Archive for April, 2011

Is Real Estate License Needed To Negotiate Short Sales or Loan Modification?

April 28, 2011

Loan Modifications

A real estate license is not required to negotiate a loan modification agreement for a client because the typical loan modification does not involve the sale of real property. See A.R.S. § 32-2101(47). In addition, a mortgage broker’s license is not required to negotiate a loan modification if the loan is already funded, the parties to and the security for the loan are the same, and no additional funds are advanced. See A.A.C. R20-4-102. However, Arizona did adopt legislation that required loan modification negotiators to be licensed and regulated under the mortgage brokerage statutes by July 2010.

Short Sales

A real estate license is generally required to represent a client in a “transaction calculated or intended to result in the sale . . . of real estate.” See A.R.S. § 32-2101(47). Therefore, any directing or assisting in the negotiations for a short sale on behalf of a seller and for compensation is an activity requiring a real estate license. See also A.R.S. § 32-2122(D).

Combs Law Group (CLG)as a law firm exempt from real estate license requirements is uniquely qualified to represent clients and assist brokers in short sale transactions. There is no program, whether sponsored by the government or a private lender, which fits every client’s circumstance. CLG’s attorneys evaluate each client’s circumstances, educate the client regarding the law, provide the client with all of the options that are available, and work with the lender to close the short sale transaction prior to closing. All short sale clients receive a thorough review of their short sale documents by a CLG attorney to ensure that their best interests are protected and promoted.

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Does Arizona Real Estate Seller Need To Certify Septic Tank?

April 27, 2011

Question: We are purchasing an expensive home in Paradise Valley from a bank that has a septic tank. Under the bank’s “as-is” addendum, we agreed to pay for all inspections and investigations relating to this home. But doesn’t the bank, have to certify that the septic tank is in working order? If so, even though we agreed to pay for all inspections and investigations, doesn’t the bank have to pay for this certification?

Answer: According to Arizona and real estate laws the bank or other seller of a home cannot sell the home without an inspection of the septic tank. There is no requirement by the Arizona Department of Environmental Quality for a certification, just an inspection. A.A.C. R18-9-A316. In other words, even if this inspection shows that the septic tank is not working, there is no requirement for the bank or other seller of a home to certify that the septic tank is in working condition or to make any repairs. Although there can be no transfer of a septic tank without an inspection, the seller and the buyer can agree in the purchase contract that the buyer will pay for the cost of this inspection. Therefore, if the “as-is” addendum requires you to pay for the cost of this septic tank inspection, you will have to pay this cost.

Does HOA Have Liability for Golf Injury?

April 27, 2011

Question: A Gilbert home is on the fairway of the first hole of a golf course. The homeowner’s association (“HOA”) for the community is basically bankrupt because of numerous foreclosures. The Covenants, Conditions and Restrictions (“CC&Rs”) for the community prohibits hitting golf balls in the community park. However, the HOA has not been enforcing this prohibition, and every evening and every weekend there are homeowners hitting golf balls in the community park. Last week a homeowner’s wife got hit in the mouth by a golf ball while in their backyard. The homeowners originally thought there was only minor bleeding, but now she may need some dental work done. The homeowners have no idea who hit the golf ball. Does the HOA have any liability? If so, will the HOA have liability insurance? Should we contact an Arizona real estate attorney?

Answer: First, if neither the HOA nor the individual homeowners have been enforcing the CC&Rs prohibition against the hitting of golf balls in the community park for an extended period of time, this CC&Rs provision may have been waived. Therefore, even if you knew the individual that hit the golf ball, that individual would probably only have liability if that individual could reasonably foresee that the golf ball would be hit into a backyard. “Foreseeability” would be different depending upon whether Tiger Woods or a weekend golfer was hitting the golf ball. Second, if this CC&Rs provision has been waived, the HOA may have liability for non-enforcement of their CC&Rs provision. Third, the HOA may have had a separate obligation to properly maintain the community park.

In other words, if golf balls were being hit in the community park, the HOA may have had an obligation to properly maintain the park, e.g., place fencing or a wall around the community park. In a leading Arizona case a woman was hitting practice balls on the driving range at the Arizona Country Club when she was struck by a golfer driving his golf ball from the first tee. The woman sued not only the golfer, but also the Arizona Country Club. The Arizona Supreme Court said that, “if the golfer and the Arizona Country Club could have reasonably foreseen that a golfer driving from the first tee could strike a golfer hitting practice balls on the driving range, the golfer would have had a duty to warn (generally by yelling “fore”), and the Arizona Country Club would have had a duty to take protective measures such as building a fence.

Foreclosure Options to “Returning” Investment Property to the Bank

April 26, 2011

Question: Four years ago during the “boom” I purchased a Scottsdale condominium for investment purposes for $380,000 with 100% financing. Since I purchased this condominium I have had nothing but trouble with tenants, and my annual “negative” has been more than $15,000. The condominium is worth no more than $160,000. What are the Arizona real estate laws if I return this condominium to the bank? Will the bank have any claim against me for losses on the mortgage loan?

Answer: I am not sure what you mean by “return” the home to the bank. Although you can return a shirt to a department store and get your money back if the shirt does not fit, it is not that easy with a home! You can only legally “return” a home if the bank will agree to accept a “Deed in Lieu of Foreclosure.” In other words, you would sign a deed to the bank, and the bank would agree to accept the deed from you. Unfortunately, a bank will rarely accept a Deed in Lieu of Foreclosure.

If by your statement “return the home to the bank” you mean stop making payments on your mortgage loan until the bank forecloses on the home, under Arizona’s anti-deficiency statutes you should have no liability to the bank for any losses suffered by the bank on the mortgage loan. You would have liability to the bank, however, for any unreasonable damage to the home at the time of the foreclosure.