Developments in REAL
ESTATE
TM
Volume 17, Issue 1 Seth G. Weissman, Editor
CFPB Investigating Zillow’s Premier Agent Co-Marketing Program By Seth G. Weissman
In a bit of a surprise, Zillow recently admitted that its co-marketing platform has been under investigation by the CFPB for the past two years. Under the program, a lender pays a portion of a real estate agent’s marketing expenses to Zillow by marketing together. Now if a real estate agent and loan officer are each paying half of the costs of the advertisement, and each roughly gets the same prominence and space in the advertisement, that should not be a problem. However, Continued on page 2
We Need to be Talking a Lot More about Cyber Crime By Seth G. Weissman In April of 2017, a buyer was purchasing a home for all cash in Atlanta. The buyer received wiring instructions from the closing attorney by regular email. Shortly thereafter, the buyer received follow-up email instructions from someone purporting to be the closing attorney informing the buyer of revised email instructions. Since the follow-up email was from someone who purported to be from the closing Continued on page 7
ALSO IN THIS ISSUE Understanding Your Tax Assessments Page 2 Challenges with Emotional Support Animals Page 3 New Trends Affecting Our Housing Market Page 4
CFPB Investigating Zillow’s Premier Agent Co-Marketing Program Continued from page 1
if a real estate agent is paying little or no cost of the advertising and receives the bulk of the marketing benefit, this may well be a violation of Section 8 of RESPA. This situation is a great example of a faulty assumption which people sometimes make – just because a big company is doing something, doesn’t always make it legal. There are two things which are particularly unsettling about the CFPB investigation. The first is if a RESPA violation has occurred here, both the lender and the real estate agent have potential liability. Under RESPA, co-marketing agreements are allowed. However, if both parties are not proportionately sharing in the cost of the marketing effort (in this case, an advertisement), it can be argued that the disproportionate payment by the lender to the real estate agent is an illegal payment for the referral of settlement services business in violation of RESPA. Since it is illegal to pay for the referral of settlement services business and to receive a payment for the referral of such services, both the real estate agent and the lender are at risk of having been found to have violated RESPA. The second disconcerting aspect to this investigation is that if the CFPB is investigating Zillow, it likely means that it already has records of all of the parties involved in such co-marketing agreements. Again, this means that anyone participating in Zillow’s Premier Agent Co-Marketing Program is at risk. Giving an endorsement of the lender in the advertisement in exchange for the lender paying a greater share of the advertisement likely makes things worse, not better. Again, whenever a lender is subsidizing more than his or her pro rata share or fair market value of the advertisement, the agent(s) receiving the benefit have exposure to a RESPA claim. While the CFPB has not made any initial ruling, agents participating in these programs need to proceed cautiously. The safest approach is to make sure that all participants of co-marketing arrangements are paying their proportional share of any advertising.
Understanding Your Tax Assessments By Allie Jett ‘Tis the season for property owners to receive their Annual Notice of
can be appealed by any person or entity who owns the property by the
Tax Assessment from their county’s Board of Tax Assessors (BTA). Every
date listed on the Notice of Assessment. Tax Appeals are filed directly with
owner is encouraged to be on the lookout for this notice as it will tell you
the BTA. The property owner can file their own appeal or hire an attorney
what valuation the county is applying to your property for purposes of
to assist them or non-attorney tax specialists. When considering whether
calculating the current year’s property taxes. In Fulton County especially,
the cost of hiring a third party makes financial sense, remember that the
there has been considerable press about the significant increases in
value set as a result of your tax appeal not only impacts the current year,
assessment valuations over last year’s values. While in some cases this
but can also be locked in for the next two years as well.
may be a situation of the assessed values catching up with actual fair market values, there will undoubtedly be a number of properties whose
If you do appeal your tax assessment, it is unlikely that your appeal will
increased valuation is not supported by facts.
be fully resolved by the time tax bills go out later this summer. In that case you will receive a ‘temporary tax bill’ based on 85% of the valuation listed
There has been some political pressure building against the BTA, even to
in your Notice of Assessment. The idea is that you pay that amount and
the point of the Atlanta City Council passing a resolution the week of June
depending on the results of your appeal, you will get a small final bill (if
5 to ask the BTA to reconsider finalizing their tax digest and requesting
your appeal resulted in a less than 15% reduction in your assessed value)
reassessment. The Council’s request was considered at the June 8 BTA
or a refund (if your appeal resulted in a greater than 15% reduction in
meeting, but a decision has been tabled until a meeting on June 15. We
your assessed value). It is important that you continue to pay the taxes
encourage everyone to be on the lookout for the results of that meeting.
during the appeal to maintain your standing. Also, it is advisable, if your mortgage company escrows for your taxes to let them know that you
In absence of a decision by the BTA to rescind their already issued Notices
are appealing your taxes. This is to ensure that they are on the lookout
of Assessment, all property owners should consider the value on their As-
if they do receive an additional tax bill after the temporary bill and that
sessment Notice to be the official word of the BTA. However, those values
they ensure it is timely paid.
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Challenges with Emotional Support Animals By Seth G. Weissman Persons with disabilities
handicapped person in need of
or handicaps (including
an emotional support animal.
psychiatric problems) are
While most housing providers
protected under the Fair
want to make reasonable
Housing Amendments Act of
accommodations for persons
1988. Discriminating against
with legitimate handicaps, it can
such persons is the same as
be frustrating to such providers
discriminating on the basis
when persons with questionable
of race, color, sex, national
handicaps subvert the law to
origin, religion or familial
keep pets which might otherwise
status.
be prohibited in a house or
The law requires
housing providers to make
community.
reasonable accommodations to afford handicapped persons
Does this give housing
equal opportunity to use
providers the right to question
and enjoy a dwelling. This
the documentation of the
requirement also applies to
handicapped person or prohibit
any homeowners association which might provide amenities to the residents of a community. So what does this all have to do with emotional support animals? Well, let’s say that a community association has an older swimming pool which
The law is the law and until the law is changed, the only safe answer is to allow handicapped persons with psychiatric needs the right to keep emotional support animals.
does not have a handicap
emotional support animals? The answer is an unqualified “no.” The law is the law and until the law is changed, the only safe answer is to allow handicapped persons with psychiatric needs the right to keep emotional support animals. To date, HUD has been less
ramp leading to the pool. A handicapped owner requests that she be
than sympathetic toward any effort to restrict emotional support animals.
permitted at her own expense to build such a ramp. The community
So, for example, in January of 2017, the U.S. Attorney’s Office filed a
association would have a duty to allow the owner, at her expense, to build
complaint against the Kips Bay Towers Condominium, Inc. alleging that
such a ramp as a reasonable accommodation to the handicapped person.
a condominium board in New York City violated the Fair Housing Act on the basis of handicap or disability by refusing to allow several residents
Similarly, a condominium association which prohibited pets would
with psychiatric disabilities to live with emotional support dogs in the
need to allow service dogs and emotional support pets as a reasonable
condominium units.
accommodation to handicapped persons with physical or mental disabilities.
At least two other lawsuits have been filed by the United States in 2017 over “assistance” or “emotional support animals.” HUD appears to be
The problem in this area is that it is increasingly easy for persons
sending a clear signal that it sees the benefits of the law as far outweighing
without psychiatric problems (or without severe psychiatric problems)
any abuse in this area and that it stands fully prepared to enforce the law
to buy documentation on-line which allows them to be classified as a
as written.
Developments in Real Estate™
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New Trends Affecting Our Housing Market By Seth G. Weissman
We are often so busy getting our day-to-day work done, we often
put, not being able to replicate what they have at anywhere near the
don’t see the bigger picture trends taking place that affect the market
same price. While many would prefer to downsize, doing so is now
in which we operate.
more of a lifestyle choice than a way to save money.
The good news is that the Atlanta region
Atlanta has always been a linear
is anticipated to continue to grow at
city with Peachtree Street being
a very healthy pace and be a great
the spine of our city. Our region
city for real estate development and
has no geographical limits to
sales. The bad news for consumers is
growth and growth will continue
that affordable housing is increasingly
in all directions in our region.
hard to find except in far out suburban
Nevertheless, the Georgia 400
locations. REALTORSÂŽ who used to
corridor will likely remain the
work in one geographical area are
extension of our linear city with
reporting a need to sell in much broader
some of the most intense and
locales. In part, this is because some
expensive development in our
neighborhoods simply no longer have
region occurring along that
affordable housing options for first time
corridor.
buyers. Additionally, with the limited housing inventory available in the market, REALTORSÂŽ are selling in
Set forth below are some of the more important trends that will affect
a broader market to maximize their revenue.
people in the real estate business.
The lack of affordable housing comes at a time when the millennials finally appear committed to buying houses rather than leasing them. While many millennials express a desire to live in urban, walkable
Homeowners are staying in their homes longer.
neighborhoods, the majority of them are continuing to opt for more
Homeowners are selling their homes two and a half times less often
affordable suburban locations.
than they did just a few years ago. Homeowners are staying put longer than they did in 2007, from 6 to 9 years. Even worse, new buyers
Part of the challenge of our housing market is that land and construction
plan to stay put for 15 years or even longer. The decline in mobility
costs have risen so quickly that many sellers have opted to simply stay
is pervasive across all age, demographic and socioeconomic groups.
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Our homes are becoming less affordable. Affordability used to be Atlanta’s calling card, an attractive development lure for relocating businesses and job seekers. The Atlanta Regional Commission, though, recently reported that the cost of living here is just above average compared to the nation’s 270 metropolitan areas. Atlanta is now no less or more expensive than the average American city. The surge in housing and transportation costs largely explains Atlanta’s rising
25 years, the region’s Hispanic population is
cost of living.
expected to grow from 694,000 in 2015 to 1.75 million in 2040. Four of our region’s 10 county area (Douglas, Gwinnett, Henry
Our region is aging.
and Rockdale) switched from majority white to
In 2016, it was reported that Atlanta
There are fewer children in metro Atlanta, with
is America’s No. 1 rapidly aging
a precipitous drop of households with residents
city. Atlanta’s senior population
1-17. Our region is generally better educated
grew 20 percent between 2010
and wealthier than it was in the past and this
and 2014, well above the 11.3
trend should continue.
majority non-white between 2000 and 2013.
percent increase seen across the country’s 53 largest metropolitan areas.
Our region will grow tremendously over the next 25 years. The City of Atlanta’s population is estimated to be roughly 475,000
Walkable Urban Communities are increasingly popular. Walkable urban places are attracting an increasing share of new development. While many of these areas are in downtown Atlanta, Continued on next page
people in 2017. Our region’s population is estimated to be 5,800,000 people. Over the next 25 years, our region is expected to grow by some 2,500,000 people. This is the equivalent of 5 cities the size of Atlanta being added to our region. Where these people will live and the effects on our infrastructure are of great concern. Outer suburbs will grow the fastest. Gwinnett County will likely overtake Fulton County as our region’s most populous county. Forsyth County will be at the epicenter of the population boom.
Our region will continue to become more diverse. The 20-county Atlanta region will continue to become more diverse, driven by a huge anticipated increase in the Hispanic population. Over the next Developments in Real Estate™
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New Trends Affecting Our Housing Market Continued from previous page
suburban town centers are increasingly being redeveloped to accommodate walkable land uses where the predominant residential uses are higher density apartments, townhomes and condominiums. There is yet the transportation infrastructure to connect these areas so walkability is often defined in terms of places where Atlantans drive to so that they can then walk. Many cities are now looking to create their own versions of Atlanta’s BeltLine with housing along walkable pedestrian trails being seen as having a premium.
Driverless vehicles will likely be widely in use within 10 years. Elon Musk, CEO of Tesla, estimates that “five or six years from now we will be able to achieve true autonomous driving where you could literally get in the car, go to sleep and wake up at your destination.� He then added 2 to 3 years for regulatory approval. This will likely revolutionize where and how we live and what our houses will look like. This may lead to a world where people can live even further away from work and use their commuting time to work, sleep, read, watch TV and enjoy other pursuits not previously available to commuters. Whether people own a car or simply call a car when it is needed is also unclear. In urban areas, garages and parking structures may be converted to alternative uses.
Technology will Continue to Make it Easier for Buyers to do Their Own Research Technology will only make it easier for buyers to do online research and evaluate neighborhoods, houses and financing options without the assistance of a real estate agent. Yet the number of buyers purchasing a home through a real estate agent has steadily increased from 69% in 2001 to 87% today. The question is what value do consumers see in hiring a real estate broker today and how will that value proposition change over time.
Millennials Are Finally Buying Homes First time buyers are rushing to buy homes after a decade on the sidelines. In a shift, new households are overwhelmingly choosing to buy rather than rent. Some 854,000 new owner households were formed during the first three months of 2017, with only 365,000 new renter households formed during the same period. The number of new homes smaller than 2,250 square feet, indicating that they are in the starter range, is increasing.
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We Need to be Talking a Lot More about Cyber Crime Continued from page 1
attorney’s website, the buyer complied. Little did the buyer know that a cyber-criminal had assumed the identity of the closing attorney and sent the buyer wiring instructions that directed the purchase price to be sent to the cyber-criminal. Several hundred thousand dollars was wired to a criminal. Does the story have a happy ending? Amazingly, while the answer to this question is “yes” mostly due to good luck, we are now regularly seeing horror stories where large sums of money are virtually disappearing with the click of a keystroke. So how did the above story have a happy ending? The second wire was sent late in the day. The buyers realized their mistake, went to the bank, and were able to have their bank reverse the wire. It doesn’t always happen that way and in many cases, it is the exception to the rule. Cyber criminals have gotten very good at assuming the identities of real estate brokers, closing attorneys and mortgage lenders. We
We are now regularly seeing horror stories where large sums of money are virtually disappearing with the click of a keystroke.
suspect they troll the internet data highway looking for key words which might lead them to a real estate transaction
authenticity of wiring instructions, never call the telephone number on the
where monies are to be wired. They then assume the identity of the legitimate
wiring instructions themselves since you may be getting an “all is well”
company which sent the original wiring instructions and send revised wiring
verification from the cyber-criminal themselves!
instructions. Many unsuspecting consumers comply and send money to the criminals. We even recently heard of a case where the cyber criminal
Buyers should be reminded to independently look up the telephone number
assumed the identity of a financial counselor advising the seller on what to
of the company sending the wiring instructions to confirm the authenticity
do with seller proceeds from a real estate closing who convinced the seller
of the wiring instructions. Cyber-criminals have found fertile ground in
to wire the funds to the cyber criminal’s account.
stealing money from real estate transactions. Only vigilance on all of our parts will stop these crimes from occurring.
The best way we can prevent this is to constantly remind our buyer (and now apparently seller) customers and clients of the risks in this area.
Buyers who have lost money should do two things. First, they should go to
Builders, mortgage lenders, closing attorneys and real estate brokers
the bank and see if a wire sent to a criminal can be undone. Second, the
are increasingly using written warnings in their contracts and in other
FBI has a cyber-crime division. If a client or customer has been victimized,
interactions with buyers to advise them of the risks in this area. Wiring
have them call the local FBI office and ask for the cyber crime supervisor.
instructions should not be sent except through encrypted messaging where a buyer has to log on to receive the wiring instructions. Of course, just
If you have any questions regarding your transactions, please contact your
because the initial wiring instructions are sent through encryption does
Weissman PC attorney who will be happy to update you on how our firm is
not mean that a cyber-criminal cannot send an encrypted email asking
battling this cyber-crime.
buyers to log on to receive revised wiring instructions. We are increasingly moving to a world where wiring instructions sent by email cannot be trusted and where independent verification of the same is required by calling the company who sent the wiring instructions. Of course, in confirming the
Developments in Real Estate™
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About the Editor
Weissman Offices
SETH G. WEISSMAN Seth Weissman represents developers, builders, investors and real estate brokers. He is co-author of The Red Book on Real Estate Contracts in Georgia, Secrets of Winning the Real Estate Negotiation Game, and Zoning and Land Use Law in Georgia. The Red Book is a highly regarded legal reference used by real estate brokers and agents. As general counsel to Georgia REALTORS®, Seth drafts the standard real estate forms used by REALTORS® throughout Georgia. In addition to a law degree, Seth has a master’s degree in city and regional planning and is a Professor of City Planning in the College of Architecture at the Georgia Institute of Technology. Seth has used this additional knowledge to draft the legal documents for complex real estate developments, including vertical and horizontal mixed-use developments, residential condominiums, office condominiums, master planned communities, senior communities and themed developments. As a result, he is considered a leading authority on new urbanism. You may reach Seth at seth@weissman.law or at 404-926-4505.
This Issue’s Contributor ALLIE JETT Allie Jett is a partner at Weissman PC and serves as General Counsel for the Georgia Association of Tax Officials. She represents individual and corporate clients in a wide range of real estate-related disputes on both the trial and appellate level and has extensive experience in litigating contract, title to real property, ad valorem property tax, probate estate, and boundary/easement disputes. Allie often provides title insurance claims and coverage counseling and represents title insurance companies and their insured. A frequent lecturer and presenter on real estate related subjects, her topics focus primarily on issues related to title litigation and ad valorem property taxation. Allie is co-editor of the Georgia Property Tax Law Blog (www.georgiapropertytaxlaw.com). Contact her at alliej@weissman.law or 404-926-4626.
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Buckhead One Alliance Center, 4th Floor 3500 Lenox Road Atlanta, Georgia 30326 404-926-4500 Fax: 404-926-4600 email: buckhead@weissman.law
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Cumming 1080 Sanders Road, Suite 300 Cumming, Georgia 30041 404-279-4080 Fax: 404-279-4180 email: cumming@weissman.law
♦ East Cobb 1225 Johnson Ferry Road Suite 100 Marietta, Georgia 30068 404-279-4020 Fax: 404-279-4120 email: ecobb@weissman.law ♦
Gainesville 322 Oak Street, Suite 1 Gainesville, Georgia 30501 678-971-4664 Fax: 678-971-4662 email: gainesville@weissman.law
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McDonough 1935 Pennsylvania Avenue McDonough, Georgia 30253 770-632-2715 Fax: 770-632-2716 email: mcdonough@weissman.law
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Midtown 999 Peachtree Street, NE Suite 525 Atlanta, Georgia 30309 404-279-4075 Fax: 404-279-4175 email: midtown@weissman.law
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North Fulton 11675 Rainwater Drive, Suite 150 Alpharetta, Georgia 30009 404-279-4040 Fax: 404-279-4140 email: northfulton@weissman.law
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Peachtree City 500 Westpark Drive, Suite 150 Peachtree City, Georgia 30269 770-632-2715 Fax: 770-632-2716 email: peachtreecity@weissman.law
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Perimeter 5909 Peachtree Dunwoody Road Building D, Suite 820 Atlanta, Georgia 30328 404-926-4990 Fax: 404-926-4871 email: perimeter@weissman.law
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Sugarloaf 1745 North Brown Road, Suite 100 Lawrenceville, Georgia 30043 404-279-4050 Fax: 404-279-4150 email: sugarloaf@weissman.law
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West Cobb 3475 Dallas Highway, Suite 510 Marietta, Georgia 30064 404-279-4015 Fax: 404-279-4115 email: westcobb@weissman.law
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Woodstock 1198 Buckhead Crossing, Suite B Woodstock, Georgia 30189 404-279-4010 Fax: 404-279-4110 email: woodstock@weissman.law
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85 North 6750 Highway 53, Suite 105 Braselton, GA 30517 404-926-4698 Fax: 404-926-4898 email: 85north@weissman.law
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WEISSMAN PC is a full-service real estate, business and litigation law WEISSMAN, NOWACK, CURRY & WILCO is a and full-service real estate, firm. Our areas of specialty include residential commercial real estate business and litigation law firm. areasrepresentation, of specialty include residential closings, developer, investor andOur builder title services, andreal commercial real estate closings, and builder representation, estate brokerage, zoning and developer land use, environmental, real estate title services, condominium and homeowner law, real estate litigation, default and financial services association litigation, and insurance zoning and land use, real estate litigation, insurance defense brokerage,defense. Weissman has offices throughout metro Atlanta. and insurancePlease coverage. WNCW has offices throughout metro Atlanta and visit us at www.weissman.law. in Miami, Florida. Please visit us at www.wncwlaw.com.
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