This is RE/MAX Around Atlanta’s Generative AI use policy. Generative AI is a field that is still extremely new, and it requires thoughtful communication and discussion to determine the most effective approach in this rapidly evolving field. It has massive potential in certain use-cases as well as key limitations we need to understand. While content and advice generated using AI may sound great and save time, there is an inherent risk of bias and inaccuracy. You are encouraged to learn more and experiment, but exercise caution when using it in your business. If you have any thoughts or feedback, please contact a Broker/Owner or In-House Counsel.
What is Generative AI? For the purposes of this policy document, Generative AI refers to technology and tools that can create content like a human, and as a consequence, perform tasks that mimic humans. The type of content (text, images, video, etc.) does not matter, nor does the underlying model/technology that enables the functionality. Popular Generative AI include, but are not limited to,: Chat GPT by OpenAI, and services powered by them Bard by Google DALLE by OpenAI Various AI powered chatbots Best Practices 1. Never upload personal information, customer/client data, or confidential information to any AI model. 2. Never send or publish AI generated content without thorough human review, regardless of whether the audience is internal or external. 3. Do not use generative AI as the sole source for research purposes. They are famous for“hallucinating” false information. Always verify with a second source. 4. Be sure that any content generated by AI does not violate license law, fair housing law or copyright law (be especially cautious with images that may resemble or be modeled using copyrighted images). 5. Keep a record of when you’re using an AI tool. 6. Be vigilant of legal topics (intellectual property, privacy, etc.) surrounding generative AI, and exercise caution. KEY TAKEAWAY: Regardless of whether content originated from Generative AI, YOU are entirely responsible for it as the author, as if you created it yourself. May 24, 2023
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We are often asked why we ask for contact information in purchase agreements.
It’s all about sending and delivering notices that are legally sufficient. First, it is important to understand the difference between a Client and a Customer. Clients vs. Customer All brokerage relationships fall into one of two broad categories: (1) broker-client relationships; and (2) broker-customer relationships. In a broker-client relationship, the real estate broker is representing the client and is acting as his or her legal agent in buying, selling, or leasing property. In Georgia, a broker- client relationship can only be formed by the parties entering into a written agreement. The other type of brokerage relationship is known as a broker-customer relationship. With this type of relationship, the broker is not representing the customer in a legal or agency capacity. However, the broker can still work with the customers and help them by performing what are known as ministerial acts. These include, for example, identifying property for sale or lease, providing pre- printed real estate form contracts, preparing real estate contracts at the direction of the customer, and locating lenders, inspectors, and closing attorneys on behalf of the customer. It does not include delivery of notices. What are Notices? If a document only requires the signature of the sender, it’s a notice. If it requires signatures of both parties, it’s an agreement. Notices have to be delivered to an email or physical address or fax included in the contact. There are many notices given in the life of a contract and, of course, in the death of a contract. Think about unilateral 8 day extensions, notice to proceed with financing, counter offers, unilateral termination of contracts, notices from a landlord to a tenant (and vice versa) and exercise of options. The list goes on. Delivery of Notices to Clients If you have an executed Seller Brokerage Engagement Agreement or a Lease Listing/Management Agreement, the Seller or Landlord is your client. The same is true for a Buyer Brokerage Agreement or a Tenant Brokerage Agreement. You can therefore accept legal notices on behalf of your clients, but you may only deliver them to clients in person or to any physical address, e-mail address and/or facsimile number specifically included in the signature block of the agreement. If a physical address (not a PO Box) is in the Address for Receiving Notice section of the signature block, you can mail a Notice to a client. If an email address or a fax number is included, you can email or fax a notice to the client. A telephone number doesn’t work (but a fax number does). If there is no appropriate contact information for delivering a notice to your client, you have to hand deliver. If the client is on the West Coast, you may be on an airplane. And that is why it is so important to include the right contact information for clients in signature blocks. Notices to Customers If you do not have a written agreement with a party or if you have a written agreement that makes the party your customer, you cannot accept notices for them. Examples are the Authorization to Show Unlisted Property and the Agreement to Work with the Buyer as a Customer. Both are customer relationships, even though they are written. If you are representing the opposite party, you have to rely on the information in the signature block. You will be thankful if you remember to have the customer include their contact information in the signature block. Notice to a Represented Party Of course, notice to a represented party can be sent to that party’s agent. That agent is responsible for delivery to their client. References: The ABCs of Agency. GAR CB01 Purchase and Sale Agreement. GAR F201 RE/MAX Around Atlanta encourages all sellers to complete the GAR Seller’s Property Disclosure Statement Exhibit (SPD) to avoid any disclosure issues. If the seller has not occupied the property, the Seller should complete the Seller’s Disclosure of Latent Defect(s) Exhibit. To avoid broker liability, t is imperative that the sellers themselves complete the exhibit. The broker or agent should never complete the exhibit for the seller. In Georgia, a buyer cannot make a claim against the seller’s broker for false statements that were made by the seller in the seller’s disclosure statement - unless the seller’s broker knows the representations to be false. Neither can the buyer sue the seller’s agent for fraud when the seller fails to disclose concealed defects in the property.
Seller’s Agreement in the SPD The SPD includes directions on how sellers should fill out the statement and how buyers should use the exhibit. In completing the disclosure statement, the seller agrees to do the following: (1) answer all questions in reference to the property (which, unless noted, shall include any improvements); (2) leave no questions unanswered; (if the sellers cannot answer, they should use the additional explanations section to explain) (3) answer all questions fully and accurately based upon the best knowledge and belief of all sellers in the purchase and sale agreement. (All sellers must sign the SPD) (4) fully explain in the “additional explanations” paragraph any questions to which the answer is “yes,” referencing the number of the question for which the additional explanation is being given; and (5) promptly revise the statement and provide a copy of the same to the buyer and any broker involved in the transaction if, before closing, there are any material changes in the answers to any of the questions. How Buyers Should Use the SPD Buyers are advised that the disclosure statements should be the starting point for a buyer’s investigation rather than the entire investigation. Caveat emptor or buyer beware is still the law in Georgia. Therefore, if an inspection reveals an issue or concern that would cause a reasonable buyer to investigate further, the buyer will likely be out of luck if the buyer chooses not to do so. The disclosure statement language to buyers is as follows: The answers of Seller below should not be a substitute for Buyer conducting a careful, independent evaluation of the Property. Caveat emptor or buyer beware is the law in Georgia. Buyers are expected to use reasonable care to identify defects in the Property and satisfy themselves that the Property is suitable for Buyer’s needs and purposes. If an independent evaluation of the Property reveals potential problems or areas of concern that would cause a reasonable buyer to investigate further, Buyer may not have legal recourse if Buyer fails to investigate further. GAR has created substantially similar property disclosures for Condominiums (GAR Form F304), for New Construction (GAR Form F310), for Lots and Land (GAR Form F307) that are tailored to those situations. The Seller Property Disclosures Must Be Attached to the Purchase and Sale Agreement. The “Entire Agreement” Clause The Seller Property Disclosure must be attached to the Purchase and Sale Agreement for a buyer to be able to bring successful claims against sellers for breach of contract if sellers make material misrepresentations in the property disclosure statements. This is based upon the “entire agreement clause” (also known as a “merger clause”). The entire agreement clause establishes that the final written agreement between the parties represents the entire agreement of the parties and that the parties are only relying on what is written in the contract. Consequently, an entire agreement clause bars a buyer from relying on alleged misrepresentations not contained in the written agreement. Active Concealment of Defects The Georgia Court of Appeals recently held that buyers could successfully sue the sellers for facts falsely stated in the property disclosure statement, even if the statement was not made part of the contract, if the sellers actively concealed the damage. References: Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (pp. 755-763). BookBaby. Kindle Edition. Seller’s Property Disclosure Statement Exhibit GAR F301 Broker Corner May 10, 2023 You’ve worked hard and written 6 offers to purchase your listing. The seller has rejected them all. Now the seller has decided to terminate the listing. What are your rights?
First, look to the listing to see your options. In Georgia, if there is not an express early termination provision or a material breach of the terms of the listing, clients cannot unilaterally terminate listing agreements or brokerage engagement agreements. That is, sellers do not have a contractual right to terminate and are in breach of the listing contract if they do terminate. If you’ve used the GAR Exclusive Seller Brokerage Engagement Agreement (F101), you won’t find an early termination provision (unless you added it yourself). That is, the GAR listing agreement does not give the seller the right to terminate. Bad stuff happens. The Seller sends you something in writing that says “You’re fired!” or “I am terminating this agreement.” However, you do not have to agree or consent. Your rights are far different with a unilateral termination versus a mutual termination to which you agree. Your Protected Period Section 5 in the GAR listing agreement lays it out. The Protected Period is the period of time commencing upon the unilateral termination of this Agreement by Seller in writing during which Broker shall be protected for its Commission.
Scenario You have an exclusive listing on a property, but the Seller sends you an email firing you. The seller does not have the right to terminate you in the listing agreement and is in default. You do not agree to the termination. The Seller then lists the property with another agent and enters into a Contract to Sell* the Property during your protection period. What are your rights: The Seller owes you a commission per the original listing agreement for a sale to ANY buyer that was shown the property, either in person or virtually, or was provided specific information about or inquired about the Property either directly or through a broker working with the buyer during your protection period. What are the Rights of the 2nd Listing Agent? The Seller may also owe a commission to the 2nd listing agent. Though that is not your concern, it is likely that a closing would take place without your commission paid. You can send an invoice to the seller for your commission, but if the seller declines to pay you, you may have to resort to litigation for your commission. The threat of litigation often results in either a negotiated commission or a full commission. Commission rights and obligations in the GAR listing agreement survive termination. Do You Have to Provide Termination Paperwork to The Seller? You are not required to provide termination paperwork to the seller. However, the GAR Unilateral Termination of Brokerage Engagement Agreement (F155) clearly notes that the termination in unilateral, is not mutual and that the broker’s commission rights are not limited, waived or terminated. It also includes that the client must pay the cost to remove the listing from FMLS. Your rights are still retained even if you do not have this signed, but seeing this in writing (not just verbally) may cause the client to think twice before proceeding. This is the language in the Unilateral Termination In terminating the Agreement, Broker is directed by Client not to perform real estate brokerage services on behalf of the Client after the Termination Date of this notice to terminate. Nothing herein shall be construed as an agreement between the Client and Broker to mutually terminate the Agreement or to limit, waive or terminate Broker’s rights to a commission or the reimbursement of fees and costs resulting from the unilateral termination of the Agreement by Client. Unilateral Termination of this Agreement by Client does not eliminate the Client’s legal obligation to Broker for commission and/or fees due to Broker as specified in the Brokerage Engagement Agreement. If the Brokerage Engagement Agreement is a listing agreement, the cost to remove early the listing from any multiple listing service in which the property is listed shall be paid by the Client. Exception to Protected Period Commission Obligation Does Not Apply If a seller hires another exclusive listing agent following a normal expiration of a listing agreement, but during a protected period, the first listing agent’s commission rights during the protected period are ended. However, this exception does not apply in the case of a seller’s unilateral termination of a listing. *Contract to sell includes a lease, lease purchase or lease with an option to purchase. References: GAR Exclusive Seller Brokerage Engagement Agreement (F101) Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (p. 1435). BookBaby. Kindle Edition. Broker Corner 5/4/23 April is Fair Housing Month. RE/MAX Around Atlanta is committed to promoting and
supporting fair housing practices and equal access to housing for all individuals, regardless of their race, color, national origin, religion, sex, familial status, or disability. Fair housing is a fundamental human right, and we are dedicated to providing accurate and unbiased information that promotes fair housing practices. We are committed to providing access to resources and information that can help individuals understand their rights under fair housing laws and regulations. We support efforts to eliminate discrimination in housing and to promote fair housing opportunities for all individuals and will work to foster a communities where diversity and inclusion are celebrated and where everyone has an equal opportunity to access safe, decent, and affordable housing. The National Association of Realtors has produced an extremely informative, interactive simulation to train REALTORS® to deliver their services without discrimination. The following “Fairhaven” simulation is one of the best ways to learn to provide our services in a fair and non-discriminatory way. Please visit the town of Fairhaven and increase your knowledge and sensitivity to fair housing concerns. It takes about 1 hour to sell 4 homes and complete the simulation. Fairhaven is a town every REALTOR® should visit. NAR launched Fairhaven, https://fairhaven.realtor/home , in 2020, a new fair housing simulation training for REALTORS® that uses the power of storytelling to help members identify, prevent, and address discriminatory practices in real estate. Inspired by real stories, this innovative online experience has agents work against the clock to sell homes in the fictional town of Fairhaven, while confronting discrimination in the homebuying process. Learners will also walk in the shoes of a homebuyer facing discrimination. The training provides customized feedback that learners can apply to daily business interactions. Get started by visiting https://fairhaven.realtor/home to explore the fictional town of Fairhaven and assess how well you are adhering to fair housing principles. Please let us know how you liked the simulation by emailing us at brokerteam@aroundatlanta.com. What is Home Title Fraud? Home title fraud is where a fraudster steals your home through identity theft and forging of documents. Then the fraudster either sells it or takes out a loan, especially HELOCs, against it without you even knowing about it. When the mortgage or HELOC is not paid, the property enters foreclosure. It doesn’t happen often, but it does happen. The loans are fraudulent, so the homeowner can eventually get the title back and the loans cancelled, but the hassle is real. Georgia’s Response Homeowners in Georgia have 2 alert systems to protect titles. They are not guaranteed, but they are good. If a homeowner doesn't have this alert tool, and something is filed in the county clerk's office against a homeowner’s property, the homeowner would not have the ability to react, often before it is too late. It works like alerts for suspicious spending on credit cards. Once the property is registered online with the county, the homeowner would get an alert any time someone tries to file something tied to that home. Whenever a property filing is recorded in a clerk’s office, registered users will receive an alert via email and/or text message. If the filing isn’t recognizable by the homeowner, they can contact the Clerk’s Office and local authorities. Opportunity to Connect with Your Database Most homeowners don’t know about this system. This is a great opportunity to send information about a strong tool of protection for homeowners. You can even go a step further by sending the parcel ID number to make the process even easier. Remember, the homeowner has to opt-in. Your clients will certainly appreciate it – and appreciate you. Here are the links. Fulton County In Fulton County, the Superior and Magistrate Court website has an online property fraud notification tool that is different from other counties, but performs the same function. The acronym R.E.A.A.C.T stands for Real Estate Activity Alert and Contact Tool. R.E.A.A.C.T. allows Fulton County property owners to register their properties with the court via parcel ID number. Anytime a document is filed against said property, the property owner will receive an alert giving them the opportunity to proceed as normal if they recognize it or to "react". This service is provided at NO COST to Fulton County Homeowners. Other Georgia Counties Other counties in Georgia use the FANS system, an acronym for Filing Activity Notification System. It has the same features as REACCT. It is a free, voluntary, opt-in program that can be used to send electronic notifications of filing activity to individuals who create notifications in the system. To access the system for all counties in Georgia, go to https://fans.gsccca.org and follow the prompts. Direct links to Atlanta core counties are below. DeKalb County https://registry.myfivepoint.com/dekalb/fraudreg/ Cobb County https://www.cobbsuperiorcourtclerk.com/real-estate-information/filing-activity- notification-system-fans/ Gwinnett County https://www.gwinnettcourts.com/deeds-and-land-records/filing-activity-notification- systems Forsyth County https://www.forsyth.cc/rod/property_fraud.aspx Fulton County https://apps.fultonclerk.org/reaact/MyAlerts The Sale or Lease of Property Contingency is quite flexible and can be used to either the buyer’s or the seller’s advantage, depending on the market and the situation. Part 1 of the discussion of the Sale or Lease of Property Contingency included various options or advantages available to the buyer and seller in the contingency as well as the process required to exercise the kick out clause. Drilling a bit deeper, the GAR form contemplates termination of a contingency contract in 2 ways: 1) Exercise of the Kick Out Clause and 2) Expiration of the Contingency Period. The Kick Out Clause Section 7 of the sale or lease contingency presents alternatives as to whether some or none of the contingencies in the contract remain in place. This can be confusing, so here’s the simple explanation by way of different scenarios. Scenario 1 Contract 1, fully executed, includes a sale or lease contingency with a 24 hour kick out clause. Contract 2, a bona fide offer, comes along and Seller wants to accept it, so Seller sends a 24-hour Notice to Buyer 1 to remove the Kick Out by amendment or Seller can terminate. Buyer 1 thinks the deal is great and that his current house will sell quickly, so, wanting to hold on to the house, Buyer 1 delivers an amendment to the Seller, agreeing to remove the contingencies and due diligence period that Buyer 1 agreed to in the original contract. In this case, the Buyer had agreed to section (A) in the purchase agreement, so the amendment says that all contingencies and the Due Diligence Period are removed from the contract. The sale becomes an all-cash transaction with the Buyer’s earnest money at risk. Scenario 2 In this scenario, the buyer chose alternative (B), but marked that only the Sale or Lease Contingency would be removed from the contract. The Due Diligence Period, the Right to Request Repairs, the Financing Contingency and the Appraisal Contingency are still in the contract. If timing is appropriate and the financing fails, the appraisal is low or there is still time to terminate in the Due Diligence Period, the buyer can still exercise his rights under those provisions. Had the seller marked additional provision in (B), that the Sale or Lease Contingency, the Due Diligence Period, the Right to Request Repairs and identified special stipulations would no longer be a part of the agreement, then only the finance and appraisal contingencies would remain a part of the agreement. Scenario 3 The Buyer cannot take the risk that the Existing Pending Contract will close n the Contingency Period. The Buyer does not respond with an amendment removing agreed contingencies. The Seller can terminate and accept Contract 2. Expiration of the Contingency Period Either with or without a Kick-Out included in the Sale or Lease Contingency, expiration of the Contingency Period automatically terminates the contract. Scenario
Buyer 1 has an outside date in the Sale or Lease Contingency by which their house must close or the contract terminates. That date is April 10, 2023. Buyer 2 has presented an offer with a back-up exhibit in their contract. The Seller really wants Contract 1 to close, but also does not want to lose Contract 2, so he either does not exercise his right to the Kick-Out provision or there is no Kick-Out provision. Seller agrees to Contract #2 with a back-up contingency. On April 11, 2023, at the expiration of the Contingency Period, Contract 1 automatically terminates. Seller sends appropriate notices and Contract 2 moves into Primary position. The Kick-Out was not necessary to terminate Contract 1. The termination was automatic after the Contingency Period expired. Reference: GAR F601, Sale or Lease of Buyer’s Property Contingency Exhibit April 12, 2023 The Sale or Lease of Property Contingency can be confusing, even to a seasoned professional. There are a lot of moving parts that need to be understood by both parties to properly draft this contingency. Each transaction is unique. The party that holds more power creating the sale or lease contingency really depends
on the market. In a seller’s market, sellers generally control and may make the contingency easy to for the seller to remove. In a buyer’s market, buyers generally control and may be able to avoid including a kick-out clause and make the time period to sell or lease as long as possible. The GAR Sale or Lease Contingency includes a lot of options for both buyers and sellers, making it flexible in both a sellers’ and a buyers’ market. Seller Options 1. If the property is not under contract already, the Buyer can be required to have the property listed for a price designed to maximize the likelihood of a sale or lease. If the property is already under contract, the seller will want to require a short time period for its closing. 2. Using a kick out clause, a seller can force the buyer to remove the contingency or even terminate the buyer’s contract if the seller receives another acceptable offer. There is a process in a kick-out clause, discussed below. 3. The seller can continue to market the property while there is a sale or lease contingency in place. 4. The Seller can negotiate to require that all remaining contingencies be removed and have the due diligence period end if the kick out is exercised, effectively making the contract an all-cash transaction. 5. If the buyer’s property was under contract when the contract was bound, but then terminates, the GAR contract allows a seller to terminate the contract. 6. If Buyer does not terminate the Agreement at the time of notice that the buyer’s contract has terminated, the Seller has the right, but not the obligation, to request that Buyer deliver an amendment signed by Buyer to remove all contingencies and Due Diligence Period from the Agreement. If Seller does not exercise this right within three (3) days from Buyer’s notice that Existing Pending Contract has terminated, then Seller’s right to request the amendment on this basis is waived. Buyer Options 1. The buyer can avoid termination via the kick out clause by removing the contingency. However, if the buyer does remove the contingency, the buyer cannot claim a failure of financing because the property didn’t sell. Careful here. 2. The buyer can convert some or all of the earnest money into non-refundable earnest money and keep the kick-out clause in place. 3. The time period for the buyer to close is a negotiated element of the deal. The buyer will want it longer. The Seller will want it shorter. 4. The Buyer can negotiate to leave contingencies other than the Sale or Lease contingency in place when the kick out clause is exercised. If the due diligence period, the financing contingency, any inspection contingency or other contingencies remain in place, the buyer still has protections. 5. If the buyer meets the pre-agreed requirements of the kick-out clause, then the original contract remains in force subject to the terms of amendment signed by both parties. 6. If the Existing Pending Contract is terminated and the buyer notifies the seller, Buyer has the right to terminate the Agreement at the same time of the notice without penalty. Meaning the buyer gets the earnest money refunded. The Process of Exercising the Kick Out Clause If the seller receives a better offer, and the seller exercises the kick-out, the seller notifies the buyer, and the buyer has a short time period to eliminate the agreed contingencies and the due diligence period from the contract making it an all-cash transaction. If the buyer does not agree to remove the agreed contingencies and the due diligence period, then the seller can terminate the contract and move forward with the better offer. Whether all contingencies and the due diligence period get removed or just some of the contingencies and the due diligence period is a matter of negotiation between the parties. The kick-out clause has been revised so that the parties can negotiate whether fewer than all of the contingencies must be removed if the kick-out is exercised or all of the contingencies must be removed. Buyers will obviously be pleased with the flexibility the form now provides. Part 2 next week. Reference: Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (p. 729738). BookBaby. Kindle Edition. GAR F601 Sale or Lease of Buyer’s Property Exhibit Situation: Broker A has a valid Buyer Brokerage Agreement with an individual Buyer. Broker A and the Buyer view a property together with Broker B, representing the Seller. The Buyer submits an offer on the property, but withdraws it before the offer is accepted. Later, while the Buyer Brokerage Agreement is still in effect, Buyer crates an LLC with a partner and submits a 2nd offer to purchase the same property. The Buyer’s Broker is not included in the new transaction. The transaction closes with the new LLC, of which the Buyer is a Member. The Buyer is at the closing and signs the security deed. Questions:
Buyer as a Legal Entity and Commission Owed to Buyer’s Broker The Buyer Brokerage Agreement at paragraph 7(f) includes the Buyer as follows: "Any legal entity in which buyer or any member of Buyer's immediate family owns or controls, directly or indirectly, more than ten percent (10%) of the shares or interest." Where the buyer changes its legal entity to another either to avoid its obligation or innocently, the Buyer is still obligated on a Buyer Brokerage Agreement that is still in effect. No, the Buyer cannot avoid its obligation to the Buyer’s Broker by changing its legal entity so long as the Buyer owns more than 10%. And yes, the Buyer continues to owe a commission to the Buyer’s Agent. It may take legal action to recover the commission, but it is owed. The Listing Agent’s Obligations REALTORS® have an affirmative obligation to ask prospects whether they are a party to any exclusive representation agreement and may not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements. In this case, the Seller’s agent was fully aware of the original buyer, having shown the property to the buyer previously, along with the Buyer’s agent. Even if the Seller’s agent thought the Buyer Brokerage has expired or was terminated, the listing agent should have investigated. Had he called the Buyer’s agent he would have learned that the Buyer Brokerage was still in effect. He violated both Georgia License Law and the REALTORS® Code of Ethics. (GA Code § 43-40-25 (14) and § 43-40-25 (26), REALTORS® Code of Ethics Standard of Practice 16-9) The recent bank failures of Silicon Valley Bank in California and Signature Bank in New
York have raised questions regarding the safety of funds in trust accounts. Trust Account Funds Are Insured The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US federal government that provides deposit insurance to protect depositors in case a bank fails. Attorneys and realtors hold funds for others in trust accounts or fiduciary accounts, insured by the FDIC. As of March 2023, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. Even though trust accounts often hold far more than the $250,000, the funds in trust accounts are treated as an individual’s funds, not the attorney’s or the realtor’s funds. That means that each person’s funds are insured up to $250,000. Although land or commercial transactions may have earnest money deposits into trust accounts as high as $250,000, most residential transactions do not. In the case of very high earnest money deposits going into an RMAA trust account, consult with a member of the Broker Team. Exception If a depositor of trust funds also has a personal account at the same bank as the bank holding funds in trust, then the two (or more) amounts are aggregated for insurance purposes. FDIC insurance coverage is per depositor, per insured bank, and not per account. So, if a depositor with a personal account holding $225,000 also has $50,000 at the same bank held in trust for a real estate transaction, (total of $275,000) then the $250,000 limit is exceeded by $25,000 and $25,000 would not be insured. The Good News Right now, the US government is backstopping all deposits, even those over the $250,000 limit. The likelihood of loss at this time is a small risk. However, the government may stop covering amounts over $250,000 at any time. Many thanks to Seth Weissman of Weissman Law for the idea for this Broker Corner. See his video “Safe Real Estate” in today’s MAX MAIL. |
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