Ask George & Chuck: Questions From Consumers - September 28, 2004
by George Stephens & Chuck Jacobus
Dear Ask George: Is it legal for a non-licensed individual to receive a fee for introducing a buyer to a seller? – Cautious Dear Cautious: State licensing laws prohibit a real estate licensee from paying a referral fee to an unlicensed person. We notice you are writing from Texas. In that state, referring a prospective buyer, seller, landlord, or tenant to another person in connection with a proposed real estate transaction is an act requiring the person making the referral to be licensed if the referral is made with the expectation of receiving valuable consideration. For the purposes of this section, the term "valuable consideration" includes but is not limited to money, gifts of merchandise having a retail value greater than $50, rent bonuses and discounts. So in answer to your specific question, regarding referral of prospects, a non-licensed person cannot be given nor can he or she receive valuable consideration including but not limited to, money, gifts of merchandise having a retail value greater than $50, rent bonuses or discounts. However, a Texas licensee can give the non-licensed person merchandise and/or gift certificates, provided it is $50 or less and cannot be used as cash. Dear Ask George: A buyer leased a condo property from my firm and also signed a purchase contract last November, 2003 with a closing set for October 31, 2004. The tenant (buyer) now wants her lease deposit and earnest money returned to her due to safety concerns and alleged crimes occurring within the complex. The way I see the situation, this isn't a valid reason to terminate the contract. She has not been rejected for a loan, thus it would seem she will be in default as to her purchase contract. The issue is that the tenant (buyer) is studying to be an attorney and works for a law firm. The owners have a nice home which I have listed for sale, and feel that an attorney with the tenant's law firm would be able to somehow get her out of her contract. They, at my suggestion, are seeking legal counsel. But they feel that if the tenant releases the earnest money and the lease security deposit to them as some form of consideration, that it would be preferable rather than trying to press any legal issues. We haven't yet approached her agent but this is what we are considering. Would you agree? – Meticulous Dear Meticulous: We agree that you correctly advised your clients to seek legal counsel. At best, lease-to-purchase deals can become tortuous and complex. We understand you are located in Texas. The governing documents are the Texas Association of REALTORS® Residential Lease agreement and the Texas Real Estate Commission's Residential Condominium Contract (Resale). Unless the two contracts have been tied together, I would handle them as two separate agreements. If the Tenant defaults on her lease, then follow the default provisions of the Lease Agreement. If Tenant (as Buyer), defaults on the purchase, then handle according to its stated default provisions. If she has a year to obtain lender approval (that is, the lender's approval that the buyer meets the lender's guidelines as being creditworthy), then follow the Third Party Financing Condition Addendum exactly. The language "...time is of the essence; strict compliance with the times for performance herein stated is required" means exactly that. Make sure the Buyer (Tenant) has complied with her obligations to notify the Sellers and/or their representatives. Take note of the last paragraph of the addendum. You are authorized, by the Buyer's signature, to receive the lender's information regarding the Buyer's loan approval. As a bottom line, here, "yes," we agree with you and the owners that it would be preferable to pressing any legal issues. You can probably make her prove timely lender application and that (at least to that particular lender) she was not approved. But the aggravation and legal costs are most likely not worth it. As for the Lease Agreement, deduct from her security deposit any funds to which the owners' are entitled by the Lease Agreement and refund the rest, if any. Dear Ask George: I know it is now illegal for a REALTOR® to buy property for the purpose of reselling it. But can the REALTOR® keep the mineral rights to that property after he turns around and sells it? – Curious Dear Curious: You appear to be writing from Goliad, Texas. Therefore, I'll respond to your question keeping in mind the applicable Texas Statutes. To begin with, there is no state law in Texas -- or any other state, that singles out REALTORS® in the state's list of prohibitions. Real estate licensees, on the other hand, are usually prohibited from doing anything generally considered to be contrary to the public good. A REALTOR® is also a real estate licensee. As such, the licensee must take no action that would place the licensee in a position to take advantage of a consumer. Thus, if the licensee purchases property for the licensee's own account, the licensee must disclose the fact -- in writing, that he or she is licensed as a real estate broker or salesperson. Dear Ask George: I have a zero lot line home. I have lived in the home for six years. The lot next door has been sold and the new owner and the builder have contacted me regarding my fence. They claim it is 10" on their property. I contacted the title company and they confirmed that the fence is indeed over the property line. Is there anything I can do to not move the fence or to not pay for it? – Cost Conscious Dear Cost Conscious: Did you build or contract to build the fence? If you did, the fence's location is clearly your responsibility. On the other hand, if the disparity is the result of a faulty or inaccurate survey, you might have recourse or be able to obtain some relief from the surveyor. A practical approach would be to communicate with the new owner. See if you can split the cost with him or her. Disputes about the actual location of fences -- though usually valid as to one party's or another's claim, make for unfriendly and un-neighborly relationships. They are seldom worth the angst that accompanies them in a residential community. | 
