Archive for February, 2011

Multiple Arizona Real Estate Brokers Could Mean Multiple Commissions

February 26, 2011

In slow real estate markets, sellers often become frustrated with the fact that their homes are failing to sell. Stories of the hot 2004-2005 market with properties selling in thirty minutes are still fairly fresh in their minds. Sellers often wrongly blame their listing agents for the home’s failure to sell. They will fire their current Broker despite having signed an Exclusive Right to Sell/Rent (“Listing Agreement”) with the Broker, which often doesn’t expire for several months. They will then go out and attempt to hire a new Broker to sell their property.

Can a seller hire the second Broker? This is a question Arizona real estate law attorneys regularly receive from the first Broker. The answer to that question is yes. The seller will not be prohibited from listing with both their first Broker (assuming that the Listing Agreement was not mutually cancelled by the first Broker and the seller) and the second Broker. However, the seller may be subject to multiple commissions as a result.

The question we receive from the second Broker in these situations is: What do I need to do before I take this listing? Prior to listing with the seller, the second Broker must obtain written acknowledgment from the seller that the execution of additional real estate employment agreements could expose that seller to liability for substantial additional commissions. ARS § 32-2151.02(C). Failure to obtain this written acknowledgment could subject a licensee to punishment by the Arizona Department of Real Estate, as well as potential civil liability for their actions. The statute specifically states that it will not affect any civil liability of a licensee arising out of such conduct. Furthermore, members of the Association of REALTORS® have an obligation to make reasonable efforts to determine whether a prospect is subject to a current, valid exclusive agreement. See Standard of Practice 16-9 in the NAR Code of Ethics.

The general rule: If a client comes to you seeking your services and complaining about their previous Broker not doing his or her job, make sure that you receive written acknowledgment from that seller that retaining multiple Brokers may subject them to multiple commissions.


Both Neighbors Responsible for Common Fence Maintenance Expenses

February 25, 2011

A Glendale, Arizona home has been a family residence for more than twenty-five years. A wooden fence on the backyard property line was there when the home was purchased 25 years ago. Recently, a strong storm came through and knocked down a large portion of the wooden fence. This wooden fence needs to be replaced, but the backyard neighbor says that, although he will not object to the replacement of the wooden fence, he will not pay for any of the cost. If this wooden fence needs to be replaced, does the backyard neighbor have to pay for any of the cost?

If there is a common fence or wall on a property line between two neighboring real estate property owners, both neighboring property owners have the obligation to pay for the cost of common fence maintenance. Therefore, if the wooden fence can no longer be maintained, but must be replaced, your neighboring property owner is required to pay half of the cost to replace the wooden fence.

When Transferring Title After Marriage “Due on Sale” Clause Unenforceable

February 25, 2011

A home was purchased in Surprise, Arizona, three years ago after a man was divorced. The title to the home was in the homeowners name only. However, last year the homeowner married again and he added his new wife to the title to the home. The mortgage loan, however, was still in man’s name only. The mortgage payments are current. If the bank discovers that the man’s new wife is on the title to the home, will the bank require immediate full payment of the mortgage loan according to Arizona real estate law?

Most mortgage loans have a “due on sale” clause allowing the mortgage lender to require immediate full payment of the mortgage loan upon any transfer of the title to the home. However, Federal law prohibits most mortgage lenders from enforcing the “due on sale” clause after certain transfers of the title to the home. 12 U.S.C. §1701j-3(d). These exempt transfers of title to the home include a transfer to a living trust, a transfer pursuant to a divorce decree, a transfer after death to a relative of the borrower, and any transfer to a spouse or child of the borrower. Therefore, when the homeowners new wife was added to the title to the home last year the mortgage lender was prohibited from enforcing the “due on sale” clause to require immediate full payment of the mortgage loan.

Arizona Law Says Five-Day Written Notice Required to Evict Commercial Tenants

February 4, 2011

A family owns a small strip shopping center in Glendale. Two years ago they verbally entered into a month-to-month lease with a hair salon for $1,500 per month. Although they originally intended to have the tenant sign a written three-year lease agreement, the property owners never did. Until now, tenant always paid the rent on time however they are more than two weeks late this month. The tenant said he will try to get us this month’s rent by the end of this month. The property owner would like to rent the space to another hair salon. Are they allowed to do that? What are the property owner’s rights under Arizona Landlord Tenant Law and how do you evict a tenant?

The property owner has two options. After giving five days written notice, they can either file an eviction action in court or they can lock out they tenant. A.R.S. § 33-361. If they choose to lock out the tenant, they must do so at a time when there will not be a breach of peace, generally after working hours when there is no one in the leased space. Unlike residential tenants, commercial tenants like this hair salon have little or no protection under Arizona statutes. The philosophy is that commercial tenants and landlords are “big boys,” and can protect themselves by negotiating a written lease agreement. Most written lease agreements will have a “cure” period, e.g., requiring at least ten days written notice from a landlord before a landlord can lock out the tenant or file an eviction action in court for non-payment of rent.

Neighbor Liable for Flood Damage Caused by Corral Construction

February 4, 2011

A family lives in a Cave Creek area in a community of five-acre “Ranchette” homes. The next door neighbor built a corral in his backyard and now it seems that every time that there is any rain, their backyard floods. The reason for this flooding is that the construction of the corral changed the natural slope of the land so that the runoff from the neighbor’s backyard now goes right into their backyard. In a heavy rain this runoff goes into their swimming pool and floods the back patio. They complained to the neighbor but refused to do anything and says that his backyard is his own private property. Is there an Arizona real estate law or something we can do to stop this flooding from the neighbor’s backyard due to the construction of this horse corral?

Yes. The general rule of Arizona real estate law is that a property owner cannot use his property in a manner that will cause harm to his neighbor’s property. Specifically, a property owner cannot change the natural pattern of rainfall runoff on his property if the result will be flooding of his neighbor’s property. The liability of the property owner for this rainfall runoff damage is based on the 1868 English court decision of Rylands v. Fletcher. In this decision the House of Lords (similar to the U.S. Supreme Court) ruled that a property owner was liable for damage to his neighbor’s mining operation due to rainfall runoff after construction by the property owner of a reservoir on his property. Similarly, the homeowner should have a claim against the neighbor for any damages that are the result of flooding due to the construction of the neighbor’s corral, as well as the cost of any improvements to protect the property.l as the cost of any improvements to protect the property.

Misrepresentation Means Arizona Homebuyer Can Take Seller to Court

February 2, 2011

When an Avondale home was purchased the home inspector said that the air-conditioning unit was not cooling properly. The seller agreed to correct this problem and at the final walkthrough before closing, the seller said the problem had been corrected. The home was closed on the home in the winter and the air conditioning was not used, but when the weather turned warm and they turned on the AC it was discovered the unit was defective and a new $1,300 compressor was needed. The buyers’ real estate agent contacted the seller, and said a specific air-conditioning company had repaired the unit before the closing. After contacting that company, they had no record of any contact with the seller. Does the buyer have a claim against the seller for the $1,300 cost of the new air conditioning unit compressor and will they need real estate law attorneys?

Inasmuch as the seller apparently misrepresented that the unit had been repaired, the buyer should have a claim. File a complaint with Small Claims Court, which has jurisdiction of disputes up to $2,500. In Small Claims Court, the parties have no right to a jury trial, no right to be represented by an attorney, and no right to appeal. In other words, the buyer needs to tell the story to a judge like television’s Judge Judy, and then they decide if the buyer wins or loses.

Only 30-Day Notice Required to End Month-to-Month Landlord and Tenant Lease

February 2, 2011

A person signed a one year lease when he rented a small home in Peoria four years ago. After the one year lease expired he continued to make my monthly payments to the landlord. The tenant did many repairs on the house in the four years of living and never asked the landlord to reimburse the tenant for the money. Additionally, the tenant spent $1,200 improving the landscaping around the swimming pool last summer. Now however the tenant, without any warning, received a notice from the landlord he had 30 days to move out of the home. The tenant called the landlord, but the landlord refused to talk to the tenant. According to Arizona landlord and tenant law, does the tenant have to move out in 30 days? Can the tenant get reimbursement for the repairs and improvements that were made to the home?

After your one-year lease expired, you were on a month-to-month lease with the landlord, and either the landlord or tenant could terminate this month-to-month lease at any time by 30 days notice prior to the periodic rental date, which is usually the first of the month. A.R.S. § 33-1375 (B). Regarding the repairs and improvements the tenant made to the home, the landlord is unfortunately not required to reimburse the tenant.

Note: Commercial month-to-month tenancies can be terminated on only 10 days notice. A.R.S. § 33-341 (B).