Legal Quiz: Popular Q&As

true OR false

Are you up for a quick challenge? Take Forms Guy’s latest quiz in the privacy of your own office. It’s a 10-question true/ false test based on recent Q&As on subjects including disclosure, advertising and, of course, forms. May The Force be with you!

BY: WILL MARTIN | GENERAL COUNSEL

1. According to an article appearing in the Real Estate Commission’s May 2016 Real Estate Bulletin entitled “Brokers: Do Not Require Closing Attorneys to Disburse Commissions,” it is not okay to ask the closing attorney to split up the commission between the listing and cooperating firms and their individual agents.

True False

2. If a broker is taking a listing on a 4-bedroom house that is on a septic system, but can’t confirm the number of bedrooms permitted by the system because the county’s records don’t go back that far, it’s okay to advertise it as a four-bedroom without doing anything else.

True False

3. A buyer agent may always rely on the listing agent’s reported square footage of a property being purchased by the buyer agent’s client.

True False

4. A seller under contract using the Offer to Purchase and Contract may use email to notify the buyer, through the buyer agent, to deliver immediately available funds within one banking day if the Due Diligence Fee or Initial Earnest Money Deposit hasn’t been timely delivered.

True False

5. It would be permissible for a REALTOR® to advertise another broker’s listing in a postcard mailing without authorization from the other broker so long as the other broker is identified in the postcard as the listing agent.

True False

6. It’s okay to leave the Notice Information section of the Offer to Purchase and Contract blank.

True False

7. If a property is under contract but the Initial Earnest Money Deposit hasn’t been timely delivered, the seller may terminate the contract immediately and sign a contract with another buyer.

True False

8. It’s acceptable for a broker’s client to cross out the “Delay in Settlement/Closing” paragraph (paragraph 13) in the Offer to Purchase and Contract.

True False

9. According to the Offer to Purchase and Contract, bathroom wall mirrors are fixtures regardless of how they are attached.

True False

10. A drone can be used for commercial purposes only if the operator gets a "Section 333 waiver" from the Federal Aviation Administration.

True False

HOW DID YOU DO?

To access the full Q&A on each test question, see the reference at the end of the answer. Simply go to “Archived Q&As” on the Legal Department page of ncrealtors.org and click on the appropriate category.

answers:

1. TRUE. As stated in the Bulletin article, this practice puts the closing attorney in potential jeopardy of paying an unlicensed firm or agent, which is a criminal act, or improperly dividing a fee due to incomplete or inaccurate information. However, it is still permissible for brokers to ask the closing attorney to write checks out of the closing proceeds to the listing firm and the selling firm. (5/17/2016—Fees/Commissions)

2. FALSE. A broker has a duty to take reasonable steps to make sure that the septic system has the capacity to support four bedrooms before advertising the property as having four bedrooms. Checking the county’s permit records is important, but the broker should also check the tax records. If the tax records show it as a four-bedroom house, and you do not have reason to believe otherwise, it is a good indicator that the septic system was permitted for four bedrooms when the home was built. You should also disclose to potential buyers that the permit for the septic system cannot be located. (5/24/16—Advertising)

3. FALSE. According to the Real Estate Commission’s Residential Square Footage Guidelines, as a general rule, an agent working with a buyer may rely on the listing agent’s square footage representations. However, if there is a “red flag” that would lead a reasonably prudent agent to question the accuracy of the reported square footage, the buyer agent should promptly point out the suspected error to the buyer and the listing agent. (5/31/16—Real Estate License Law & Rules)

4. TRUE, assuming the buyer agent’s email address appears in the Notice Information section of the Contract. Paragraph 21 states that any action between the parties relating to the transaction may be conducted by electronic means, including any notice or communication. Paragraph 21 also provides that any such communication may be transmitted to any email address set forth in the Notice Information section, and that it may be given to a party or to that party’s agent. (6/21/16—Forms/Offer to Purchase and Contract)

5. FALSE. A REALTOR® may not advertise property without authority. See Standard of Practice 12-4 in the REALTOR® Code of Ethics and Case Interpretation 12-16 in NAR’s Code of Ethics and Arbitration Manual. Also note that the authorization to advertise another REALTOR®’s listings on an IDX site does not extend to non-IDX advertising. (6/28/16—Advertising)

6. FALSE. Leaving the contact information on page 11 blank is sloppy and should be avoided. Paragraph 21 of the Contract states that “[a]ny written notice or communication may be transmitted to any mailing address, e-mail address or fax number set forth in the “Notice Information” section” on page 11. If no contact information for either of the parties or their agents has been filled in, it could raise a legal question as to whether a notice has been effectively sent. Not providing email addresses or other contact information for the buyer and seller is understandable. But there is no excuse for failing to fill in contact information for the agents. (7/05/16—Forms/Offer to Purchase and Contract)

7. FALSE. Although the seller can terminate the contract, he can’t do it immediately. Instead, the seller must follow the two-step process set forth in the Contract. According to paragraph 1(d), the buyer has one banking day following written notice to deliver “immediately available funds” (i.e., cash, wire transfer, certified check, etc.) to the payee. If such funds are not timely delivered, the seller may then terminate the contract by written notice to the buyer. (7/26/16—Forms/Contract-related Forms (300 Series)

8. TRUE, but it’s a lousy idea because unless time is made “of the essence” regarding closing, it leaves it up in the air as to how long a delaying party may have to close. A party to a transaction, unlike his or her broker, can make changes to the pre-printed content of the Contract. The broker should send the client an email confirming that the change was the client’s idea and that the broker recommended the client consult with an attorney just in case a question comes up later about who was responsible for making the change. (8/09/16—Real Estate License Law & Rules)

9. TRUE. In the July 2016 version of the Contract, “bathroom wall mirrors” has been added to the laundry list of items specified as fixtures in paragraph 2(b). Any other mirror will be considered a fixture only if it is attached to the wall in a more permanent way. If the parties have a different understanding about whether a particular mirror will stay or go, they can and should provide otherwise in paragraph 2(d) or 3, as appropriate. (8/16/16— Forms/Offer to Purchase and Contract)

10. FALSE. The FAA announced a new "Small Unmanned Aircraft Rule" effective on August 29, 2016 that allows the use of drones weighing less than 55 pounds for commercial purposes without first obtaining a Section 333 waiver. The new rule requires an operator to obtain a certificate and contains many restrictions on when and how drones can be used. An operator using a drone for commercial purposes must also obtain a permit from the NC Division of Aviation. (8/23/16—Other Laws & Rules)

STUDY HARD

If you’re not doing so already, be sure to read the Q&As that appear in the REALTOR® Report every Wednesday afternoon. It’ll help you on the next quiz!