Real Estate Legal Q & A
Q: As a broker representing a seller of a single family home who has been leasing the property, what should I be aware of during the sale transaction and how can I ensure that my client will not have any legal issues with the buyer regarding the tenant?
A: A property that is listed for sale when occupied by one or more tenants presents special issues that must be recognized and addressed during the negotiations with both the buyer and the tenant. The California Association of Realtors residential purchase agreement (“RPA”) provides in paragraph 5‐C that with respect to tenant occupied property, the property shall be vacant at least 5 (or other designated days) prior to close of escrow, unless otherwise agreed in writing. If the seller is unable to deliver the property vacant in accordance with rent control or other applicable law, the seller may be in breach of the RPA. Therefore, when representing a seller of property occupied by a tenant, any offer in the form of the standard RPA should be countered with a provision that addresses the terms under which the seller is able to have the property vacant during the escrow if the standard provision cannot be complied with. Continue reading
Q: The heavy rains this winter severely damaged the roof and interior of my house and although I have insurance coverage, how can I be sure that I recover all of the benefits I am entitled to under my insurance?
A: After a claim is reported to an insurance company, it will conduct an investigation to determine whether the claim is covered under the policy, and the nature and extent of benefits the policy holder is entitled to receive. But the person assigned to investigate or adjust the claim is hired by the insurance company and is required to follow the company’s policies in handling the claim, even if they limit the ultimate recovery by the insured. Continue reading
Q: I hired a landscaper knowing he did not have a contractor’s license and after I paid for several months of work at my house, I want to terminate the contract and recover all of the compensation I paid the landscaper. Can I retain the benefits of the work performed and also recover the amount I paid the landscaper, even though I knew he was unlicensed when I hired him?
A: Yes, although it seems unfair that a homeowner may retain the benefits of work performed by the landscaper even though the homeowner knew he was not licensed before the work began, section 7031 of California’s Business and Professions Code provides the hiring party with both a defensive shield against any claim for payment by the unlicensed contractor, and an affirmative sword to sue the unlicensed contractor for all compensation paid under the contract. Equitable defenses such as unclean hands, estoppel, unjust enrichment, and even claims of fraud by the hiring party, will normally not be available to the unlicensed contractor, even if they are based upon the hiring party’s prior knowledge of the unlicensed status. Continue reading
Q: Because my wife and I cannot afford the down payment on our first residence by ourselves, her father has offered to provide 100% of the down payment so long as he is a co-owner of the property and can share in any appreciation in value of the property, and we make all of the mortgage payments. What options do we have in specifying how the grant deed to the property should be prepared to provide my father-in-law with a recorded interest? Continue reading
Q: I need to sell my house with a short sale because I can no longer afford to pay the mortgage. But there is a cloud on the title in the form of a deed of trust that I paid off long ago to my brother, and he refuses to have the deed removed from the title. What can I do to get the title cleared of my brother’s deed so I can complete the short sale? Continue reading
Q: I am a first time home buyer and my agent mentioned that I may want to request “contingencies” in addition to those provided in the standard residential purchase agreement because of the characteristics of the type of homes we have been researching. What are contingencies and what should I consider in determining which contingencies to include in my offer? Continue reading
Q: I am considering selling my home and then purchasing a new home. Because of the amount of information I can obtain on the internet about selling and buying real property, do I really need a broker who I will have to pay a commission to?
A: It is not uncommon for many sellers and buyers of real property to have misconceived notions about the utility of using a broker to handle the selling and buying of real property, especially if they have not been involved in prior transactions. Some sellers believe that the broker’s function is limited to finding a buyer, and buyers tend to believe that the broker’s role is limited to finding a property. But such limited views do not recognize the many valuable functions that brokers can provide, and the benefit of a broker may not be realized until after serious and negative legal consequences have occurred. Continue reading
Q: I purchased a home that has a pool and the seller’s agent informed me that there did not appear to be any visual defects, and my own agent told me that he was not aware of any problems with the pool that I should insist on being repaired before the close of escrow, even though the pool was only half full of very dirty water and it did not appear to have the filter equipment operating for some time. I did not insist on filling the pool up or checking its operation and after I purchased the house, I learned that the overflow pipe discharged onto the slope below my house that is off my property, and the city has required me to install a sump pump overflow system at significant cost. Do I have any rights against the seller’s agent or my own agent? Continue reading
Q: I entered into a residential purchase agreement and during the contingency period, I determined that I would not be able to develop the property the way I want to because of the zoning restrictions. I gave timely notice to the seller of the exercise of my right to cancel the agreement, but the seller has refused to sign the document the escrow company says it needs to cancel the escrow and return my deposit. What can I do to get my deposit back?
A: In the California Association of Realtors residential purchase agreement (“RPA”), a buyer has a certain period of time to perform investigations of the property and provide the seller with a notice of the buyer’s cancellation of the contract. If the buyer gives written notice of cancellation pursuant to the rights of the buyer under the RPA, both the buyer and seller agree to sign mutual instructions to cancel the sale and escrow and release deposits back to the buyer, less the fees and costs incurred. The RPA provides that release of the funds will require mutual signed release instructions that are typically provided by the escrow company handling the transaction. Most escrow companies will require the execution of such instructions, in the form of amendments to the escrow, to disburse the funds being held by the escrow company event if it appears that the buyer has a clear right to the money on deposit. Continue reading