Legally speaking: Can I write a purchase contract for parties involved in a FSBO transaction?

posted by Brian G. Walsh   [ updated ]

By Peg Ritenour, OAR Vice President of Legal Services/Administration

Q: I was contacted by a former client who found a FSBO he wants to purchase. He and the seller have already negotiated the terms, but they want me to draft the purchase agreement and will pay me $500.00.  Can I do this?  Who would I represent?  Am I required to show the buyer the house before writing the purchase agreement?

A: While it is important to clarify who you will represent in this situation, the first and most crucial issue that must be addressed is the potential risk that you could be found to have engaged in the unauthorized practice of law by merely drafting a contract for the buyer and seller. Under Ohio law, drafting legal documents for third parties is conduct that requires a license to practice law. However there is a exception that permits a real estate licensee to fill in the blanks on pre-printed, form purchase contracts and leases that have been prepared by an attorney. This is because such conduct is perceived as falling within the ordinary course of a licensee's business duties. But in the situation where a licensee is being hired to merely write a purchase contract on behalf of buyers and sellers for a fee, such conduct could be considered the practice of law if you are not also performing any other duties that are part of your real estate related services as a licensee. Thus, to avoid a claim that you engaged in the unauthorized practice of law, you need to make sure that you are providing other services that you would normally perform as a real estate licensee. Examples of such duties would include showing the property, reviewing comparable sales in the area, making sure that the seller has provided the buyer with the Residential Property Disclosure Form and the Lead-based Paint Form (if required), assisting with the financing and inspection process, and other steps necessary to see the transaction through to closing. In determining what services will be provided, it is important to understand that under Ohio licensing law you must establish an agency relationship with either the seller, the buyer or both. Moreover, Ohio law also specifies that you owe that client(s) fiduciary duties of due care and diligence, obedience, confidentiality, disclosure, etc. In this scenario you should clarify with the parties who you will represent, what services will be provided, what your compensation will be and who will pay it. Your agency choices would be to represent the seller only, the buyer only, or both as a dual agent. Once that is decided you will be able to better determine the services that you will perform. Of course this agreement should be reduced to writing and because it will likely constitute an agency agreement, it must contain the fair housing language and logo and a definite expiration date.

This content is copyright 2019 Ohio REALTORS.

Front desk closing early tomorrow (Tuesday), April 23, 2019..

posted Apr 22, 2019, 8:19 AM by Brian G. Walsh   [ updated Apr 22, 2019, 8:19 AM ]

Good day:

Front desk will be closing tomorrow at 2:30P.  Please forward anything that you will need tending to in advance.  

Thanks, BGW

Zillow / Trulia syndication..

posted Apr 12, 2019, 12:17 PM by Brian G. Walsh   [ updated Apr 12, 2019, 12:17 PM ]

Good day TFPs,

On Monday we will be switching methods for syndicating our listings to Zillow from HomeSmart to our MLS.  HomeSmart's system has been relatively reliable but we have had a few hiccups so I did my due diligence and by going with the MLS method we will remove two links from the chain which will lower the risk of issues.  You do not need to do anything but we may have a short period of down time where our listings don't appear on Monday.

Thanks,

BGW

Home Inspector Licensing effective 4-4-19 (how it affects us)..

posted Apr 11, 2019, 10:23 AM by Brian G. Walsh   [ updated Apr 11, 2019, 10:24 AM ]

If a real estate broker or real estate salesperson provides the name of a home inspector to a purchaser or seller of real estate, the broker or salesperson shall provide the buyer or seller with the names of at least three home inspectors. Any home inspector named shall be licensed under Chapter 4764. of the Revised Code.

Providing a purchaser or seller of real estate with the names of licensed home inspectors does not constitute an endorsement or recommendation of those inspectors and does not obligate the broker or salesperson to satisfy any due diligence requirements with respect to the licensed home inspectors.

This section does not require a broker or salesperson to provide purchasers or sellers of real estate with information on home inspection services or home inspectors. No cause of action shall arise against a broker or salesperson for providing or failing to provide the names of licensed home inspectors or information on home inspection services or for failing to recommend a licensed home inspector to a purchaser or seller


Amending the residential property disclosure after it has been completed..

posted Apr 9, 2019, 6:18 PM by Brian G. Walsh   [ updated Apr 9, 2019, 6:18 PM ]

At our meeting we discussed the above topic.  My stance is the same as it is with a fully executed contract (use a separate amendment, do not update or replace a completed document).  If something occurs after the home is listed and it requires updating the property disclosure I would ask that you please use a new form that I have provided in the Addenda section of our Documents entitled Residential Property Disclosure Amendment.  I discourage updating the existing disclosure or replacing it with a new one as it lends towards confusion and possible errors in updating the form in supplements and in our paperless system which can fall back on us should the buyer not receive proper documentation.  Thanks, BGW

Buyer / Seller Letters..

posted Apr 4, 2019, 9:59 AM by Brian G. Walsh   [ updated Apr 4, 2019, 9:59 AM ]

Prior to our meeting I spoke Peg Ritenour at OAR to get some guidance on above and we had a discussion about it at the meeting.  It is too much to spell out here so if you use either of the above or plan on it please get with me and we can discuss it.  Thanks, BGW

Buyer Broker Compensation field in MLS..

posted Mar 31, 2019, 11:31 AM by Brian G. Walsh


Division form now available to register nicknames, initials and maiden names..

posted Mar 27, 2019, 6:13 PM by Brian G. Walsh   [ updated Mar 27, 2019, 6:13 PM ]

By Peg Ritenour, Ohio REALTORS Vice President of Legal Services

Do you use Mike, Liz or J.R. to identify yourself in your advertising? If so, you are now required to register that name with the Ohio Division of Real Estate and Professional Licensing.

As was reported earlier this year, the Ohio Real Estate Commission adopted amendments to several administrative rules that became effective on Feb. 10. Among these was a rule that addresses the name licensees can use in advertising or any form of marketing, including social media.

Under existing Ohio law, licensees are required to advertise in their name as it appears on their real estate license. This will generally be the licensee’s legal name. Previously, a Commission rule allowed licensees to use common nicknames, a middle name, or initials in their advertising. However, this rule has been amended to now only allow this if the licensee registers that nickname, middle name, etc., with the Division as a “preferred name."

This requirement to register a preferred name will include even common nicknames or derivatives such as Dave, Jim, Patty, Chris, Debbie, etc. It will also allow licensees to register initials (J.D., P.J.) or more unusual nicknames such as Buzz, Skip, Buffy, etc. In addition, a licensee who wishes to advertise in a maiden name can also register that name.

The form to register such names -- Application for Preferred Name Registration -- is now available. A $10 application fee is required. The Division has indicated that licensees will be given ample time to comply with this new registration process.

It should be noted that many years ago the Division did issue some licenses in a person’s nickname. If you are one of those licensees, it is not necessary for you to register that nickname because it is already your licensed name.

The bottom line is, if you want to use a name that is different than what is on your license, you have to register it. CLICK HERE to access the form.

Our next office meeting is Tuesday, April 2, 2019 @ 10:00am..

posted Mar 25, 2019, 9:00 AM by Brian G. Walsh   [ updated Mar 25, 2019, 9:01 AM ]

Please bring your win for the month and any challenges you are facing along with any topics you would like to discuss.  I am going to talk about buyer letters (letters written to seller when we work with buyer) and seller letters (letters we leave out for buyers to read in our listings).  Thanks, BGW

Pearl Anniversary

posted Mar 24, 2019, 6:04 AM by Brian G. Walsh   [ updated Mar 24, 2019, 6:04 AM ]

Today marks 30 years in the real estate business for me.  A few years ago while I was having a minor surgery a nurse asked me what I did for a living and I told her I have a PhD in real estate (LOL).  It has been a fun ride.  Thanks for being a part of it!  BGW

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