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QUESTION:  I have a hard time getting Firpta forms from other agents. Do we have to have them on file and do auditors look for them?



ANSWER:  No. In fact, the only time that it matters is IF the seller is a non-resident alien. In that case, both firms should have the form so that both can properly advise their client. The seller should be advised to consult their tax adviser immediately so that the process of determining proper withholding can be initiated. Buyer should be advised to mark the proper box on the face of F 21 and put escrow on notice of the need to withhold funds from seller's proceeds at closing.
 
The industry is taught to obtain a FIRPTA certificate (Form 22E) from every seller in every transaction because, of course, there is no way that brokers know which sellers fall into the category of "non-resident alien" unless that information is provided by the seller. As a precautionary measure, it is a good idea for a buyer's broker to obtain a FIRPTA Certificate from every seller.
 
It is silly for listing brokers and sellers to refuse to provide the certificate or make it hard on buyer's broker to obtain the certificate because there is nothing about the Form 22E that weakens seller's position, that reveals seller's confidential information or that negatively impacts seller in any way ... unless seller is a non-resident alien and considers that fact to cause a negative impact. Because there is no adverse impact to seller for providing a Form 22E unless, arguably, seller is a non-resident alien, then for every seller or listing broker who refuses to provide a Form 22E, buyer broker almost has to assume, for the protection of buyer, that seller is a non-resident alien ... simply because proof from seller, that seller is not, is too easy for seller to provide.
 
This question illustrates an example of a situation where brokers in a transaction often treat each other as adversaries rather than as two professionals, both trying to get their client across the same finish line. There is absolutely no justification for listing brokers to be uncooperative in any way with buyer brokers with respect to this issue. Seller's status as a non-resident alien, or not, is information that is critical to the successful closing of the transaction. It is information that is critical to both parties. Federal law creates this burden on the parties and their brokers. Why a listing broker would refuse to assist both parties, buyer's broker and escrow in obtaining information that is harmless to seller and critical to the transaction is a mystery.
 
Buyer broker should continue efforts to obtain a copy of seller's completed and signed Form 22E in every transaction. The form should be retained in the transaction file for both firms as proof of seller's status under FIRPTA and as proof that both brokers acted competently and with professionalism to protect the interests of their client and to further the goals of both parties, to close the transaction. Listing brokers should obtain a complete and signed Form 22E from every seller, when the listing is taken, and upload the form as an attached document to seller's listing. That is listing broker's greatest act of professionalism with respect to the FIRPTA issue.

 

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 . Please tell us your NRDS number when you e-mail the Hotline with your question.



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