​The short answer is No. A tenant seeking and advertising for a roommate is not covered by the Fair Housing Act (FHA).  The long answer is more complicated. It involves a 9th Circuit Appellate case that distinguishes the roommate situation from the FHA.   For those of you that want the legal explanation, read on.
“Dwellings” As Defined By the Fair Housing Act
The FHA is very broad-based legislation that prohibits discrimination in housing on the basis of “race, color, religion, sex, familial status, or national origin” in the “sale or rental of a dwelling.” 42 U.S.C. § 3604(b) .  Dwelling is the operative word, according to the 9th Circuit decision, Fair Housing Council of San Fernando Valley v. Roommate.com, LLC, 666 F.3d 1216 (9th Cir. 2012).
The FHA does not interfere with relationships inside the home.
 
The FHA defines “dwelling” as “any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families.” Id. § 3602(b). A dwelling is thus a living unit designed or intended for occupancy by a family, meaning that it ordinarily has the elements generally associated with a family residence: sleeping spaces, bathroom and kitchen facilities, and common areas, such as living rooms, dens and hallways.
 
The Court concluded that there is no indication that Congress intended to interfere with personal relationships inside the home. Congress wanted to address the problem of landlords discriminating in the sale and rental of housing, which deprived protected classes of housing opportunities. But a business transaction between a tenant and landlord is quite different from an arrangement between two people sharing the same living space. According to the Court, Congress did not mean for the FHA to apply to people sharing the same living spacc. Consider, for example, the FHA's prohibition against sex discrimination. Could Congress, in the 1960s, really have meant that women must accept men as roommates? Telling women they may not lawfully exclude men from the list of acceptable roommates would be controversial today; it would have been scandalous in the 1960s.  By extension, “Female seeking female roommate” would be allowable under this case.
 
Constitutional Concerns
 
There are also Constitutional concerns with applying the Fair Housing Act to roommate situations. The Court concluded that the roommate relationship is so personal and intimate that potential government interference with that relationship raises significant Constitution concerns, and is unwarranted. The Court reasoned that the roommate relationship falls under the ambit of the fundamental right of intimate association, which, necessarily, also includes the right not to associate. The Court extended to roommate selection the same level of Constitutional protection afforded to “marriage, child-bearing, child rearing and cohabitation with relatives.” Our roommates, the Court reasoned, have unique access to every aspect of our personal home lives, and, we, likewise, have unfettered access to every aspect of theirs. We have a right, therefore, to select our roommates based upon our personal beliefs and opinions regarding things that may be offensive, dangerous, annoying, or otherwise incompatible with our own lifestyles. Extending the FHA anti-discrimination provisions to apply to the roommate relationship would permit the government to intrude into our homes, which are “entitled to special protection as the center of the private lives of our people.” Accordingly, it is perfectly reasonable for a woman to seek only female roommates.
 
Notes:

1. The Civil Rights Act of 1866 prohibits any discrimination on the basis of race.  It is not limited to the sale or rental of housing. It is a completely separate federal act from the FHA and is prosecuted broadly. Advertising for a roommate using racially discriminatory language could go hard against the advertiser.  You could be violating the Civil Rights Act of 1866. Don’t be a test case.
2. Remember that the roommate exception to the FHA is very limited It is federal court decision based, not found in the exceptions in the FHA. This article applies ONLY to roommate situations and advertising by the tenant for a roommate.

The Georgia Fair Housing Law also covers discrimination in housing.  If a violation of the Federal Law is found, there is likely also a violation of the state law. There may also be city and county prohibitions against discriminatory practices in the sale or leasing of housing.

​No person shall be discriminated against based on sex, race, age, disability, color, creed, religion, sexual orientation, national origin, familial status or any other protected class.  The Company policy prohibits discrimination in either hiring or firing of personnel based on sex, race, age, disability, color, creed, religion, sexual orientation, national origin, familial status or any other protected class. 
 
RE/MAX Around Atlanta believes that fair housing policies are not just the law of the land but simply the right thing to do.  The Company maintains a strong policy upholding all federal and state fair housing laws and Article 10 of the REALTOR Code of Ethics, including review and adherence to NAR’s Fair Housing Declaration.  Associates agree to comply with all applicable federal, state and local fair housing laws.  Among the prohibited practices which are against this policy and the law are:

• Refusing to show, sell, rent, represent or assist based on a person being a member of a protected class.
• Different treatment/disparate treatment to persons of a protected class.
• Steering:  A person shall not encourage or discourage another from moving into any area because of the race, color, religion, sex, handicap, marital status, familial status, national origin, ancestry, age, sexual orientation, gender identity, or any order of protection status.
• Discriminatory advertising that “expresses” a preference for buyers or tenants of a particular race, color, religion, sex, handicap, marital status, familial status, national origin, ancestry, age, sexual orientation, pregnancy, gender identity, or order of protection status.
• Harassment (i.e., coercion, intimidation, threats or interference with a person’s fair housing rights or because a party is abiding by fair housing law).
• Applying more burdensome criteria to applicants of protected classes.
• Blockbusting/Panic Peddling:  A person is prohibited from inducing or attempting to induce another to sell or rent a property by making any express or implied representations regarding the entry or prospective entry into a neighborhood of a person or persons of any particular race, color, religion, sex, handicap, national origin, ancestry, age, marital status, familial status, physical or mental disability, sexual orientation, pregnancy, gender identity or any other protected class.  The parties agree to comply with all applicable federal, state and local fair housing laws.

 
Violating the FHA could get you into serious legal trouble and cost you thousands of dollars. Here are some common fair housing mistakes you’ll also want to be aware of:

• Creating rules that treat renters with children differently than renters without children. A rule such as “Children may not ride bicycles on the property” is discriminatory if other residents of the property are permitted to ride bicycles on the property.  This policy is only permissible if everyone is prohibited from riding bicycles on the property.  
• Asking a prospective tenant how many children they have or if they are expecting. This question is discriminatory, as familial status is protected by the FHA.
• Failing to maintain and retain proper documentation of a prospective tenant’s application process. If a prospective tenant accuses you of discrimination, HUD may request all documentation including rent offered, apartments shown, specials, deposits, and fees. If you are unable to supply this documentation, there is a presumption that discrimination against the applicant did occur.
• Declining a rental application for any reason other than the prospective resident not meeting your stated qualification criteria. Your guidelines should be clear, visible, and impartial.
• Denying a disabled resident’s request for an assigned parking spot or refusing to install grab bars in the bathroom. Under the Fair Housing Act, you must make reasonable accommodations, defined as a “change, exception, or adjustment to a rule, policy, practice or service that may be necessary for a person with disabilities” to be able to use and enjoy a dwelling, including public and common use spaces.
• Evicting a hoarder. Hoarding is a disorder, and as such, hoarders are entitled to protections under the Fair Housing Act as people with other mental or physical disabilities.
• Failing to establish a clear maintenance response policy. A common complaint to fair housing is about maintenance requests not being handled properly and/or timely for all residents. Provide basic FHA training to your maintenance team. Create uniform policies to handle requests for maintenance. Document all requests for repairs and keep thorough records of work requests and maintenance actions taken.
• Associates should be aware that persons with AIDS are considered handicapped and "familial status" means families with children under the age of 18 years, an individual who is pregnant or an individual in the process of obtaining legal custody of a person under the age of 18 years. \

 
If in Doubt:

• DO NOT USE ethnic references (Black, Caucasian/White, Asian, American Indian, etc.)
• DO NOT USE nationalities (Chinese, African, German, Italian, etc.)
• DO NOT USE religious references (near temple, mosque, church, Christian, Muslim, Catholic, etc.)
• DO NOT USE sex, gender or sexual orientation (male, female, transgender, homosexual, gay, etc.)

 
Should an Associate be accused of discrimination, the Broker will investigate.  If the investigation confirms the accusation, the Associate’s actions will be reported to the Georgia Real Estate Commission for further investigation and necessary action.  A basic premise to which the Company and its Associates subscribe is that individuals with similar financial resources and interests in the same housing market area have a like range of housing choices available to them regardless of their race, color, religion, sex, handicap, national origin, ancestry, age, marital status, familial status, physical or mental disability, sexual orientation, pregnancy, gender identity or any other protected class, and that information and service will be made available to enable all clients and customers of our Company to have free choice in housing opportunities. 
 
A landlord could face large fines if they are found guilty of a violation. Cases tried before a HUD Administrative Law Judge could result in penalties of up to $21,000 for a first violation. For subsequent violations, the fine increases up to a maximum penalty of $105,194. In addition to the administrative penalties, you may also be liable for paying damages and attorney’s fees to someone who has experienced housing discrimination.

​In the state of Georgia, brokerage law permits client relationships, customer relationships, dual agency relationships, and designated agency relationships.  Client relationships, including dual agency relationships and designated relationships, can only exist when a written brokerage agreement is executed between RMAA and the client. 
 
BUYER REPRESENTATION
It is RMAA’s policy to represent each buyer with whom the Company is working as a client pursuant to a written Buyer Brokerage Agreement, and in addition the Associate must promote the interests of the buyer client by (a) seeking a property at a price and on terms acceptable to the buyer; (b) timely presenting all offers and counter offers to and from the buyer; (c) disclosing to the buyer adverse material facts which the Associate has actual knowledge concerning the transaction; (d) advising the buyer to obtain expert advice as to material matters which are beyond the expertise of the Associate; (e) timely accounting for all money and property received by the Associate in which the buyer has or may have an interest; (f) exercising ordinary skill and care in working for the buyer; and (g) complying with all laws and regulations governing real estate brokers and Associates. 
 
SELLER REPRESENTATION
It is Company policy to represent each seller with whom RMAA is working as a client pursuant to a written listing agreement, and in addition the Associate must promote the interests of the seller client by (a) providing information on market statistics to the seller; (b) advising the seller in regards to property condition and pricing; (c) marketing the home to potential buyers; (d) timely presenting all offers and counter offers to and from the seller; (e) advising the seller to obtain expert advice as to material matters which are beyond the expertise of the Associate; (f) timely accounting for all money and property received by the Associate in which the seller has or may have an interest; (g) exercising ordinary skill and care in working for the seller;  and (h) complying with all laws and regulations governing real estate brokers and Associates. 
 
CONFIDENTIALITY
As required by the Brokerage Relationships in Real Estate Transactions Act (BRRETA), Associates must maintain confidentiality of all personal and financial information and other matters identified as confidential by the client unless otherwise required by law or if the buyer or seller permits disclosure of the information by subsequent word or conduct.  An Associate should treat as confidential any information provided by the client that may reasonably be expected to have a negative impact on the client’s real estate activity.  Licensees should pay attention not to make unauthorized or offhand comments about a client's situation or property in a way which could be considered a violation of the duty of confidentiality.  Four areas considered of importance are:
 

1. The lowest price or terms a seller is willing to accept.
2. The highest price or terms a buyer is willing to pay.
3. The motivation of either party to enter into the transaction, for example, a job change or divorce.
4. Previous offers and counteroffers of either party.

 
CUSTOMER RELATIONSHIP
When an Associate is acting as the seller’s listing agent only and there is not a selling broker involved, then the Associate must treat the buyer as a customer.  Under those circumstances there is no agency relationship between the Associate and the buyer.  Instead, the Associate will work with the buyer as a customer and must perform the following responsibilities to the buyer: (a) treat the buyer fairly; (b) not knowingly give the buyer any false information; (c) timely disclose to the buyer all adverse material facts pertaining to the physical condition of the property and improvements located on such property, including but not limited to, material defects in the property, environmental contamination and facts required by statute or regulation to be disclosed which are actually known by the Associate, and which could not be discovered by a reasonably diligent inspection of the property by the buyer; and (d) timely disclose all material facts pertaining to existing adverse physical conditions in the immediate neighborhood within one mile of the property which are actually known to the Associate and which could not be discovered by the buyer upon a diligent inspection of the neighborhood or through a review of reasonably available governmental regulations, documents, records, maps, and statistics.
 
DUAL AGENCY AND DESIGNATED AGENCY
Company policy does not allow dual agency where one Agent represents both parties in a real estate transaction without prior written approval by the Broker.  A potential single Agent dual agency situation can occur when (1) a buyer comes to the listing Agent’s open house, (2) an Agent is an on-site builder representative, (3) the listing Agent receives a direct solicitation from a potential buyer from a sign-call, ad-call, or other similar contact, or (4) a buyer is interested in a for sale by owner.  In situations like 1, 2, and 3, the Associate involved will represent the seller as a client, and in situations like 4, the Associate involved will represent the buyer as a client.  The other party in these situations can be treated as a customer, and no single Agent dual agency should occur.  Should the other party insist on client representation, Company policy is to assign another RMAA Agent from our Office to work with that party.  Any compensation sharing between Agents should be agreed upon in writing in advance and a copy should be given to the Office.  With this preferred policy, different Agents affiliated with our Office act as designated Agents to exclusively represent different clients in the same transaction.  The Office has the right to assign such Agents in order to have a designated agency situation, rather than single Agent dual agency situation.  Each Agent so assigned shall ensure that they each represent their respective clients in accordance with the Brokerage Relationships in Real Estate Transactions Act as well as the respective brokerage agreement, as discussed above.  Regarding designated agency, the Company has adopted a policy that the Associate identified in the listing agreement is automatically assigned to represent the seller as a client and that the Associate identified in the Buyer Brokerage Agreement is automatically assigned to represent the buyer as a client.
 
If, in the rare case in which dual agency is permitted in writing by a member of the Broker Team, the 2 involved clients must each consent to deal agency in writing.  If the situation occurs after either the Buyer Brokerage or Seller Brokerage paperwork has been executed, then amendments to both agreements consenting to dual brokerage must be obtained by the associate.
 
Considering the increasing emphasis in the industry on agency relationships, the Company prefers and urges that each Associate discuss agency relationships with customers and clients at the earliest possible time in the relationship to avoid later misunderstandings.  All Associates must disclose not later than the time periods required by the License Law and the rules promulgated thereunder.  

The GAR Lease is very specific regarding the obligations of Holders of Security Deposits for leased property. Compliance requires that the Holder adhere to multiple time limits for the preparation of Move-Out Statements and for the return of the full Security Deposit or deductions of funds from the Security Deposit.
 
The Move-In Inspection
Per the GAR Lease Agreement, a Security Deposit is not given until there is a Move-In Inspection, which includes a list of any existing damages to the premises.  Both the Landlord and Tenant must agree to the list of pre-existing damages and sign the Move-In Inspection.  The Move-In Inspection creates a base line for any change to the property at Move-Out.
Because there is often a time lag between the signing of a lease and the Move-In Inspection, it is common that the Tenant pay a Reservation Fee, which can be non-refundable, to the Landlord or Manager.  The reservation fee then converts to a Security Deposit following the delivery of the Move-In Inspection.  This has to be spelled out in the Lease.
If the Holder is a real estate agency like RMAA, the funds must be deposited within 5 banking days an into an escrow account.  The Security Deposit cannot be released to the Landlord or to the Tenant until there is a Move-Out Statement.
 
When is the Move-Out Statement prepared?
The Move-Out Statement must be prepared within three (3) banking days after the termination of occupancy. If all goes well and there is a satisfactory Move-Out Agreement
at the termination of the lease, the Security Deposit must be returned to the Tenant by the Holder within 30 days of termination.   
If the tenant terminates occupancy without notifying the Holder, the Holder may make a final inspection within a reasonable time after discovering the termination of occupancy. The tenant has the right to inspect the premises within five (5) banking days after the termination of occupancy in order to ascertain the accuracy of the Move-Out Statement. If the tenant agrees with the Move-Out Statement, the tenant signs. If the tenant refuses to sign the Move-Out Statement, the tenant has to specify in writing, the items on the Move-Out Statement with which they disagree within three (3) banking days. For all purposes herein, a banking day shall not include Saturday, Sunday or federal holidays.
 
What if the Move-Out is not satisfactory and there are damages to the property?
Deductions from Security Deposit: The Holder has the right to deduct the following from the Security Deposit: (1) the cost of repairing any damage to Premises or Property caused by Tenant, Tenant’s household or their invitees, licensees and guests, other than normal wear and tear; (2) unpaid rent, utility charges or pet fees; (3) cleaning costs if Premises is left unclean; (4) the cost to remove and dispose of any personal property; (5) late fees and any other unpaid fees, costs and charges referenced herein.
 
What if the Tenant abandons the property or does not co-operate with the Move-Out procedure?
If the tenant terminates occupancy without notifying the Holder, the Holder may make a final inspection within a reasonable time after discovering the termination of occupancy. The tenant has the right to inspect the premises within five (5) banking days after the termination of occupancy in order to ascertain the accuracy of the Move-Out Statement. If the tenant agrees with the Move-Out Statement, the tenant signs. If the tenant refuses to sign the Move-Out Statement, the tenant has to specify in writing, the items on the Move-Out Statement with which they disagree within three (3) banking days. For all purposes herein, a banking day shall not include Saturday, Sunday or federal holidays.
 
What If a Security Deposit is Dishonored?
If a SD is not honored, the Holder must notify all parties to this Agreement in writing. The Tenant then has three (3) banking days after notice to deliver good funds. In the event Tenant does not timely deliver good funds, Landlord has the right to terminate this Lease. 

​We are often faced with selling property after an owner has died. Every situation
is different, but here are a few basics you should know. The following are
examples from the quickest and easiest sale of real estate after a death of an
owner to the more time consuming and difficult.
Joint Tenancy with Right of Survivorship
Property owned in joint tenancy with the right of survivorship automatically
passes to the surviving owners when one owner dies. No probate is necessary.
Joint tenancy can be used when couples (married or not) acquire real estate,
vehicles, bank accounts or other valuable property together.
Property Held in A Living Trust
A Living Trust is basically an alternative to a will for the property held in the Living
Trust. A decedent creates a Living Trust before death, just like a will. Title to
property is transferred to and held in the Living Trust and beneficiaries are
named. The creator of the trust is the initial Trustee and has the power to sell it
as the Trustee while alive. In the Living Trust document, a successor Trustee
would be named and the beneficiaries of the living trust are named. Except for
the Joint Tenancy with Right of Survivorship, this is the easiest way to transfer
property after death without the property going through probate court. No
probate, no court and no judges are involved. The property can be promptly
transferred to the beneficiaries. The Living Trust is becoming very popular, for
good reasons.
If Tom Thompson is the owner of property held in a Living Trust and he wants to
transfer it during his lifetime, he would execute a Purchase and Sale Agreement
as Tom Thompson, Trustee of the Living Trust of Tom Thompson. If there are 2
or more trustees in the living trust, both or all must execute any sale. The closing
attorney will request the living trust document and examine it prior to closing to
be certain the document includes proper authority to sell.

Property of a Decedent That Died With a Will
An estate with real property that is NOT a part of a joint tenancy or in a Living
Trust will have to be administered by the probate court or “go through probate.”
If the will names an Executor with expanded powers, including the power to

transfer real estate, then the Probate Court is petitioned by the Executor or
Executor’s attorney for a “Letter Testamentary.” When the “Letter Testamentary”
is granted, the Executor can legally sell the property as the representator of the
Estate.
If an Executor is not named or the Executor was not granted the expanded power
to sell property in the estate, then the Executor has to petition the court for leave
to sell and the court then has to grant permission to sell. However, it can get
complicated. Before granting permission to sell, the court must notify all heirs or
beneficiaries and ask for any objections to the court granting an ability to sell to
the Executor. If there are objections, a hearing may be required. The Executor
cannot sell the property until the process has concluded. Obviously, the process
of obtaining court permission to sell in a limited power situation is time
consuming and expensive.
Property of a Decedent that died Without a Will
The proper reference for a situation of death without a will is that the party died
intestate. Georgia law controls the distribution to beneficiaries of an intestate
estate. The representative for the estate is called an Administrator. The probate
court names the Administrator, who performs the same functions as an Executor.
How long does all of this take?
Joint Tenancy with Right of Survivorship and Property Held in A Living Trust are
the quickest and easiest ways to transfer real estate. Assuming no
complications, property can be sold almost immediately with Joint Tenancy and
Living Trusts. Other property that goes through probate can take months to
years. If a seller comes to you with Letters Testamentary or Administrative
Letters already in their possession, you can list and sell right away. Otherwise,
count on a delay.
Note: Probate cannot be avoided entirely. Even if all of the property, including
real property, cash, stock and insurance policies, in an estate can pass directly to
the joint partner and beneficiaries, the probate court still requires that a will be
validated. The probate court must also approve any requests to avoid probate.

Moral of this article: Before you list and sell real property after an owner’s death,
be certain that the Executor or Administrator has the proper authority to sell in
the form of Letters Testamentary or Administration. If in doubt, contact one of
the Broker Team or your closing attorney!

​RESPA (Real Estate Settlement Procedures Act) is a law passed by Congress in 1974 to curb unethical practices and consumer abuse in real estate settlement charges. Before RESPA, real estate professionals and closing service providers routinely abused consumers with unnecessary fees to close on their homes
Under RESPA, real estate firms and agents are required to disclose business arrangements which may result in fees or compensation to the real estate agent or brokerage. Whenever a real estate agent refers either a homeowner or buyer to a law firm, mortgage company or other associated settlement service, an affiliated business arrangement comes into existence. Therefore, a Disclosure Statement is required by law to be provided to and signed by the homeowner or buyer.  To stay in compliance with the law, RMAA requires that every brokerage agreement, whether with a buyer or a seller, include an ABAD.
RESPA contains provisions relating to prohibition against kickbacks and unearned fees. However, a referral that could result in fees is not prohibited if the person making each referral has provided to each person referred a written disclosure, in the format of the Affiliated Business Arrangement Disclosure Statement.
A “referral” of a law firm or lender or other service can be oral or written. It just has to have the effect of affirmatively influencing the selection by any person of a provider of a settlement service or business incident to or part of a settlement service.
Violations of RESPA can result in fines, penalties and in civil actions by individuals. The penalties for violating RESPA can be quite severe. At one time, the Consumer Financial Protection Bureau (CFPB) fined a mortgage lender, two real estate brokers, and a mortgage servicer almost $4 million in penalties and consumer relief.
There is liability for a violation of RESPA even if the proposed real estate transaction does not conclude. Therefore, the practice of providing disclosure at the time of initiating a brokerage relationship is critical.
The RMAA ABAD form can be located 2 ways.  It can be easily downloaded in Remine at the time brokerage agreements are accessed.  Simply choose the forms package RMAA 01 RE/MAX Around Atlanta.  The drop down includes the ABAD.  Select it and it will be one of your forms in the transaction. It is also in the RMAA Resource Library section of the RMAA Hub, in the Office Forms and Documents section as a stand-alone form.

It often happens that a RE/MAX Around Atlanta agent represents a buyer and another RE/MAX Around Atlanta agent represents a seller in the same transaction.  The Brokerage Relationships in Real Estate Transactions, BRETTA, a Georgia statute, controls the legal relationship of brokers to clients in this situation.In these cases, BRETTA allows the managing broker to legally assigns different licensees as designated agents to exclusively represent different clients in the same transaction. The reason for the designation of different agents as exclusive representatives of the different parties is to properly to perform the duties owed to the individual clients, particularly, to maintain the confidential information of the parties. 
 
BRETTA avoids the dual agency position by allowing for Designated Agency by law. RMAA does not allow dual agency, except in unique, unavoidable situations with the permission of the managing broker.
 
The GAR Purchase and Sale Agreement requires the disclosure of designated agency at the section 10, Brokerage Relationships in this Transaction.  The proper way to complete the section is with RE/MAX Around Atlanta as the Broker for both parties, but with the individual designated agents providing exclusive representation for the buyer and for the seller.
 
10. Brokerage Relationships in this Transaction. 
In a designated agency transaction, the designated agent for the buyer owes the same duties to the buyer as if the agent was acting only as a buyer’s agent. Similarly, the designated agent for the seller owes the same duties to the seller as if the agent was acting only as the seller’s agent. With designated agency, each designated agent is prohibited from disclosing to anyone other than his or her broker any information requested to be kept confidential by the client unless the information is otherwise required to be disclosed by law. Therefore, designated agents may not disclose such confidential information to other agents in the company. The broker is also prohibited from revealing any confidential information he or she has received from one designated agent to the other designated agent, unless the information is otherwise required to be disclosed by law. Confidential information is defined as any information that could harm the client’s negotiating position which information the client has not consented to be disclosed. 

​The Federal Housing Administration (FHA) was created by the federal government to provide mortgage lenders with insurance against losses if a borrower defaults on a loan.  FHA is not actually the lender.  FHA is really an insurance company that eliminates the lender’s risk so lenders will make loans to borrowers that they might otherwise deny.
 
Borrowers like FHA insured loans because of relaxed credit and income ratios , lowered down payments and less cash to close.  Sometimes a buyer that can’t qualify for a conventional loan will want to switch to an FHA insured loan. 
 
Should a Seller allow a Buyer to switch to an FHA loan?
 
First, a buyer that includes a conventional loan contingency in a contract cannot switch to an FHA insured loan (or VA or USDA) without an amendment to the contract. That is, the Seller has to agree.
 
Next, there are substantial differences in the Seller’s position if the seller agrees to an FHA loan.  A simple financing contingency that expires quickly can become a valid termination right before closing day.
 
Amendatory Clause and Repairs Clause
 
The FHA loan contingency offers protections to a borrower, required by FHA regulations, that are not found in a conventional loan, specifically, the Amendatory or appraisal and repairs clauses.  According to the FHA, operation of these clauses, cannot be eliminated.  Even if the finance period has expired, the contract can still be terminated due to a low appraisal or a failure to agree to repairs.  For that reason, some Sellers won’t accept an FHA insured loan contingency.  Termination due to appraisal or repair issues can happen right up to closing day, even if buyer has the ability to obtain the loan. 
 
Here’s an example:
A contract has an FHA loan contingency with 21 days from the binding date to determine if Buyer has the ability to obtain the Loan. The 21 days has expired and the buyer has the ability to obtain the loan.  However, the appraisal comes in low.
 
According to the Amendatory Clause in the FHA Loan contingency (paragraph 11), the Buyer can terminate and the Buyer gets the earnest money back.  The Buyer can decide to close, but it’s the Buyer’s choice.  There are, of course, ways that the parties can negotiate if the buyer and the seller want to negotiate. The Seller can reduce the purchase price or the buyer could pay the difference to the contract price or anything in between.  But if the appraised price is lower than the minimum value in the contingency and the Buyer wants to terminate, the buyer can terminate and will get the earnest money back. 
 
Here’s a second example:
The same facts as above, but the appraised price is not an issue.  Instead, the appraisal includes certain required repairs to the property that exceed the amount the Seller has agreed to pay in paragraph 15. 
 
According to paragraph 15 (Repairs), if the costs of repair exceed the amount agreed, 1) the Seller has to provide written statement of the repair cost and 2)
the Buyer and Seller have 3 days to negotiate and agree.  If they don’t come to an agreement, the contract automatically terminates. No one is in default.  The earnest money goes back to the buyer.
 
Conventional Loan
Compare this situation to a conventional loan contingency. The ability to obtain a loan and the appraisal contingency have expired.  It’s simply a cash deal now.  The buyer can bring loan proceeds to closing, but if the buyer does not and does not have the cash to close, the buyer is in default and the buyer’s earnest money is forfeited to the seller. 
 
Investigate the Situation
So, what if your seller is faced with a contract that includes a FHA loan contingency or a buyer that wants to switch from a conventional loan to an FHA loan?  Our recommendation would be to investigate before agreeing.  Is the appraisal going to meet the price?  Are repairs going to be an issue?  If the FHA loan looks good and the appraisal and repair issues look good, then it’s reasonable to agree.  If a buyer is asking to switch to an FHA loan. get some answers before agreeing.  

Prior inspection reports typically come up from a deal that didn’t go through.  A good report can bolster a property’s value, but a bad report can hurt. The question often asked,
“Do I have to provide a bad report to subsequent buyers?”
 
The bottom line answer is YES. Prior reports constitute material facts. A seller's duty to disclose his knowledge of defects does not end when he completes a written Seller Property Disclosure. A seller's knowledge includes prior inspection reports obtained by previous buyers. Sellers have an ongoing duty to disclose any defects revealed in those reports.
The Brokerage Relationships in Real Estate Transactions Act (“BRRETA”) is the Georgia consumer protection state statute that governs the relationship between real estate brokers and real estate consumers.  Regarding a Broker’s duties to other parties, BRETTA states the following:
A broker engaged by a seller must disclose all the following to all parties with whom the broker is working: All adverse material facts pertaining to the physical condition of the property and improvements located on such property including but not limited to material defects in the property, environmental contamination, and facts required by statute or regulation to be disclosed which are actually known by the broker which could not be discovered by a reasonably diligent inspection of the property by the buyer.
 
Seth Weissman, attorney at Weissman PC and general counsel for Georgia REALTORS®,
 in his Safe Real Estate Series, covers 4 Listing Agent scenarios:
 

1. The Listing Agent didn’t get the report, but knows what is in it:  You must disclose it, if you know what’s in it.
2. The Listing Agent got it, but disagrees with the report.  Doesn’t matter. You have to provide the report.
3. The Listing Agent got the report and it is probably right, but your seller disagrees and directs you not to provide the report to future buyers: Doesn’t matter. You have to provide the report.  (In this case, BRETTA gives you legal protection.)
4. The Listing Agent didn’t know about the defect, but the buyer’s agent e-mailed it to you and you never opened the email.  Seth’s advice is to open the email and deal with it. Avoid the consequences of using that position in front of a jury. 

 
So, now you know, you have to disclose the bad report.  Consider a few courses of action: Get a new report that neutralizes the bad report.  Or, if that is not a possibility, the seller should consider repairing the defects. Or, consider adjusting the price to reflect the defects.
 
Always weigh on the side of disclosure, regardless of how much it might hurt.  Prior inspection reports constitute material facts concerning the property which a purchaser is entitled to know in making the decision whether to buy the property.