Best of the Hotline – Q & A
By James L. Goldsmith, Esq.
Lead Paint Disclosure
Q. Is a separate lead-based addendum to the agreement of sale required since the lead disclosures are part of the seller’s property disclosure statement?
A. Yes. Federal law requires the use of a separate lead-based paint hazard addendum in all transactions involving the sale of homes built prior to 1978. No ifs, ands, and buts. The penalty that may be imposed upon brokers and salespersons can be extreme and therefore strict compliance is necessary.
Counting the days
Q. For purposes of calculating deadlines in the agreement of sale, when do you start counting the days, when the agreement is signed or the day after?
A. Think of how times are calculated at a track or swim meet: when the gun sounds, the stop-watch begins its count. For purposes of an agreement of sale, the gun goes off at when the agreement of sale is executed (the last party signs acknowledging that all parties have agreed to all terms).
In a race, it takes on second to reach number one. In other words, as soon as the gun is fired, we cannot say that a whole second has lapsed. We have to wait, albeit a very short time! When an agreement of sale is executed, a day has not passed until the lapse of 24 hours. So when the agreement is fully executed on a Monday, a day has not lapsed until Tuesday at the same hour. Yes, we are counting beginning with the execution of the agreement of sale, but we don’t reach one full day until we have counted 24 hours.
In most cases, the parties acknowledge that 12-midnight on the last day of the time period will be the final hour in which to perform the task provided. If either party is going to hold the other to a precise number of days, then that should be communicated when the agreement is executed (e.g., the 10 days to complete a home inspection will expire at 5:30 p.m. on July 15, 2014, which is exactly 10 days following execution of the agreement).
Appraiser/Salesperson
Q. I have a salesperson who is also an appraiser who works for me strictly as a real estate licensed salesperson. His appraisal practice is performed on-the-side as a sole proprietorship. Do I have any liability for the appraisals he performs?
A. A broker in this situation would be wise to assure that the businesses are clearly separate and that clients of the real estate brokerage understand this. Requiring the appraiser/salesperson to give a written disclosure stating that appraisal services are not performed in conjunction with the brokerage practice is a starting place. Further, the broker may wish to enter into an indemnification agreement to assure that any liability asserted against the broker for the performance of bad appraisal will be covered (defense and liability payments) by the appraiser.
Of course, the appraiser has to avoid any conflicts of interest and not appraise properties in which he has played any role as a salesperson. Likewise, there should be a policy for his involvement in appraising properties in which his colleagues at the real estate firm have played a role.
This superficial treatment of the issue should serve as a starting place for your investigation if you are engaging a salesperson/appraiser or if you are one who fits this situation.
Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2014
All Rights Reserved
Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.
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