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Posted by Phil Newman | Comments Off on 8-8-16 TAR DIGEST

8-8-16 — Vol.: 2016 Iss.: 29 Randy Durham, 2016 President • Phil Newman, TAR Digest Editor

TAR TAKEAWAYS
? Update: The Advertising rule does apply to Twitter
? How best to handle earnest/trust money
? Securing a copy of the closing disclosure is about to get easier
? Tips for rocking the road on your mobile device

 

CONTENTS
In the News
1. Closing Disclosure: A Helpful Change
2. *Twitter and the TN Advertising Rule*
3. Mark Cuban & Coolio: ‘Just Show Up’
Member Services
4. Stroke Screening Across TN 8/26
5. Free RETI Webinar: Mobile Road Warrior
Vote. Act. Invest.
6. Housing-Affordability Event Highlights
Professional Development
7. RCS-D Course at TAR 8/15-16
Legal & Ethics Hot Line
Disbursement of Earnest/Trust Money
8. Unexecuted Contract?
9. Broker Interpretation of the Contract?
10. Interpleader?
Key Links & Resources
**Register for Fall Convention!**

 

1. Closing Disclosure: A Helpful Change
If gaining access to the closing disclosure has been more difficult for you since last fall, take heart: Real estate pros experiencing trouble receiving copies of the disclosure under federal rules for residential transactions should see relief under proposed changes and clarifications released at the end of July. The Consumer Financial Protection Bureau, which had revised longstanding closing procedures in October 2015 under its Know Before You Owe initiative, now says it understands that “it’s customary for real estate sales associates, brokers, and other third-party service providers to receive copies of the closing disclosure that goes to the customers during the transaction.” The closing disclosure replaced the HUD-1 Settlement Form when the new procedures took effect. At the time some lenders and settlement agents cited privacy concerns and refused to share the disclosure with real estate professionals, making it hard for them to advise their clients. The CFPB has clarified “that it is appropriate and accepted for creditors and settlement agents to share the closing disclosure with consumers, sellers, and their agents,” said NAR President Tom Salomone. “That’s a significant victory that will help REALTORS® continue to provide the expert service their clients have come to expect.” The agency will take comments on the proposal until Oct. 18. See the full article HERE. View the actual proposal HERE.

2. *Twitter and the Advertising Rule*

Last week’s hotline Q&As on social media and the Advertising Rule prompted several questions about Twitter. Like all social media, Twitter does fall under the requirements, so that by rule, each tweet is required to contain the firm name (or d/b/a) and phone # as licensed with TREC. In light of Twitter’s 140-character limit, this may be a challenge, but there are creative ways to work within it. Example: Keep the tweet brief—“New listing…”, “Must-see property…” or “Coming soon…”—add the required name/phone #, and include (or link to) an image or video containing all of the details. Note: Twitter is preparing to remove images from the character count, making it easier to say more in 140 characters; read about that HERE.

For context, here is the pertinent portion of the rule, with emphasis added in bold:

1260-02-12(1) All advertising, regardless of its nature and the medium in which it appears, which promotes either a licensee or the sale or lease of real property, shall conform to the requirements of this rule. The term “advertising,” for purposes of this rule, in addition to traditional print, radio, and television advertising, also includes, but is not limited to, sources of communication available to the public such as signs, flyers, letterheads, e-mail signatures, websites, social media communications, and video or audio recordings transmitted through internet or broadcast streaming. Advertising does not include promotional materials that advertise a licensee such as hats, pens, notepads, t-shirts, name tags, business cards, and the sponsorship of charitable and community events.

Please refer to last week’s hotline section HERE for our bullets on the rule’s specific requirements.

3. Mark Cuban & Coolio: ‘Just Show Up’
James Altucher, an author, entrepreneur, angel investor and former hedge-fund manger, has identified a common trait shared by all of the successful people he has interviewed, from Mark Cuban to Coolio: They all show up, every day, with persistence and patience, and keep working hard even when the results come slowly. Altucher’s 95-second answer on the subject HERE is worth a quick look.

4. Stroke Screening Across TN 8/26
As a follow up to last week’s life-saving testimonial (see that powerful message HERE), Life Line Screening, a TAR partner, is offering Tennessee REALTORS® and their family members a community-health screening statewide on Friday, Aug. 26. Through ultrasound, screeners will evaluate carotid arteries for the build-up of fatty plaque, the leading cause of stroke. Register for the Stroke, Vascular & Heart Rhythm package—which includes carotid artery, abdominal aortic aneurysm, peripheral arterial disease and atrial fibrillation—for the reduced rate of $135. Call (888) 653-6190 or visit HERE to find locations and schedule your appointment.

If you or someone you know experiences any of these signs of stroke, call 911 right away:

  • Sudden Numbness
  • Difficulty Speaking
  • Severe Dizziness
  • Loss of Coordination
  • Sudden Loss of Vision
  • Sudden Intense Headache
  • Brief Loss of Consciousness

To learn more about our member benefits through Life Line Screening, visit HERE.

5. Free RETI Webinar: Mobile Road Warrior
The Real Estate Technology Institute (RETI), a TAR partner, will offer a FREE webinar at 3 p.m. EDT/2 p.m.CDT this Wednesday, Aug. 10. “Become a Mobile Road Warrior—Increase Productivity with Mobile Devices,” led by Craig Grant, will show you the tools to be as efficient in the field as you are in the office. Register HERE.

6. Housing-Affordability Event Highlights
In case you missed it, at a recent symposium hosted by NAR in Washington, D.C., leaders in the affordable-housing community tackled homelessness and housing affordability. The attendees discussed effective solutions; shared innovative ideas, partnerships and experiences; and formulated plans of action for their communities. The event built on NAR’s policy that urges state and local REALTOR® associations to work with community stakeholders to develop innovative and proactive strategies to aid citizens experiencing homelessness or facing housing insecurity. To read about or watch sessions from Housing for All, click HERE.

7. RCS-D Course Covers Divorce, Elder Care at TAR 8/15-16
TAR is hosting another RCS-D designation course (Real Estate Collaboration Specialist–Divorce), Mon.,Aug. 15, and Tues., Aug. 16. Taught by Kelly Murray, J.D.—a Vanderbilt law professor, licensed REALTOR® and instructor—the 12-hour (CE) course will equip you to work with divorce and elder-care clients, and their attorneys, throughout the property buying/selling process. It’s a perfect opportunity to help clients navigate these challenging seasons of life. GoHEREfor more details and to register. (Login required.)

Legal & Ethics Hot Line Source: TAR Legal & Ethics Hot Line Counsel

Correction: Last week’s Advertising Rule article contained a typo. To clarify, a firm’s name or d/b/a must be registered with TREC, not with any other commission.

Disbursement of Earnest/Trust Money
The Tennessee Code Annotated, along with the Rules of the Tennessee Real Estate Commission (TREC), tasks brokers with the responsibility of maintaining an escrow account to hold earnest money/trust money. One of the biggest responsibilities that comes with maintaining an escrow account is disbursing the money if a deal does not close. Below are some hotline responses to help you properly disburse the funds entrusted to you.

8. Unexecuted Contract?

QUESTION: If a buyer deposits earnest/trust money with their broker at initial offer on a property, but the offer never becomes a binding agreement, is there any requirement for an earnest/trust money release form?

ANSWER: No. The Earnest Money/Trust Money Disbursement and Release form should be used only when a contract has been created. If the offer was not accepted, then the earnest money can simply be returned to the buyer. For your protection, it is advisable to draft a letter outlining this and/or issuing a receipt for the return of the money.

9. Broker Interpretation of the Contract?

QUESTION: I am holding earnest money for a contract that fell through. The seller will not sign the disbursement and release form. Can I disburse the earnest money based on my interpretation of the contract?

ANSWER: Yes, according to TREC rules you may make a reasonable interpretation of the contract and disburse the earnest money.

The principal broker has several options available to remit the funds in the event that the deal does not close. TREC Rule 1260-2-.09(7) outlines how a broker may distribute earnest money funds. It states: “A broker may properly disburse funds from an escrow or trustee account: (a) upon a reasonable interpretation of the contract which authorizes him to hold such funds; (b) upon securing a written agreement which is signed by all parties having an interest in such funds, and is separate from the contract which authorizes him to hold such funds; (c) at the closing of the transaction; (d) upon the rejection of an offer to purchase, sell, rent, lease, exchange, or option real estate; (e) upon the withdrawal of an offer not yet accepted to purchase, sell, rent, lease, exchange, or option real estate; (f) upon an interpleader action in a court of competent jurisdiction; or (g) upon the order of a court of competent jurisdiction.” Bear in mind that according to TREC Rule 1260-2-.09(9), this should be done within 21 days from the date it is first requested in writing.

If you cannot get an agreement by the parties, you, as holder of the funds, will need to review the contract to determine if you can make a reasonable interpretation. The party who does not receive the funds could file suit against you and the party receiving the funds. However, there is language in the PSA that provides some protection should that occur. Lines 159-161 state, “No party shall seek damages from Holder (nor shall Holder be liable for the same) for any matter arising out of or related to the performance of Holder’s duties under this Earnest Money paragraph.” If you are not comfortable with this option, then you can interplead the funds. An interpleader is a safer option than making an interpretation of the contract, as the judge will then determine who receives the funds. (See item 10 below.)

10. Interpleader?

QUESTION: I have a transaction where I represent the seller, and the buyer backed out. The buyer feels like they should receive the earnest money, but so does the seller. How do I go about doing an interpleader?

ANSWER: If you have to interplead the funds, you will likely need to file a petition to Interplead Funds in the General Sessions Court of the county where the property is located. You may obtain a copy of the petition by logging onto the TAR website HERE and downloading or printing TAR Form RF 706. (Login required.) Typically, once the petition is filed, copies will be served on the parties to the contract, and a hearing date will be set. On the hearing date, you will appear before the judge and explain why the brokerage is seeking to interplead funds with the court. After the petition is granted, the judge will determine, either that day or at a later hearing, which party (i.e. the buyer or seller) is entitled to the funds. The parties will have the opportunity to present their arguments to the judge during that hearing.

The procedure for interpleader actions differs from county to county and from general sessions court to chancery court. An interpleader action should be filed in general sessions court if the amount of earnest money is less than $25,000. If the amount is $25,000 or greater, the action should be filed in either circuit or chancery court.

If you have to interplead the funds, the buyer and seller will be named as defendants on the interpleader form. This sometimes upsets the parties to think that they are being sued. However, keep in mind that you are not suing them—you are simply turning the funds over to the court and asking the court to decide who is entitled to the funds.

Which party is responsible for court costs in an interpleader depends on the earnest-money agreement and/or contract. Generally speaking, the losing party typically is responsible for paying court costs.

One more note: The firm will be listed as the plaintiff. Bear in mind that if the firm is incorporated, an LLC, or certain types of partnerships, it must be represented by an attorney. An individual cannot represent the interests of an incorporated entity without a law license. With regard to your attorney’s fees and costs, you should include them in a specific request.

KEY LINKS & RESOURCES
To check your CE hours: verify.tn.gov/default.aspx
For CE and other courses around TN: tarnet.com/education/
For online CE courses:tarnet.com/education/?target=online-CE-courses/
To ask a TAR Legal and Ethics Hot Line question:tarnet.com/technology-support/legal-ethics-hotline/
TREC: tn.gov/commerce/section/real-estate-commission
TAR website: tarnet.com
TAR on Twitter:twitter.com/tnaor
TAR on LinkedIn:linkedin.com/groups?gid=852077&trk=hb_side_g
TAR on Facebook:facebook.com/pages/Nashville-TN/Tennessee-Association-of-RealtorsR/15041383689

2016 TAR Fall Convention
Sept. 14, 15 and 16

Watch the PREVIEW VIDEO

REGISTER HERE

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