., promissory note and deed of trust. Can the real estate broker act as trustee under the seller carryback deed of trust?
Yes. A.R.S. 33-803(A)(3) authorizes a real estate broker to act as the trustee of a deed of trust.
Note: Any real estate broker acting as a trustee under a deed of trust should confirm with their errors and omissions insurance company that there will be insurance coverage for any negligence of the real estate broker acting as a trustee. Arizona REALTOR® Magazine – March 2011
Real Estate Broker Can Be Statutory Agent for an LLC
The real estate broker is leaving a major real estate brokerage firm to form his own real estate brokerage firm. This real estate brokerage firm will be a limited liability company (“LLC”). Under Arizona law an LLC must appoint a statutory agent to be the agent of the LLC for service of process and other notices required under Arizona law. Can the real estate broker be the statutory agent for this LLC?
Yes. Any individual can be the statutory agent for a real estate brokerage firm operating as an LLC.
Note: A.R.S. 29-604, 29-605 should be reviewed before the individual agrees to act as the statutory agent for the LLC. Arizona REALTOR® Magazine – March 2011
Real Estate Broker Can Sell a Mobile Home “Installed” on Real Property
The owner of a mobile home wants to list the home for sale with a licensed real estate broker. An Affidavit of Affixture has not been recorded. Can the real estate broker list and sell this mobile home?
If an Affidavit of Affixture is not recorded, title may be able to help with that. It may need to have an engineering inspection to prove that tie downs have been installed. It used to be that you needed a special license to sell mobile homes that are on leased land. This is not the case anymore. A sales agent may list the property for sale or rent under their active real estate license now.
Note: If an Affidavit of Affixture for the mobile home has been recorded, the mobile home is generally considered real property like any other home. Arizona REALTOR® December 2009
If an Affidavit of for the mobile home has been recorded, the mobile home is generally considered real property like any other .
Back to: BROKER MANAGEMENT CLINIC #3 – Supervision
BROKER MANAGEMENT CLINIC #3 – Supervision
SUPERVISION, DELEGATION & LOSS OF LICENSE
Delegation of Authority: ARS 32-2153
Grounds for Denial, Suspension & Revocation
Office Policy Manual: BMC #3 - Supervision
Legal Question and Answers Part 1-BMC #3 - Supervision
Section 1 Exam -BMC #3 - Supervision
Renewal of licenses & Unlicensed Activity
Unlicensed activity: BMC #3 - Supervision
A.R.S. §32-2155: BMC #3 - Supervision
Legal Question and Answers Part 2-BMC #3 - Supervision
Section 2 Exam -BMC #3 - Supervision
STANDARD OF CARE & ANATOMY OF A LAWSUIT-BMC #3 - Supervision
Standard of Care Specifics-BMC #3 - Supervision
Legal Question and Answers Part 3-BMC #3 - Supervision
Section 3 Exam -BMC #3 - Supervision
ERRORS & OMISSIONS INSURANCE-BMC #3 - Supervision
Standards of Care & Conduct by E & O Carriers-BMC #3 - Supervision
ERRORS & OMISSIONS POLICY COMPONENTS-BMC #3 - Supervision
High Risk Areas of Real Estate-BMC #3 - Supervision
Legal Question and Answers Part 4-BMC #3 - Supervision
Section 4 Exam -BMC #3 - Supervision
MARKETING/ADVERTSING-BMC #3 - Supervision
Real Estate Advertising Rules & Guidance-BMC #3 - Supervision
Legal Question and Answers Part 5-BMC #3 - Supervision
Section 5 Exam -BMC #3 - Supervision
Broker Supervision in Risk Management-BMC #3 - Supervision
The Agency Disclosure Process-BMC #3 - Supervision
The Due Diligence Process-BMC #3 - Supervision
Legal Question and Answers Part 6-BMC #3 - Supervision
Section 6 Exam -BMC #3-Supervision
Final Exam-BMC #3 Supervision
Legal Question and Answers Part 5-BMC #3 – Supervision Standard of Care Specifics-BMC #3 – Supervision