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A Legal Update from C.A.R. Official

Wednesday, June 20, 2007

Gov Hutchinson, assistant general counsel and staff vice president of the California Association of REALTORS® (C.A.R.), gave SAMCAR brokers and managers an update on legal issues at last week’s Broker/Manager meeting, held at the Crowne Plaza in Burlingame.

Hutchinson told SAMCAR members, on the real estate market side, compared to the rest of the state, the Bay Area market is healthier. Calls to C.A.R.’s legal hotline, however, have surged to about 80 per day; the numbers are driven by lawsuits and litigation.

“The good news for your Association is that you are using Realtor-generated forms,” he indicated.

Despite the return to more normal market conditions, he said Realtor membership continues to grow. He did warn against a growing number of “unlicensed assistants of licensees,” and noted, these assistants cannot write purchase offers nor should they be showing homes.

“We have heard in some offices there could be 100 unlicensed agents with just three who are licensed,” he disclosed.

Hutchinson reported that C.A.R. has been working hard to upgrade the standards of the real estate profession. Beginning Oct. 1, new licensees can no longer get a conditional salesperson license. A person must complete three real estate classes before applying for the real estate salesperson exam. C.A.R. also sought to eliminate the degree broker license, and while this piece of legislation did not pass, C.A.R. is sponsoring a bill to tighten regulations for brokers by clarifying Broker license requirements by requiring brokers’ specialization in real estate require a degree that majors or minors in real estate.

Also, as of July 1, the DRE will require all agents who renew their licenses to take a new class on risk management. The DRE is also cracking down on education scams, he said.

While there has been a net decrease in C.A.R. forms, Hutchinson said there is a new form this year, known as the Agent Visual Inspection Disclosure form. Although not required, this form gives sellers an opportunity to be more specific and more room to write their disclosures. The form also includes disclaimer language which attempts to protect the real estate agent, Hutchinson explained.

“It contains wonderful disclaimer language. You merely have to disclose what you see.  … You don’t have to use it, but I’d recommend it,” he said.

The biggest legal issue these days involves foreclosure sales. Hutchinson warned brokers  if a transaction specifically involves a buyer who is an investor and does not intend to live in the home he wishes to purchase, and the seller is in foreclosure, the buyer will need a special form for the transaction which will need to be filled out by a lawyer – not the agent.

Ignorance of this law cannot be an excuse, said Hutchinson. If a special form is not filled out, the penalties are stiff – the buyer could go to jail, the agent could be fined $25,000, and the sale rescinded.

“Check and see if the house is in foreclosure and if it is owner-occupied, if you are working with a buyer who is an investor,” advised Hutchinson.

Hutchinson touched on numerous other topics, including requirements if sellers are foreigners, HOA disclosure of their reserve status and assessment plans, and he also shared recent cases.

“There is a lot of activity out there. It’s still pretty much a seller’s market, but it seems harder these days to get a deal to close,” said Hutchinson. “And it’s clear that it is the experienced agents that are doing a lot better these days.”

The C.A.R. official said Realtors need to keep abreast on the latest news and laws and regulations that could affect their business, by regularly checking the C.A.R. Web site. For questions, Hutchinson urged SAMCAR members to call the C.A.R. hotlines: (213) 739-8350 for brokers and (213) 739-8282 for Realtors.

 


SAMCAR Brokers and Managers mingle before lunch and a presentation by S.A.R.'s Gov Hutchinson. - Image 1 of 3 The June SAMCAR Broker/Manager Meeting was held at the Crowne Plaza in Burlingame. - Image 2 of 3 Assistant General Counsel and staff Vice President of the California Association of REALTORS Gov Hutchinson - Image 3 of 3

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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