FORMS CHANGES COMING SOON

Form Changes

The changes will be released on August 1, 2016.

The Minnesota REALTORS® Forms Committee held six meetings, one Commercial Forms Sub-Committee meeting, and one Leasing Forms Task Force meeting this fiscal year. It covered many of the members’ suggested changes. A special thanks due to the Forms Committee Chair, Deb Richmond-Johnson, and all of the volunteer Forms Committee, Sub-Committee, and Task Force members for their efforts in accomplishing a very hefty agenda this fiscal year.

The Forms Committee made numerous forms changes, which are summarized in this article. These changes will be released on August 1, 2016. Please note that substantive changes were made to three main contingencies including the Addendum to Purchase Agreement: Inspection Contingency; Addendum to Purchase Agreement: Sale of Buyer’s Property Contingency; and the three Addendum to Purchase Agreement: Financing Contingencies (Conventional, FHA, and DVA). We strongly encourage you to thoroughly review these revised forms to ensure you understand how these changes affect the applicability, duration, and removal of these particular contingencies.

VIEW THE ENTIRE ARTICLE HERE

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

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Real Estate Q&A’s

DRG blog

Find answers to common real estate questions in the DESKTOP REFERENCE GUIDE. This is a great guide to laws, rules and regulations pertaining to real estate.

You’ll find Q&A’s on all kinds of topics including Department of Commerce Regulations, Environmental Issues, Property Tax, Short Sales and more.

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Here are a few examples:

Q: Is the seller required to disclose the presence of pets in the home? 

ANSWER-

Many people have allergies to pet dander and/or pet fur. Dander and fur can remain present well after the pet has no longer been on the premises. The presence of these allergens would have an adverse affect on a buyer’s use and enjoyment of the property, and therefore, is considered a material fact and needs to be disclosed.

Q: Can I use my team’s name in our advertising?

ANSWER-

blog Q&AAny advertising by a licensee must include the real estate brokerage name more prominently displayed than the licensee’s name for the purchase, sale, lease, exchange, mortgaging, transfer, or other disposition of real property, whether the advertising pertains to the licensee’s own property or the property of others. If a salesperson or broker is part of a team or group within the brokerage, the licensee may include the team or group name in the advertising only under the following conditions:

  • the inclusion of such team or group name is authorized by the primary broker of the brokerage to which the salesperson or broker is licensed; and
  • the real estate brokerage name is included and more prominently displayed than the team name or group name in the advertising.

The following two options would be acceptable forms of using team names in real estate advertising:

The Smith Team at ABC Realty; or

The Smith Group

ABC Realty

Please see MN Statute 82.69 for more information.

View more Q&A’s in the DESKTOP REFERENCE GUIDE

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

MATERIAL FACT DISCLOSURE REQUIREMENTS

IS IT MATERIAL?

According to MN Statute 82.68, Subd. 3, real estate licensees shall disclose to any prospective purchaser all material facts pertaining to the property – be it commercial or residential – of which the licensee is aware, which could adversely and significantly affect the ordinary purchaser’s use or enjoyment of the property, or any intended use of the property, of which the licensee is aware. Additionally, REALTORS® are required under Article 2 of the Code of Ethics to avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Remember, disclosure is limited to those material facts of which the licensee is aware. Licensees are not required to disclose, “what they should have known,” nor are licensees required to actively research or discover, or advise on matters outside the scope of their real estate license.

Is it a material fact?

The most common question arising under the statutory provision is what constitutes a “material fact” which must be disclosed. There are certain facts which are clearly material and must be disclosed, which include such facts as a flooded basement or the presence of lead-based paint, (lead-based paint disclosure is mandated under federal law). At the same time there are certain facts which cannot be disclosed under state law, such as the fact that a seller has AIDS, the disclosure of which is prohibited under the Minnesota Human Rights Act. Between the extremes of facts that must be disclosed and facts that must not be disclosed are a variety of facts which are open to interpretation as to whether they are material or not.

In analyzing the issue of materiality to determine if a fact must be disclosed, REALTORS® should consider whether the fact would affect (1) the buyer’s use or enjoyment, or any intended use, of the property; and (2) the purchaser’s decision to purchase the property. Put yourself in the shoes of a buyer and ask yourself if this is a material fact that you would want to know if you were a buyer. Will the fact affect the buyer’s use or enjoyment of the property or any intended use of the property? Will the fact in question have an effect on a reasonable purchaser’s decision to buy? Is the seller moving from the property because of a particular fact that affects the use or enjoyment of the property, (i.e., it is too noisy because it is by an airport). If the seller is moving because of a fact that would affect the use or enjoyment of the property, that would strongly suggest it is material and must be disclosed. If the fact deals with an off-site issue, such as a waste disposal dump, the proximity of the problem would bear on its materiality. If it is in close proximity to the property, it is probably more likely to be material than if it is not in close proximity to the property. The potential effect on the property can also help define its materiality. Could the fact materially affect the value of the property? (e.g. adverse versus an infrequently used airport that does not disturb the peace and tranquility of the neighborhood with any frequency.) Materiality can be difficult to define and must be analyzed in light of the unique circumstances of each case.

Facts that are not material:

There are some facts specified in statute that have been designated as not material facts. Licensees and sellers DO NOT have to disclose the fact or suspicion that the property:

  • is or was occupied by an owner or occupant who is or was suspected to be infected with HIV or diagnosed with AIDS;
  • was the site of suicide, accidental death, natural death, or perceived paranormal activity; or
  • is located in a neighborhood containing any adult family home, community-based residential facility, or nursing home.

Seller Disclosure requirements under MN Statute 513 are similar to the licensees’ requirements however, real estate licensees do not have the option for a buyer waiver of their material fact disclosure requirements. In addition, the seller material fact disclosure is required only for single-family residential property transactions however, REALTORS® are obligated to provide material fact disclosures in any type of real estate transaction (i.e. purchase/sale, lease/rental, residential/commercial, etc.).

Susan Dioury

 

Susan L. Dioury, JD

Senior Vice President, Risk Management

sdioury@mnrealtor.com

 

 

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

YOU & A DOC ENFORCEMENT CALL

Besides the REALTOR® Code of Ethics, real estate brokers and licensees are bound by state statutes in the practice or our trade. In Minnesota, enforcement runs through the Minnesota Department of Commerce (“DOC”). Last year, there were 43 enforcement actions against agents/brokers. Considering that Minnesota has 22,000 real estate licenses (brokers & salespersons), that number of enforcement actions does not suggest a high percentage of licensees who are found in violation of licensing law.

So why should you read on? Although the enforcement actions are low, it is the focus of the actions that we are bringing to your attention.

  1. Make sure you have the correct information on file with the DOC – address, email, etc. The REALTOR® Association files are not linked to the DOC Pulse Portal system. MN Statute 82.641, Subd. 5 requires licensees to notify the commissioner, in the format prescribed by the commissioner, of a change of information contained in a license application on file with the commissioner within ten (10) days of the change (e.g. your legal name, age, residence address, the name and place of business of the real estate broker on whose behalf the salesperson is to be acting, and any other information you completed in a license application). As you review your real estate education on  the Pulse Portal system – check to ensure your other information is accurate. Here’s where to check your CE on Pulse Portal: www.pulseportal.com
  2. Make sure you keep accurate and complete files. Paperwork may be cumbersome to keep track of, but it is the easiest way to document and substantiate your actions in a real estate transaction. Notes of phone conversations or emails confirming conversations and other activities will help you remember what happened, when it happened, and how it was handled. You may ask “Why”? Can you remember all of the conversations you had with a client 6 or 10 months ago? A log with notes about conversations, or email records confirming some of these conversations would be helpful if you are involved in an enforcement investigation.
  3. Understand your fiduciary duties. When you represent a party in a real estate transaction – buyer or seller – make sure you are acting in their best interest and living up to your fiduciary duties. Understand your role in all agency relationships – including dual agency or acting as a facilitator – and complete the paperwork appropriately.
  4. Expertise in the specific real estate discipline. Some of the enforcement actions involved property management situations by agents who were not working through or reporting such activities to their broker. Talk with your broker about what real estate services you wish to provide to consumers within the structure of the real estate firm, and to confirm whether such activities are allowed by the supervised by your broker.Although you have a real estate license, it is important to be competent within any real estate discipline in which you engage. Don’t participate in any real estate disciplines without the broker’s approval and supervision.
  5. Read the MN REALTOR® publications. All statutory changes applicable to real estate licensees are highlighted in our publications. We email them to all members through our weekly and monthly newsletters. Review the MN REALTOR® Desktop Reference Guide, which contains Minnesota and federal regulations and laws that you should be familiar with. The Reference Guide is laid out in an easy to read Q & A format with links to the statutes and other information related to the issues. Please keep in mind, the 15 hours of CE you take annually cannot cover all of the legal requirements and responsibilities you have as a real estate professional. NAR, MN REALTORS®, and your local association all provide informational updates so you can stay abreast of the laws.

DOC enforcement personnel may contact you to investigate a complaint or compliance issues. We’ve heard from a number of members – and their counsel – about the numerous ways the DOC staff have engaged licensees in their investigations. Many times the investigation starts with a “conversation” in which a licensee may falsely assume they have done nothing to be concerned about, and that they need not speak with their broker or attorney before answering any and all questions asked by the DOC. Here are several tips regarding how to handle any such conversation or investigation:

  1. Don’t feel obligated to answer questions before speaking to your broker or legal counsel. The DOC may call and immediately commence questions and information gathering which they will use to build a case against a licensee. It is important that you understand you have the right to abstain from answering their questions until you consult with your broker or legal counsel. They should be providing you with confirmation of that fact, via a Tennessen Warning. You may also need to speak with your E & O insurer as soon as you’re aware of an investigation to determine whether you may have coverage for such an event. Before guessing about a file or a matter that may have occurred some time ago. ask them what file or transaction they’d like to know about, and set up a time to call them back or meet with them once you’ve had an opportunity to review your file. No matter the pressure, you have time to review the transaction and call your broker/legal counsel before answering any questions.
  2. You have the right to have legal representation in a DOC investigation or enforcement action. Make certain you obtain the assistance of someone who has the expertise and knowledge about the enforcement process and your rights in an investigation before moving forward.
  3. Take the call seriously. Even if you think the inquirer is missing some facts or asking for general information. Remember the old saying “everything you say can and will be used against you…” Although some investigations or enforcement actions are the result of the DOC having received false information or erroneous statements in a complaint, do not make the mistake of presuming you have nothing to be concerned about, such that you are too casual about what you say, or the significance of such an investigation. Since any violation of licensing law can result in a fine of up to $10,000 per violation (plus the costs of the investigation), it is important to devote adequate time and consideration to how you will handle such an investigation.
  4. Be proactive. The best way to stay out of trouble is to follow the rules. The best way to follow the rules is to read about them regularly and to know what you are required to do, and what you are prohibited from doing, as a real estate licensee. The five tips at the beginning of this article are a good place to start.

If real estate licensees break the law and harm consumers, they should be held accountable. There is no advantage to the industry in having bad characters in the real estate business.

However, you are innocent until proven guilty. If the DOC enforcement staff contacts you, remember it is likely they are seeking to determine whether you have violated licensing laws. They tend to focus on finding violations, without giving you the benefit of the doubt. Know and follow real estate licensing regulations and applicable law, stay current with changes to statutes that impact your business, and if you are investigated, remember to consult your E & O provider, broker and legal counsel before engaging in a response to a DOC inquiry or enforcement action.

Chris

 

Christoper Galler

Chief Executive Officer

cgaller@mnrealtor.com

 

 

The Minnesota REALTORS® is the largest trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

INVENTORY FOR MARCH DOWN SIGNIFICANTLY

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The biggest news for the month of March in Minnesota is inventory – where is it? Interest rates are still low, we experienced a mild winter by Minnesota standards, and the spring market is upon us. According to the data, there were 23,790 homes for sale in Minnesota; this is a 14.9% decrease over the same time period in 2015. There were 4,174 less homes to choose from in March.

The pending sales were up 8.7% to 8,198 units over last year. However, closed sales were down 1.7% to 5,476 units over March 2015. That number has slowed since the pending sales were running a little soft in the first months of the New Year.

The median sales price jumped 6.4% to $196,750, while the average sales price rose 2.9% to $227,724. The median sales price is the midpoint, indicating as many transactions above as below the stated price.

With the low inventory, buyers are making a decision to buy much faster. Homes sold in 77 days on average in March. This is a 10.5% decrease over March of 2015.

“The low inventory keeps the sellers in control when it comes to the marketplace,” said Chris Galler, CEO of the Minnesota REALTORS®. “Buyers have to act quickly in order to get the house they want.”

Download the March 2016 Minnesota Housing Report HERE

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Carrie

 

Carrie Andersen

Vice President, Member Services

candersen@mnrealtor.com

 

 

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.