Archive for the ‘Uncategorized’ Category

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.

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.

Liability on Buyer for “As Is” Arizona Real Estate Sale

June 28, 2010


Recently a HUD foreclosure home was purchased in Glendale, Arizona. In the HUD contract that was agreed to, the home was purchased in “as is” condition. The HUD contract did give the buyer right to conduct inspections. The buyer previously was in the construction industry, and after spending four hours inspecting the home, it was found to have only some minor items that needed repair. However, two weeks after the home purchase closed, the roof leaked. The roofing company has estimated that the cost of repairs to the roof will be $4,800. Does HUD have any liability for this $4,800 in roof repairs?

According to real estate laws, if a home is sold in “as is” condition, a seller generally has no liability after the close of escrow for a defective roof or any other problem with the home. Therefore, HUD probably has no liability to the buyer. HUD would have liability to the buyer, however if a HUD employee or agent had knowledge of the defective roof. The reason is that the failure of a seller to disclose a known, material problem with the home is fraud. Note: A roof is generally the most expensive repair problem in a home. Therefore, the buyer of a home should have a roof warranty at the time of closing.

Lender Must Foreclose in Reasonable Time After Mortgage Default But Owners Liable for HOA Fees Until Then

June 26, 2010


Two partners purchased an expensive condominium in Scottsdale for an investment. Due to the failing economy and the slowdown in their business, they have been unable to make the condominium payments and defaulted on the mortgage for seven months. They know that under the Arizona anti-deficiency law they have no personal liability for any deficiency on the mortgage loan, but they also know that they are personally liable to our HOA for the monthly fees of $1,400 as long as they own the condominium. They want to give the condominium back to the mortgage company, or lose the condominium at foreclosure. The mortgage company, however, will not accept a deed in lieu of foreclosure, nor will the mortgage company tell them when they will institute foreclosure proceedings. Can they make the mortgage company foreclose on the condominium so that they are no longer liable for maintaining the condominium, including payment of the $1,400 monthly HOA fees?

A phenomenon of this current real estate market is that mortgage lenders are not “racing to foreclosure,” especially on high-end homes. The reason is that, after the foreclosure sale, the mortgage lender will not only have another REO (“Real Estate-Owned”) “dog” on their balance sheet, but the mortgage lender will be responsible for the HOA fees, landscaping, pool and other repair/maintenance costs, until the home sells. Under Arizona law, a mortgage lender is only required to institute foreclosure proceedings within six years of the default on the mortgage loan, i.e., when the borrower stops making payments. Therefore, although highly unlikely, unless they were to do a “short sale” or otherwise sell the condominium, they could be required to maintain the home, including the $1,400 monthly HOA fees, for the next six years.

Arizona Real Estate Law Requires Written Notice for Non-Return of Security Deposit

June 26, 2010

A couple moved into an apartment in East Phoenix last year and signed a one-year lease and paid a $1,200 security deposit to the landlord. The lease ended last month and they moved out of the apartment. The apartment was left spotless, and when they asked the property manager for the return of our $1,200 security deposit. The property manager later said that the landlord inspected our apartment, and had told the property manager not to return our $1,200 security deposit because there was major damage done to the apartment. They think the landlord is just trying to keep the $1,200 security deposit. They had never talked to the landlord, and on had only two conversations with the property manager who know refuses to return their telephone calls. What rights do these people have to get their $1,200 security deposit back?

According to Arizona real estate law, the Arizona Residential Landlord and Tenant Act provides that, after a residential lease has terminated and the tenant has requested the return of the security deposit, the landlord is required to deliver a written notice to the tenant within 14 days specifying in detail the reasons for withholding all or part of the security deposit. A.R.S. §33-1321. If the landlord fails to timely deliver this 14-day notice to a tenant, the tenant is entitled to file a lawsuit to recover damages of three times the amount of the security deposit. Therefore, the couple should be entitled to recover $3,600 (three times the $1,200) in damages from the landlord in a justice court lawsuit. Note: if the landlord is correct and they did major damage to the apartment amounting to more than the $1,200 security deposit, the landlord will not only owe them nothing, the landlord will be entitled to get a judgment against them for any damage in excess of the $1,200 security deposit.