(Daniel, Please insert Sect. 12 - 00 Beginning Slide)
Chapter 12 - Practices and the Law
Advertising Regulations
The State does not require licensees or firms to send in copies of their ads for approval. The State does
monitor ads on a sporadic basis and certainly investigates complaints by consumers regarding
advertising.
Basic requirements by the Federal Government and the State have to be met regarding the use of
advertising for specific forms of real estate activities. The exception is when a licensee is leasing or
selling his or her own property and discloses the license in the ad. Example: "Licensed agent wishes to
sell property in Carnation."
Blind Ads - When advertising on behalf of clients, a broker/firm must include the name of the licensee
sponsoring the ad. If this does not appear, it is call a blind ad and illegal.
Franchise Ads - When a broker is associated with a National Franchise Firm, the advertisement can
utilize the franchise name, BUT must also specify the name of the licensee on file with the State.
Deceptive Ads - No ad can imply that the real estate firm is a research firm, publicly owned agency, or
non-profit organization. Example" "We participate on behalf of the United Good Neighbors
Organization."
Advertising in the Name of Another - A licensee cannot advertise in the name of a DBA or outside
firm without the permission of the Director. If the Director grants permission for a DBA, the Director
will make sure that it is not deceptive or similar to a competing firm.
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Advertising - Use of the Internet
The same rules that we discussed above about advertising would also prove true on Internet or Web
Page advertising as well.
No Blind Advertising - The Web Page must include the name of the firm the licensee is registered with
as well as the office location; city, and State.
Franchise Ads - A firm must use the name that it has registered with the Department of Licensing and
the main office location; city and state.
(On the next page please insert slides - 002 & 002A)
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No Deceptive Pages
Full Disclosure - All forms of Internet contact with the public must include full disclosure of the
information on file with the Department of Licensing. This would include communication such as email,
chat rooms, discussion lists, news groupings, bulletin boards, information links, etc.
1. Exception - If disclosure is provided on pages prior to going to these areas of the Web Site, the
disclosure is not required a second time.
Banner Ads - A banner (normal) ad on the Web Site or another Web Site must have a single click link
to the Disclosure Page. The only exception is if disclosure is provided in the Banner ad.
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Timely Use of the Internet
Use of the Internet must be kept up-to-date by the licensee.
Listings - A broker/firm must remove listings that are no longer valid in a timely manner. Former
listings cannot be used as a "come-on" to obtain possible buyers. All invalid listings must be removed
from the Web Site as well as 3rd party Web Sites in the timely manner.
Other Firm’s Listings - A broker/firm cannot advertise listings of competing firms UNLESS gaining
permission from the listing firm.
No Misleading Advertising - A broker/firm cannot utilize advertising that is deemed misleading. It will
be the Department of Licensing that will determine if a Web Page is misleading.
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Competitive Market Analysis (CMA)
CMA - When working with a seller, a licensee can help the seller determine the sale or listing price of
the property by using a competitive market analysis or CMA. This is done by comparing the prices of
properties that sold, properties up for sale, and those properties that did not sell. Comparisons have to
utilize properties that are similar in location, size, age, style, and amenities to the seller’s property. This
process is similar to an appraisal, but it is far less formal and does not take into consideration other
considerations that a licensed appraiser would use.
Furthermore, an appraiser will not utilize the offering price of similar homes in an area. An appraiser
will not utilize the price of similar homes that did not sell in an area. The appraiser will only use the
price that homes have sold for in a given area.
Market Value (Price) - The market price is the most probable price the property would be sold for
under normal conditions on the open market. Hopefully, the CMA that you come up with will be in the
right price range. The market price will be the starting point from which buyers will come forward with
an offer.
Assessed Value - The assessed value is the amount of value that the county will base its property tax on.
Since assessments are not completed by the County each year, the assessed value is usually lower than
the CMA that you would come up with.
Appraised Value - When an appraiser comes out, his/her appraisal value might be lower, at, or below
the CMA market price that you came up with. Hopefully, it will be around the same value as you
determined. Remember, appraised value will be based on actual sales in the area the property is located
in.
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Listing Agreements
Types of Listing Agreements - The following are the different types of listing agreements that a
seller and managing broker can enter into.
Listing Rule - The more likely the managing broker is to receive a commission, the more
likely the managing broker will spend time on promotion and advertising.
1.
Open Listing - An open listing (open season) is exactly that. All licensed
managing brokers in the State as well as the owner have the right to sell the
property. The listing is OPEN. A commission is only paid to a managing broker if
that managing broker sells the property. No amount of commission is paid to any
other managing broker.
No Commission - The owner does not have to pay a commission if the owner
sells the property himself/herself.
Unilateral - This is our unilateral (one-sided) contract that we discussed earlier.
The managing broker is not required to perform. He/she simply promises to try to
find willing and able buyers. The seller must perform if the managing broker finds
that buyer.
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Forms of Listing Agreements
2.
Exclusive Agency Listing - Only one managing broker has the right to sell the
property as the seller’s agent and receive a commission. Only one managing
broker is the "exclusive agent". A managing broker is more willing to pursue
advertising and promotion if he/she knows that if anyone other than the owner
sells the property, the managing broker will receive a commission.
Owner Can Sell - Under the exclusive agency agreement the owner, the
principal, retains right to sell the property themselves and pay no commission to
the exclusive managing broker. The owner must sell to a person that was not
contacted by, referred by, or solicited by the managing broker.
Problems - The seller cannot interfere with the managing broker's agency efforts.
The seller cannot infringe on the managing broker’s contacts. Example: The
managing broker holds an open house for the seller with lots of people walking
through. If any of these people come back to the seller/owner and want to buy, the
seller would have to pay the managing broker a commission. Some sellers don’t
want to pay a commission under this scenario.
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Forms of Listing Agreements
3.
Exclusive Right to Sell / MLS Form - This is the most common form of agency
listing. This is the listing form utilized by the MLS member managing brokers. In
order to be listed on the MLS, the listing must be in this form. There is only one
managing broker that has the exclusive right to commission for a stated period.
The managing broker receives a commission no matter who sells the property
during the listing agreement period.
Owner Sale - The owner cannot avoid paying a commission if a sale occurs or
could have occurred. Even if the seller sells the property, a commission is due the
managing broker. Even if the seller decides to take the property off the market, a
commission might still have to be paid.
Example: Managing Broker V has an Exclusive Right to Sell listing
agreement with client H. V brings a buyer who is willing to pay the full
asking price for the listed property of H. H now owes a commission to V.
If H doesn’t sell the house, H stills owes a commission. The broker
performed, the seller did not.
Commission - As long as the broker performs his/her requirements under this
listing agreement to bring a willing and able buyer paying the asking price, a
commission is owed the broker.
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Mold Explained
Molds are part of the natural environment. Molds reproduce by means of tiny spores; the spores are
invisible to the naked eye and flow through outdoor and indoor air. Mold may begin growing indoors
when mold spores land on surfaces that are wet. There are many types of mold, and none of them will
grow without water or moisture.
Concentration of mold spores in the air can cause toxic damage to the human lungs when breathing the
air. In addition, the mold spores inside the lungs can then cause toxin levels to go into the body.
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Indoor Air Quality or IAQ
The Department developed these guidelines to promote practices that prevent or reduce the
contamination of indoor air, thereby contributing to a safe, healthy, productive, and comfortable
environment for building occupants. Benefits of good IAQ may include improved health of occupants,
decrease in the spread of infectious disease, protection of susceptible populations, increased productivity
of occupants, improved relationships/fewer complaints, reduction in potential building closures and
relocation of occupants, less deterioration of buildings and equipment, reduced maintenance costs, and
decreased liability and risk.
Mold is Material Information
Known material information must be disclosed in a transaction.
Seller - Seller must disclosed defects to the buyer on Form 17 Seller’s Disclosure Form.
Licensee - If a licensee is aware of material defects such as Mold, the licensee must divulge such
information to the involved principals.
NOTE: Concealment or misrepresentation of a material fact by a licensee will
cause action by the DOL.
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Disclosure Practices - Tenant / Landlord
Mold Disclosure
To minimize the occurrence and growth of mold in the Leased Premises, Tenant hereby agrees to the
following:
1. Moisture Accumulation
Resident shall remove any visible moisture accumulation in or on the Leased Premises, including on
walls, windows, floors, ceilings, and bathroom fixtures; mop up spills and thoroughly dry affected area
as soon as possible after occurrence; use exhaust fans in kitchen and bathroom when necessary; and
keep climate and moisture in the Leased Premises at reasonable levels.
2. Apartment Cleanliness
Resident shall clean and dust the Leased Premises regularly, and shall keep the Leased Premises,
particularly kitchen and bath, clean.
3. Notification Of Management
Resident shall promptly notify management in writing of the presence of the following:
(i) A water leak, excessive moisture, or standing water inside the Leased Premises;
(ii) A water leak, excessive moisture, or standing water in any community common area;
(iii) Mold growth in or on the Leased Premises that persists after the resident has tried several times to
remove it with household cleaning solution, such as Lysol or Pine-Sol disinfectants, Tilex Mildew
Remover, or Clorox, or a combination of water and bleach;
(iv) A malfunction in any part of the heating, air conditioning, or ventilation system in the Leased
Premises.
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Mold - Lease Addendum
4. Liability
Resident shall be liable to Owner for damages sustained to the Leased Premises or to Resident’s person
or property as a result of Resident’s failure to comply with the terms of this Addendum.
5. Violation Of Addendum
Violation of the Addendum shall be deemed a material violation under the terms of the Lease, and
Owner shall be entitled to exercise all rights and remedies it possesses against Resident at law or in
equity.
6. Addendum Supersedes Lease
In case of a conflict between the provisions of this Addendum and any other provisions of the Lease, the
provisions of the Addendum shall govern. This LEASE ADDENDUM ON MOLD is incorporated into
the lease executed or renewed on _________________day of _________________, 20_______ between
Owner and Tenant.
(date) ( month) (year)
DATED this _________________day of _________________, 20_______ .
(date) (m onth) (year)
__________________________________________ _______________________________________________
Owner/Agent Tenant
_______________________________________________
Tenant
_______________________________________________
Tenant
LEASE ADDENDUM ON MOLD
Lease Addendum on Mold
Revised 10/2005
Reviewed 1/2009
Owner/Agent and Tenant are each advised to seek independent legal advice on matters arising from use of this form.
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Lead Paint Disclosure
FEDERAL LEAD-BASED PAINT HAZARD REDUCTION ACT
Buyer Requirements - The Act requires the lead-based statement to be signed by the purchaser/buyer
acknowledging that he/she:
1. Read Statement - The buyer has read and understands the Lead Warning Statement.
2. Received Pamphlet - The buyer received the lead hazard pamphlet.
3. 10-Day Inspection - The buyer was given the required 10-day (unless otherwise agreed to)
opportunity to conduct risk assessment or inspection of the property.
Real Estate Licensee - If a real estate agent/licensee is contracted on the sale, he/she is required to
ensure that his/her client complies with this law. The licensee cannot FORCE the client to comply. The
licensee must make sure that the client is aware of their responsibilities under this Federal Regulation.
Licensee - If a licensee is aware of "material" defects such as Lead Paint, the licensee must divulge such
information to the involved principals.
NOTE: Concealment or misrepresentation of a material fact by a licensee will
cause action by the DOL.
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Lead Paint - MLS Form 17
On the Sellers Disclosure Form 17, the following questions are answered by the seller for a home that
was constructed in 1978 or earlier:
For Section A, the seller either checks that lead paint is known OR checks that lead paint is not known.
For Section B, the seller states and/or provides existing reports or records regarding the lead paint and its
status OR states that no reports or records are available.
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Seller’s Disclosure Form 17
Environmental Disclosure MLS Form 17
:
First of all, you are not required to look up any of these questions regarding environmental
considerations. You are a marketer and not an investigator.
7. Environmental considerations are important for the well being of the buyer.
Section A - Standing water and moisture is the cause of Mold. Answering "Yes" to this question is a red
flag.
Section B - Fill material question. If the property has fill material it could contain toxic dump material
and/or unstable land for support of the subject home.
Section C - Past damage that has not been corrected is important. This is especially true for fire damage
and earth movement.
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Form 17 (Continued)
Section D - Property that has wetlands and a shoreline is highly regulated by the State. Further
development of the property would be questionable.
Section E - Toxic materials are the concern here. This is especially true of asbestos, formaldehyde
insulation, and underground storage tanks.
Section F - Commercial use could present problems with the presence of toxic materials and dumped
items.
Section G - Groundwater that rises up and damages foundations and floods basements.
Section H - This is concerned with overhead wires that can cause cancer as well as buried "hot" wires
that are not known.
Section I - The main concern here is the manufacturing of Meth on the property. The materials and the
cooking process are highly toxic and damaging.
Section J - Towers can interrupt the service of cell phones, antenna equipment, and a person’s body.
Licensee - If a licensee is aware of "material" defects such as Environmental Problems, the licensee
must divulge such information to the involved principals.
NOTE: Concealment or misrepresentation of a material fact by a licensee will
cause action by the DOL.
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Relationships with Competitors
The next thing we're going to look at regarding ethical and legal considerations are the relationships that
you face with competitors. In all professional business forms there is competition. With the real estate
profession we have several different aspects that we have to consider when doing business in the
competitive business market. These include state regulations, association membership requirements,
procedures as a member of a multiple listing service, affiliate firm procedures, and now agencies of the
Federal government.
Most of these requirements delve into the area of professional services that is provided the public.
Whether it is procedures and handling client funds or protecting the agency status of agents with their
clients, the main goal is to provide professional services that protect the public.
The Federal government gets involved when business pursuits cross state boundaries or involve what are
called anti-trust activities. Over the course of the past four years the Justice Department of the Federal
government has been looking into anti-trust activities of the real estate profession.
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Relationships with Competitors
Interfering with an Agency Contract - One of the more interesting factors with competitors involves
the attempt to interfere with the listing agreement between a seller and the listing firm. Very few States
have regulations regarding the interruption of the listing contract by an outside licensee. However, most
MLS organizations have rules regarding such actions by its membership. In fact, one MLS has a $5,000
fine that is levied against any member who tries to interrupt an agency agreement. You might check
with your local MLS on this topic.
Speaking Disparagingly of Competitors - Unfortunately there are individuals in this world who do not
have a kind word for anyone let alone a competitor. Speaking disparagingly of anyone is known in the
legal circles as personal injury against the competing firm. There are States that have regulations
regarding this tendency as well as MLS organizations. The problem is that it's hard to prove that such
actions took place. However, when there is a history of such actions there is usually some form of
reprimand issued by the state or MLS organization.
When talking about a competing firm in such a manner, it lessens the degree of professionalism of the
licensee and the real estate profession. Hence, such actions are discouraged by the industry on all fronts.
Changing Firms - When a licensee moves from one firm to another, he/she has to be careful in regard
to explanations for the change. It is best to make such innocuous comments as "it didn't work out" or "I
obtained a better contract". A licensee should not start "bad mouthing" the former firm to colleagues and
clients. It will show far more professionalism of the licensee by not speaking disparagingly of this new
competitor.
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Handling Offers
An offer by a buyer is the beginning process in forming a real estate contract and transaction. For this
reason the State of Washington has specific parameter or is that it requires in handling an offer. The
main area of emphasis by the RCWs is that all offers must be presented to the seller.
In the past, some agents for sellers would refuse to present an offer because it was too low or the buyer's
agent was not a member of the local MLS. Actions such as these are against the Washington state
statutes and cannot be practiced any longer.
Additionally, the buyer's agent should present their clients offer as expediently as possible. It doesn't
matter whether the market is soft or strong, buyer's market or sellers market. All offers must be
presented to the seller and in an expedient manner.
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Escrow Funds, Earnest Money, Promissory Notes
State RCW 18.85.285
Transactions and Recordkeeping - Trust Account Requirements
(1) Brokers and managing brokers must submit complete copies of their transactions to their firm. The
designated broker shall keep adequate records of all real estate transactions handled by or through the
firm or firms to which the designated broker is registered.
All paperwork completed in forming a real estate transaction must be turned into the firm in a proper
manner. The designated broker for the firm is responsible to make sure that all these records are kept
properly and available for audit and inspection on a walk-in basis.
The records shall include, but are not limited to, a copy of the purchase and sale agreement, earnest
money receipt, and an itemization of the receipts and disbursements with each transaction. These records
and all other records specified by the director by rule are open to inspection by the director or the
director's authorized representatives.
Though an audit on a walk-in basis is unusual, the Director and the Director's investigative
representatives have this power.
(2) If any licensee exercises control over real estate transaction funds, those funds are considered
trust funds.
Funds presented by principals to a licensee involving a real estate transaction are considered trust
funds in all instances. Trust funds must be deposited in the firm’s trust account the next business
day. The only exception would be funds sent direct to escrow or a check given by a buyer with written
instructions to be deposited in a later date.
(On the next page please insert slides - 020 & 020A)
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