The Legal Side of Real Estate

One of my favorite real estate attorneys is Kate Brooke, from Brooke Law Office, LLC just across from Washington Square (Tigard/Portland, Oregon). I’ve been an avid reader of her monthly newsletter since 2013 and thought it would be a good idea to take a look into the issues that end up in her office needing legal solutions.

These are great lessons in Risk Management and Due Diligence.
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Direct from the office of Kate Brooke:

The Scenario: A cash Buyer offers the Seller $10,000 over their asking price, but the Seller is already under contract with another Buyer.
The Question: How can the Seller terminate the existing Agreement?
Kate’s Answer: “Buyers have contingencies. Generally, sellers do not. Therefore, once your seller signs a purchase and sale agreement, the seller likely has no option to terminate the contract unless the buyer agrees to terminate or the buyer has breached the contract’s terms…”
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The Scenario: Unmarried couple wants to purchase a home together
The Question: What is the best way to do that?
Kate’s Answer: “If your clients are an unmarried couple, they should not purchase real property together without having a tenants in common agreement to guide them in case of a break up, disability, long term illness…”
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The Scenario: Have multiple offers, one is quite a bit over the list price.
The Question: Should the Seller yell Yahoo! Or not?
Kate’s Answer: “Another way buyers are making themselves more attractive to sellers is to offer well over list price to secure an accepted offer, and then rely on the lender’s appraisal to lower the price. Listing agents, to prevent this, advise your seller of the risk and suggest that the seller either consider a buyer with a lower offer (and what seller wants to do that?) or add a contract term that requires the buyer to fund any portion of the purchase price in excess of the appraised value. If that seems too complicated, you can ask for a bigger earnest money payment and make it non-refundable to the buyer after the inspection period is over.”
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The Scenario: Seller has a Cash Offer and expects fewer issues because it is cash.
The Question: What should the Seller demand when offered Cash?
Kate’s Answer: “…A residential purchase is not an all cash transaction if the buyer is (i) borrowing from a hard money lender, (ii) using a gift from dad, (iii) drawing funds from a trust or (iv) using the proceeds from a line of credit or 401k. All of these financing options are contingent and the failure to disclose that fact is likely actionable (meaning that the seller might get the earnest money).” ________________________________________________________________________

 The Scenario: Great home, newly remodeled.
The Question: Was this a Flip? If so, what do I need to know?
Kate’s Answer: “If you are buying a house from a flipper you should tell your buyer to check with the Oregon CCB to make sure they are a licensed contractor. I have made a lot of money representing buyers who purchased from flippers who are not. Get lots of inspections, check the permit history and if part of the basement was converted into one or more bedrooms, get a sump pump.” ________________________________________________________________________

The list is almost endless. Here are more scenarios without comment:

  • What constitutes “Delivery” of documents that are required to be delivered?
  • The proper way to make a “Counter Offer”
  • Announcing your Purchase intent too soon
  • Does the Home Inspection require a Certified and licensed Inspector?
  • Some ways the Buyer’s Earnest Money is at risk
  • What small changes in the Purchase Agreement can make your life miserable?
  • What repairs are not allowed to be done by the Seller? Really?
  • How to handle “Under the Radar” or “Side” deals.
  • Is it legal for Buyer to make offers on more than one property? Then take whichever one accepts first?
  • How to handle “SOLD AS IS” purchases.
  • Buyer Repairs done before closing.
  • Can people record phone conversations without telling you?
  • Are Home Inspections Confidential?
  • Who are Non-Traditional Tenants and what risk are they to Buyers?

PLEASE NOTE: Ms. Brooke’s contribution is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Seek the advice of an attorney for specific legal information.

All this is to get across the point that Buyers and Sellers in real estate should be aware of risk and well informed to handle it. Be careful out there!

For full text and/or deeper information of any of these topics:
Ken Reetz
Realtor – Principal Broker
Reetz Pro Real Estate
(503) 330-4148 Ksreetz@Gmail.com

Oregon License #200409337

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