Ask Realty Times - November 12, 2004
by Peter G. Miller
Question: Suppose I make an offer on one of Broker Smith's listings. Would the seller be more apt to negotiate a lower price if the mortgage was through Broker Smith's company? Answer: No. Broker Smith is obligated to place client interests first. The possibility of additional loan business may be great for Broker Smith, but it has nothing to do with the best interests of the seller. Many brokerages that own mortgage companies go to great lengths to assure that such conflicts do not arise. Suggesting an exchange of mortgage business for a lower sale price would cause a sensible broker to instantly leave the room. Question: A group of friends and I are considering forming a real estate limited partnership with me as the General Manager. Unfortunately, my credit is not good, creating a problem with the financing of the purchases. How can we get around the credit issue so that I can remain the General Manager and the rest of the group remains as silent partners? Answer: There would be no problem if you and your friends wanted to buy real estate and finance each transaction from your own resources. However, when you apply for financing the lender will want to assure that the borrowing party is both safe and solvent. To meet underwriting requirements, the lender must know the type of entity making the purchase (individual, partnership, corporation, etc.). In the case of individuals and partnerships, the finances of each applicant must also be revealed to assure that the loan does not represent undue risk. With a corporation, the lender will want to know about its finances, its right to own property and related matters. The lender has nothing to do with who is named or not named general partner. That's a matter for the investors to determine. In effect, to be the general partner you have to offer something of value to the others in your group. The best approach would be to first create an investment entity such as a partnership or limited liability corporation. You'll need a local attorney to advise what form of organization is best for your purpose and jurisdiction and what licensure is required. It will go a long way with lenders to have proper organizational paperwork in place. While silence may be golden in the general case, when it comes to mortgage applications some volume is needed. So-called "silent partners" are simply creditors with a claim against your profits because they've provided cash and/or credit. Creditors and what is owed must be shown on loan applications -- failing to do so can raise questions of mortgage fraud. Question: My wife and I placed a back-up contract on a home. The broker told us to write a $500 check as earnest money on a back-up contact. Weeks after we did not get the house, we still do not have our earnest money back. Now the title company wants to take $250 out of our earnest money for a processing fee. Our agent made no mention of processing fees for earnest money on a backup contract. How do we get our money back? Answer: By any chance, did you sign an agreement obligating you to pay $250 to the broker? As to the title company, without a purchase agreement you would have no need for their services as you have not bought anything. Explain to the broker that you want your $500 back or you want to know the reason why in writing. If the money is not returned in full, or you are not satisfied with the broker's response, contact your state real estate commission or department. A handy list can be found at: ARELLO.com. Question: In our homeowner association by-laws it states that no signage can be present in any owner's yard with the exception of "for sale" signs. Two political signs have been in place in one neighbor's yard for about five days now. What can I do as a neighbor if the board does not remove the sign or the neighbor with the signage does not remove it? Answer: You need to ask if the board has already contacted your neighbor. Beyond that, your question raises an important point: As private entities, as quasi-governments, HOAs have a lot of power. They can limit signs, including political signs, but they must have policies in place that are equally enforced. An HOA without a clear sign policy, or an HOA that does not fairly enforce a sign policy, can have problems. Alternatively, why not ask for five days to show a sign of equal size? That should spur your HOA to act.... Question: Where can I get more information for programs to assist with the repair of EIFS/Synthetic stucco built homes? Answer: Houses such as you describe have been the subject of extensive litigation. For general information and additional references try the EIFS Legal Network. Question: I'm a real estate salesperson. I moved from Broker A to Broker B in September. I co-listed a property under Broker A which has now been sold. Settlement was delayed for a variety of reasons but I have yet to receive my commission. How can I get paid? Answer: The first question to be asked is whether you have any grounds for payment. Do you have a written engagement agreement with your old broker? If yes, what does it say? Policies in this area vary. Some agreements provide for payment on listings obtained prior to separation, others end compensation obligations as of the date of separation. If there is no written agreement then the rules are unclear. You could sue, but that costs money and takes time. Arbitration with your local professional association is another option, if you both belong to the same professional group or if both agree to arbitrate.
This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought. | 
