Read Get the Facts including the Legal Hotline Q & A
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Weekly Membership Newsletter
August 14, 2018 • Stay Connected!
         

WE'VE MOVED BACK IN!  
The Washington REALTORS® building is complete and staff has moved back to 504 14th Avenue SE, Olympia, WA 98501. We're experiencing technical difficulties with our phone system, however. Please continue to use our Contact Form on our website or email to get in touch with staff. We hope to have service restored by tomorrow, August 15th.
 
Thank you for your patience as we get settled in!  


QUESTION:  In the Purchase and Sale Agreement, Buyer and Seller agree to Buyer taking possession 14 days after closing. There were no rental-related terms included other than the agreement that seller will occupy for 14 days post closing. When Buyer's Lender confirmed Buyer's monthly loan payment, Buyer presented NWMLS Form 65B (Rental Agreement/Seller Occupancy After Closing) to Seller with a rental amount based on Buyer's payment roughly prorated for the agreed period. Seller's position is that the Buyer agreed to a 14 day post-closing Seller occupancy without reference to rent and therefore should be no cost involved. Buyer's position is that the closing terms in the Purchase and Sale Agreement require a rental agreement, and that Buyer is due a reasonable compensation for the Seller's post closing occupancy. Where do the parties stand?



ANSWER:  Unfortunately, both parties are correct in that their competing positions illustrate the problem created when one contract requires the creation of a future contract in order to fulfill the terms of the first contract. In the law, we call this "an agreement to agree" and "an agreement to agree" is an unenforceable contract. These parties (and brokers) need to work hard to resolve this issue.
 
Buyer is correct, that Form 21 says that whenever possession occurs on a day other than closing, the parties AGREE, by signing Form 21, to also sign either Form 65A (buyer taking early possession) or Form 65B (seller retaining delayed possession) [see Form 21, lines 79-83]. In other words, once the parties sign Form 21 agreeing to possession on any day other than closing, the parties have already agreed and are locked into signing Form 65A or B. The problem is illustrated by seller's position. Since no rent was provided in the PSA, seller has been operating under the impression that seller's occupancy was rent free. Now, seller will not agree to pay rent to buyer even though seller is obligated to sign Form 65B.
 
The problem ... Form 65B contains a number of blanks, including the amount of rent. When buyer and seller both agreed, by signing Form 21, that they would also sign Form 65B in the future, the brokers failed to complete the terms of the Form 65B so that the parties could actually agree to the terms of the rental agreement that they were agreeing to sign in the future. In other words, Form 21 includes an agreement requiring the parties to agree, in the future, to the terms of a rental agreement. Because of the handling of negotiations and drafting before mutual acceptance, the parties entered an agreement to agree and the agreement may be unenforceable if the parties cannot come to agreement on the terms of Form 65B.
 
The problem is not a problem inherent in the statewide forms. Rather, the problem is that the Form 65B was not completed and either signed or initialed by the parties at the time the PSA was entered. There is no way that the Form 65B can have all blanks completed as boilerplate. Form 65B must, necessarily, include some blanks that must be completed consistently with the unique terms of the given transaction. Terms such as the amount of rent or the dates of occupancy cannot be completed as boilerplate.
 
The way that possession on any date other than closing should be handled is for the brokers to include either a Form 65A or 65B, already completed with the terms agreed between the parties, as an attachment to the PSA. By signing the Form 21, the parties will agree that when either party begins possession as a tenant, both parties will sign the already-agreed Form 65A or 65B. With that, the parties are agreeing to execute the Form 65A or B at the time of tenancy but there is no "agreement to agree" because the parties have already agreed to the terms of the Form 65A or B that will be signed. This methodology provides the dual benefit of not only eliminating the "agreement to agree" problem, it also reinforces the serious nature of one party becoming the tenant or landlord of the other.

 

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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  VHT Studios


  
 
IRS Guidance on 20% Business Income Deduction
(Source: Speaking of Real Estate) If you were tuned to the news Aug. 8 you might have heard the IRS released proposed regulations on the new 20 percent business income deduction for pass through businesses. IRS summary with link to FAQ. Proposed rules...Now that proposed regulations are out, it’s clear the new deduction will be available to a wide range of real estate professionals.
 
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No Housing Recession Over the Horizon
(Source: REALTOR® Magazine) Media reports are increasingly focused on whether a major home sale slowdown, or maybe even a crash, is in the making, in part because many hot housing markets are seeing slackening buyer demand, and nationally 2018 is expected to end with fewer home sales than 2017. But the possibility of a crash is unlikely, says Lawrence Yun, chief economist for the National Association of REALTORS®.
 
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To Bot or Not to Bot?
(Source: Tech Helpline) That's more than a technical question. Technology has empowered real estate agents in remarkable ways in the last couple of decades. One of the hottest innovations for agent websites is bots. What’s a bot? Short for robot, a bot is a software program that can execute commands, such as reply to messages, or perform routine tasks, typically automatically. For agent websites, chatbots are used to conduct a text conversation when someone visits your site.
 
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Grow Your Instagram Authentically
(Source: Katie Lance) Are you struggling with growing your following over on Instagram? I totally get it. One of the number one things people ask me all the time is, “Katie, how can I grow my Instagram following?” So today, I want to give you a few tips, tools, and things not to do.
 
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Primary Mortgage Rates Survey
(updated every Thursday)  Source:  Freddie Mac
 
 August 9, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.59%  4.05%  3.90%
 Fees & Points  0.5
 0.5
 0.3
 Margin  N/A  N/A  2.76



 August 2, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.60%  4.08%  3.93%
 Fees & Points  0.4
 0.4
 0.2
 Margin  N/A  N/A  2.76



 July 26, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.54%  4.02%  3.87%
 Fees & Points  0.5
 0.4
 0.4
 Margin  N/A  N/A  2.76



 July 19, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.52%  4.00%  3.87%
 Fees & Points  0.4
 0.4
 0.3
 Margin  N/A  N/A  2.76



 
 UPCOMING CLASSES
 
Date Class Location CE  
16-AUG  The Hotline Vs. The Bottom Line Spokane 7.5 More info...
16-AUG  NAR Code of Ethics Webinar Live Webinar 3.0 More info...
23-AUG  CORE & More Longview 7.5 More info...
28-AUG  Current Issues in WA Res RE Wenatchee 3.0 More info...
29-AUG  To Disclose or Not to Disclose Yakima 4.0 More info...
29-AUG  Don't Get Whacked by the WACs Yakima 3.5 More info...
29-AUG  NAR Code of Ethics Bellingham 3.0 More info...
30-AUG  The Hotline Vs. The Bottom Line Walla Walla 7.5 More info...
06-SEP  NAR Code of Ethics Webinar Live Webinar 3.0 More info...
13-SEP  Financing Solutions to Close the Deal (CRS) Chelan   More info...
13-SEP  2018 Fall Business Symposium SeaTac 7.5 More info...
14-SEP  The Hotline Vs. The Bottom Line Gig Harbor 7.5 More info...
17-SEP  Principled Negotiations Olympia 7.5 More info...
20-SEP  Agency Law & CORE Vancouver 7.5 More info...
20-SEP  NAR Code of Ethics Webinar Live Webinar 3.0 More info...
20-SEP  Real Estate Safety Matters Olympia 3.5 More info...
21-SEP  The Hotline Vs. The Bottom Line Vancouver 7.5 More info...
02-OCT NAR Code of Ethics Olympia 3.0 More info...
04-OCT Tech Edge SeaTac   More info...
18-OCT  NAR Code of Ethics Webinar Live Webinar 3.0 More info...
24-OCT  NAR Code of Ethics Puyallup 3.0 More info...
25-OCT  NAR Code of Ethics Webinar Live Webinar 3.0 More info...
15-NOV  NAR Code of Ethics AM Olympia 3.0
More info...
15-NOV
NAR Code of Ethics PM
Olympia 3.0 More info...
16-NOV Water Rights & Water Supply Issues Kennewick 3.5 More info...

More Classes →


  
COE WEBINARS ARE BACK BY DEMAND
Washington REALTORS® will host COE Webinars starting in August to assist members with completing the mandatory training. Don't wait until the last minute, though! These webinars are capped and they fill up fast...
 
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