Read Get the Facts including the Legal Hotline Q & A
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Get the Facts  Weekly Membership Newsletter
January 17, 2017  -  Stay Connected!
 
    

 
QUESTION: At walk thru the day of signing closing documents (recording to be next day) purchasers discover that 35R work requirements have not been done. Buyers don't sign. They now do not want to proceed. Seller believes buyers have defaulted. Buyer wants earnest money returned because they believe seller defaulted. While earnest money is being argued, can the buyers make offers on other properties? Or does it tie up the buyers and the property?



ANSWER: Buyer can buy another house and seller can find another buyer. Neither buyer nor seller is "tied up" with the other at this point, based on the facts presented. The closing date passed, the sale failed to close, the purchase agreement terminated. The parties are now disputing ownership of the earnest money but not ownership of the real property. Buyer is no longer claiming the right to buy the property. If buyer wanted to prevent seller from selling to another buyer, buyer would have to file a lawsuit and record a lis pendens against title to seller's property. Based on the facts presented, that has not and will not happen. As a result, both of these parties are free to move on to new transactions while still disputing ownership of the earnest money from this failed transaction. Printable Version

The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org or call (800) 562-6027. Please have your NRDS number ready when you call or e-mail the Hotline with your question.

 

Thank you, Corporate Sponsors!

   

 

 
 
Lenders Aim for 21-Day Closing Window
(Source: REALTOR Mag) In an era of bloated closing times, some lenders are looking to quicken the pace it takes to get a buyer to the settlement table. Some lenders are retooling operations and aiming to close a loan within 21 days. [Read more...]
 

 
 
Millennials Patient, Thrifty when It Comes to Homeownership
(Source: RIS Media) Though millennials perceive homeownership as a vital component to the American Dream, they are also accepting of the realities of owning a first home, according to a new survey by Better Homes & Gardens magazine. Eighty-five percent of the first-time millennial homeowners surveyed view homeownership as a sound investment, and many are practical when it comes to home-buying and -renovating. [Read more...]
 

 
ONLINE REGISTRATION IS CLOSED - REGISTER AT THE DOOR
Washington REALTORS® Legislative Day event is scheduled from January 18-19, 2017 here in Olympia. Online registration is closed, but you can still register at the door. Come represent fellow REALTORS®, learn the inside scoop on the industry, and help create positive change for your community! [More information...]
 

 
 
Where to find hyperlocal content for Facebook in minutes
(Source: Inman) Are you struggling to find information to share on your Facebook business page? Beyond doing the dirty hands-on work of interviewing local school principals and reviewing dishes from every restaurant in town, how can you keep your finger on the pulse of what’s happening so that your Facebook followers hear it from you first? Download the right mobile apps, set up a few simple email alerts and you can keep an eye on local news in just minutes a day.[Read more...]
 

 
 
What Happens When You Deliver Cookies to 40 Neighbors?
Real estate video guru Ty Smith has some helpful advice on talking to your buyer's new neighbors and what that can mean for your business. [Watch the video here...]
 

Primary Mortgage Rates Survey
(updated every Thursday)

 

(source:  Freddie Mac)
 
 
 
UPCOMING CLASSES
 
NAR Code of Ethics Webinar
Thursday, January 26, 2017
9:00 AM to 12:00 PM  
3.0 CE Hours
Location:  Live Webinar   
 
Put a S.O.C. In It
Wednesday, February 8, 2017
8:30 AM to 4:30 PM  
7.5 CE Hours
Location:  Tacoma  

 

 
 
QUESTION from 1/7/2016 - Seller is agreeing to do a 2nd mortgage on a sale. Buyer has asked the seller not to record the 2nd for 6 months to allow the 1st mortgage company time to sell off the paper on the secondary market. If seller complies, is seller participating in mortgage fraud?

  
ANSWER -  Yes. And so are the brokers who facilitate this outcome. The mortgage fraud actually occurs upfront when buyer's mortgage lender is not informed that seller will be recording a second deed of trust. It may be that the mortgage broker and even a bank representative, if the loan is taken through a bank, are informed of seller's carry back. But, if seller's carry back invalidates the loan for sale on the secondary market, and sale on the secondary market is lender's objective, then it is doubtful that lender (the entity actually funding the transaction) is aware of and approved the transaction with seller carrying back a note with a recorded deed of trust. If lender is aware of and approves this seller requirement, then why would buyer be asking seller to refrain from recording the deed of trust? Recording the deed of trust would be in compliance with buyer's loan terms. The fact that this buyer is making this request raises a red flag that seller and listing broker cannot avoid. Moreover, consider the risk that seller runs in not recording seller's deed of trust for six months. What if, in that six month time period, buyer incurs another obligation that encumbers title to the property. When seller records the deed of trust six months after closing, seller will no longer be in second position. Seller will be somewhere farther down the chain of title and seller's security for the note will be impaired. Or, what if buyer's first mortgage holder begins foreclosure proceedings. Seller will have no recorded interest in the property and will not be notified of the foreclosure or of seller's need to take action to protect seller's interests in the property. With increased activity in the market, there are ever increasing rumblings of mortgage/lender fraud. Brokers must be vigilant for indications of lender fraud. When the facts of a situation, like this, seem out of the ordinary, brokers should ask questions. Brokers may need to consult with broker's managing broker or contact the Legal Hotline for confirmation of broker's suspicions. Brokers must avoid participation in lender fraud schemes and must avoid advising their clients, even unwittingly, to participate.
 
(You will need your NRDS# & password to access the Legal Hotline)
 
The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org or call (800) 562-6027. Please have your NRDS number ready when you call or e-mail the Hotline with your question.