Legal Hotline

By Chris Darby, Tom Muldoon and John Nalls of Counselors Title, LLC, and Pardo & Drazin, LLC, General Counsel

QUESTION: I have a listing in Northwest District of Columbia, where the sellers are the trustees of the deceased owner, who held the property in a living trust. Since trustee sales are exempt from having to complete the Seller Disclosure Statement, the seller/ trustees did not complete one. However, a prospective buyer discovered a structural issue with the home and made us aware (with a written report). The sellers also got a second opinion and have that written report, which confirmed the issue.

Can you confirm that the sellers are still required to disclose this in writing (via report or otherwise) to any prospective buyers?

ANSWER: While the sellers may be exempt from filling out the property condition disclosure statement, they are still required to disclose ALL known material defects to any prospective buyer (this obligation always exists). QUESTION: If there were five tenants in a single-family house and they gave notice and left of their own accord this weekend, do they still have tenant rights (through the Tenant Opportunity to Purchase Act - TOPA)? The original lease was signed prior to March 31, 2018 BUT three new tenants moved in June 1, 2018, and a new lease was signed by all parties around May 21, 2018.

ANSWER: Provided the tenants left of their own volition prior to the property being listed (and there was no remaining term in the lease), and the seller didn’t otherwise evidence an intent to sell the property while the tenants occupied the property, there should be no continuing right of the tenants to receive TOPA notices/rights. That being said, it is always a good idea to run TOPA questions by your favorite settlement company so that they can get underwriter approval (to verify TOPA compliance).

QUESTION: If I'm representing a buyer on a contract with a For Sale By Owner listing in Maryland, do the dual/designated agency rules apply with the seller? I don't want liability for an unrepresented owner. What is the best course of action in this situation to mitigate issues?

ANSWER: Maryland Dual Agency (Dual and Designated Representation are the terms used under D.C. law) would not be applicable under the situation that you described because the seller is unrepresented. As an unrepresented party, the first thing you must do prior to engaging him or her is to disclose that you represent the buyer using GCAAR Form 1003 (“Understanding Whom Real Estate Agents Represent”). Once this disclosure is made, you may engage the seller, but the only assistance that you can permissibly provide is to perform ministerial acts, which are those that do not require any judgment or discretion on your part.

QUESTION: If a customer or client gets hurt or injured during a showing or open house, who is liable?

ANSWER: While there are a number of variables that could affect the issue of liability, unless a person at the property acted negligently or intentionally to cause the injury, any person who attends an open house is considered to be a “Business Invitee” of the owner and thus any injuries to them should be covered under the homeowner’s insurance of the property owner. The owner/ seller should confirm this with their insurance carrier prior to agreeing to have their agent conduct an open house. QUESTION: If a first-time Maryland buyer submits an offer on a Montgomery County property and as part of the offer, the first-time buyer offers to pay 100% of the "seller's" transfer and recordation taxes— including State Transfer taxes—and it is specifically written in to the contract as an express agreement between the buyer and the seller, and that contract is ratified, then does Maryland law prohibit the buyer from paying the state transfer tax portion of the seller's taxes?

ANSWER: Section 13-203(b)(3) of the Tax-Property Article of the Annotated Code of Maryland provides: “Notwithstanding any other provision of law, for a sale of improved residential real property to a first-time Maryland home buyer who will occupy the property as a principal residence, the rate of the transfer tax is 0.25% of the consideration payable for the instrument of writing and the transfer tax shall be paid entirely by the seller.” Accordingly, Maryland law does prohibit the buyer from paying the seller’s portion of the State Transfer Tax, if the buyer is a first-time Maryland home buyer. A common “workaround” in the situation where the parties truly wish for the seller to incur no financial impact of the transfer and recordation taxes, and buyer is a first-time Maryland homebuyer, would be to have the buyer agree to provide the seller with a closing cost credit of 0.25%, separate and apart from any agreement as to the Transfer and Recordation Taxes. With such an agreement, the State Transfer tax would still be collected from the seller as required by statute, but the seller would not be financially impacted by this requirement.

DISCLAIMER: The answers provided here are the opinion of the authors, are for informational purposes and are only for GCAAR members. Neither Counselors Title, LLC, nor Pardo & Drazin, LLC, is providing legal advice, but rather providing a general statement of law. No lawyer/client relationship is–or will be–established as a result of this material. Readers are encouraged to retain their own counsel for their specific questions. Answers may have been edited for formatting purposes.