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Sunday, November 23, 2008

SHORT SALE Q&A

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Short Sale Q&A
The increase in the number of short sales throughout the state prompted two legal questions from Mike Richardson, Association Executive of the Naples Area Board of Realtors. FAR’s General Counsel Randy Schwartz responds:

Q: If a real estate licensee lists a property at a below market price he knows the seller probably won’t accept, is the licensee in violation of Florida real estate license law?

A: Randy Schwartz: While a violation of the Florida real estate license law is a matter to be determined by the Florida Real Estate Commission, in my opinion, if a licensee lists a property for a price the licensee and the seller know is not acceptable, a case of misrepresentation and false advertisement can be made under Chapter 475.25(1)(c) Florida Statutes. It would not make any difference if the listing indicated that the selling price was subject to a third party lender or not; it is more a matter of advertising something that is known to not be acceptable.

Q: Is the seller in violation of any law if he states he would sell a property at a certain price even though he knew it would not actually sell at that price?

A: Randy Schwartz: I do not believe the seller would be violating any license law because Chapter 475, Florida Statutes, does not regulate the public. However, Chapter 817, Florida Statutes, might come into play for the licensee and a member of the public. Whether the seller could be held accountable for civil damages, due to his or her misrepresentation, would be completely determined by the individual facts of the case.

Short sales and the Foreclosure Rescue Fraud Prevention Act
Does Florida's new Foreclosure Rescue Fraud Prevention Act (F.S. 501.1377) prohibit real estate licensees from being involved in short sales? According to Florida Attorney General Bill McCollum in a letter to FAR President Chuck Bonfiglio, the answer is no, provided the only compensation sought by the licensees is the commission on the sale. The new law, which took effect Oct. 1, 2008, seeks to protect homeowners who face the threat of foreclosure from individuals who would prey on them.

McCollum's interpretation is based on the following scenario: A licensee secures a listing agreement on a home for sale, ascertains that the fair market value of the home is less than the loan amount, and lists the property at the lower amount. If a buyer agrees to pay less than the loan amount, the licensee then asks the lender to accept the lesser amount in order to avoid foreclosure.

"As long as there is no upfront or other fee for the negotiating service other than the normal real estate fee charged for the sale of the property, that activity [participating in a short sale] would not appear to fall under the provisions of F.S. 501.1377," according to McCollum.


Florida issues ruling on doc stamp taxes for short sales
The Florida Department of Revenue (DOR) issued its ruling stating that doc stamp taxes owed on a deed should be based on the sale price paid by the purchaser. The DOR ruling is effective immediately.





Best Practices

Protect your brand

Registration of your mark is not required, but it’s a good idea if you want to protect it. On the USPTO registration application, you must concisely list your trademark’s goods and services. You may use the federal registration symbol “®” only after the USPTO has actually registered the mark, not while the application is pending, and you may use it only for the goods and services listed in your federal trademark registration.



FREC Final Order

This Florida Real Estate Commission Final Order allows a sales associate to be paid a commission directly if the sales associate’s broker provides the closing agent with written authorization identifying the specific transaction, the sales associate to be paid and the specific amount to be disbursed.

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