​Adverse Action Letter Regarding Rental Application
If a landlord denies the prospective tenant’s rental application because of poor credit, the landlord is required, under Section 615(a) of the Fair Credit Reporting Act  to provide a special notification to the prospective tenant that, among other things, provides the applicant with the name, address, and telephone number of the credit reporting agency; informs the applicant that the credit reporting agency did not make the adverse action and is unable to provide the applicant with the specific reasons why the adverse action was taken; and gives the tenant the right to obtain a free copy of her credit report from the credit reporting agency to dispute the accuracy or completeness of the credit report.
This type of notice must also be given if the landlord charges the tenant an extra amount as a result of having bad credit (such as an additional security deposit or extra rent). The notice does not need to state the specific information in the credit report that was of concern to the landlord. Instead, it merely needs to state that information in the credit report was a basis for the denial of the rental application. 

​The May 1, 2022 revisions to the GAR Forms have been released.  There are 2 new Special Stipulations (SS) that should be of value to you.  These can also be found in the GAR Special Stipulations.
 

1. NO COMMISSION OWED BY THE BUYER

Because the current Exclusive Buyer Brokerage Engagement Agreement states the buyer agrees to pay the broker a commission and some brokers do not want to include that provision, the new Special Stipulation 110 negates any obligation of the buyer to pay a commission to the broker.
 
SS 110 NO COMMISSION OWED BY THE BUYER
Notwithstanding any provision to the contrary contained in this Agreement, Broker shall not look for Buyer to pay any portion of Broker’s Commission pursuant to this Exclusive Buyer Brokerage Engagement Agreement. 
 
 
2.CONTINGENCY FOR RECEIVING CONDOMINIUM QUESTIONNAIRE
As noted in a previous post, Fannie Mae and Freddie Mac have created additional conditions to the HOA Approval process since the terrible condominium collapse last year in Florida.  Significant deferred maintenance at that condominium was a factor in the building collapse.  Property management of condominiums will now be required to answer additional questions regarding deficiencies, defects, substantial damages and deferred maintenance, as well as other new questions.  To protect a buyer’s earnest money, in the event that the approval process takes longer than the time limits of financing or appraisal contingencies, we recommend adding a Special Stipulation to all condominium purchase agreements that allows the buyer to terminate if the property cannot be qualified by FNMA or Freddie Mac.  The following is a new SS released by GAR for this situation.  Note that the SS calls for the buyer’s termination right based on a number of days from the binding date.  The time period can, of course, be adjusted as the situation requires.

​Sellers are always anxious to get their property back on the market after it looks like the buyer won’t be closing.  So long as the purchase agreement is properly terminated, the property can be relisted.  Watch for these issues to be certain that termination is proper.  If so, and the Seller terminates by a Unilateral Termination, the Seller can immediately relist. An improper termination could open the Seller to liability. 
 
It is important to understand the differences between a breach of contract, an anticipatory breach of contract and a non-breach of the contract. Here are some common situations.

​Often sellers are not ready to move out on the date set for closing and require a Temporary Occupancy Agreement.  In a seller’s market, the buyer usually agrees to win the property. The GAR Temporary Occupancy Agreement (TO) offers protections for the buyer against a seller holding over past the agreed occupancy period.
 
Temporary Occupancy Agreements are generally limited to 60 days.
The reason behind this provision is that most standard deeds to secure debt and standard FNMA and FHLMC requirements provide that the buyer must occupy the property as their principal residence on or before 60 days from the date of closing.  However, if the buyer pays cash for the property, the 60 day limit is not relevant.  The buyer should consider, in the case of a cash sale, whether a lease would be more appropriate than a Temporary Occupancy Agreement.

​The GAR Purchase Agreement includes a detailed representation and agency section that identifies the Brokers and the type of Buyer or Seller representation that exists between Brokers and the parties.  One of the reasons for requiring clarity of representation is that notice to a party can be accepted, or cannot be accepted, by the named Broker according to the type of representation that exists.

​The Binding Date of a Purchase Agreement confirms acceptance and initiates certain time periods in the PSA. Binding Date issues can derail a contract if the parties are not operating from the same date.  This can happen when an incorrect binding date is entered or if no date has been entered

​In many builder transactions, an attorney, who is representing the builder, has drafted the builder’s contract from scratch. They most often favor their clients, the builders, rather than your clients. Here are a few things to look for and bring to the attention of your clients.

The 3 most common deeds that we see in real estate are Quitclaim Deeds, Limited Warranty Deeds and General Warranty Deeds.
 
Quitclaim Deed.                                                                                                                      
A quitclaim deed transfers the ownership interest of the grantor to the grantee without any warranties or guarantees that title is good or that the property is free of liens or claims. It transfers whatever is owned by the grantor. If the Grantor owns nothing, then nothing is conveyed.  If the Grantor co-owns along with others, the Grantee gets what the Grantor owned – ownership along with others. The quitclaim deed is used mostly in non-sale transactions such as transfers between spouses or parents to children.  It is used also in commercial transactions to clear title issues.
 
Limited Warranty Deed                                                                                                   
When a special or limited warranty deed is used, the grantor only warrants that there are no title defects during the time the grantor owned the property. The limited warranty deed gives the grantee more protection against claims to title than a quitclaim deed, but less protection than a general warranty deed.  If a tax lien or another lien pops up that was prior to the ownership of the grantor, the grantee may have to pay it.  Note the title insurance comment below.
​
General Warranty Deed                                                                                                           
​A general warranty deed offers the best protection for the grantee because it guarantees, from the beginning of time, that the title is good and marketable. The grantor promises the grantee that the grantor will defend the grantee from any all claims made by third parties. That tax lien owed from before the time the grantor owned the property would have to be covered by the grantor.

​There are 2 approaches to handling Multiple Offers.
The first approach is for the Seller to instruct the Listing Agent to ask for the “Best and Final” or “Highest and Best” offers from all potential buyers.  This process carries some risk. It may cause some buyers to back away. Buyers don’t like to bid against themselves and don’t like bidding wars. It’s a risk the Seller takes.
 
The second approach is for the Seller to pick the offer that looks the best and negotiate that one.  If it does not work out, the Seller can move on to the next offer – if it has not been withdrawn.  There is no rule that the Seller must negotiate the offers in order or that the seller must choose any particular offer - so long as the process is fair and does not violate Fair Housing rules.
 
The key is that the client decides how they wish to proceed – not the agent.

​Earnest Money is almost always involved in an offer to purchase.  The terms of the contract determine when the earnest money is due.  But what if the funds are not delivered on that required date?  What are the consequences and how should it be handled?
 
If the funds are not delivered on time, is the Buyer in default?
Yes, the Buyer is in default.  But that doesn’t mean the contract has failed. The Seller’s right to terminate when earnest money is late is limited. First, the Holder named in the contract must promptly give Notice to both the Buyer and the Seller that the funds have not been delivered. The Buyer then has three (3) banking days from the date of receiving the notice to cure the default. If the Buyer does not do so, the Seller may, within seven (7) days thereafter, terminate this Agreement upon notice to Buyer. If the Seller fails to terminate the Agreement timely, Seller’s right to terminate based on the default is waived and the contract is enforceable.