The Weekly Membership Newsletter of the Tennessee Assn. of REALTORS


CONTENTS
1. Common Sense Prevails in One Lawsuit!
2. HOT LINE: Contacting Someone Else’s Client
3. HOT LINE: Assignability of Contracts
4. Mortgage Fraud Increasing!
5. Holding Successful Open Houses
6. Rates Hold Steady
7. ALERT: To Continue Receiving the TAR DIGEST…


1. Common Sense Prevails in One Lawsuit!

After only two hours of deliberation last week, the jury unanimously vindicated a buyer’s agent accused by his clients of failing to disclose that two other homes in the neighborhood sold for less than what they paid.

The Carlsbad, Calif.-based couple, Marty and Vernon Ummel, who filed suit against their real estate agent lost their court case. The lawsuit made national headlines, BUT the jury found ReMax agent Mike Little not guilty of fraud and negligence! The Ummels insisted Little withheld the information when they purchased the property because he simply wanted to finalize the transaction and pocket his commission, but the jurors said Little upheld his end of the business arrangement.

The real estate industry closely watched the case because a verdict in the Ummels’ favor would have sparked lawsuits from other buyers seeking to blame someone for a decline in their property value. The buyers may still appeal the decision.

[SOURCES: Realblogging.com; Information, Inc.; New York Times]


2. HOT LINE: Contacting Someone Else’s Client

QUESTION: I represented a buyer and had a contract with a For Sale By Owner seller. The buyer had a 72-hour right of refusal on this property, and backed out in this time frame. The seller took another offer by an investor who then assigned the property to another REALTOR to put on the market. This other REALTOR, who knew that I represent my buyer, has now contacted my buyer. Can this broker ethically do this?

ANSWER: NO. She should have not contacted them directly. If she was trying to get your clients to breach their agreement with you, this is interference with a contract which is in violation of the Broker’s Act in Tennessee.

In addition, if the agent is a REALTOR, she has likely violated the NAR Code of Ethics. According to Standard of Practice 16-13:

“All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.”

In addition, depending upon what she knew, she may have violated Standard of Practice 16-18:

“REALTORS shall not use information obtained from listing brokers through offers to cooperate made through multiple listing services or through other offers of cooperation to refer listing brokers’ clients to other brokers or to create buyer/tenant relationships with listing brokers’ clients, unless such use is authorized by listing brokers.”

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


3. HOT LINE: Assignability of Contracts

QUESTION: I have a buyer who has a contract to purchase a home. It doesn’t look like they are going to be able to do it. I have another buyer who could take over this contract. Can the TAR contract be assigned? And if so, do I need the approval of the seller? What form do I use to complete this assignment?

ANSWER: All contracts for the sale of real property in Tennessee are assignable unless the contract states otherwise. In addition, you will need to check to see if the contract requires the approval of the seller. The TAR contract is assignable and does not require the approval of the seller. TAR does not have an assignment document.

Therefore, we would strongly encourage you to work with an attorney who can assist you in drafting an assignment document in this situation. Furthermore, it is important to understand that if the assignee does not fulfill the obligations of the contract, the buyer is still responsible to do so.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


4. Mortgage Fraud Increasing!

Reports of suspected mortgage fraud rose 42 percent last year as banks became more leery of lies on loan applications.

The Treasury Department’s Financial Crimes Enforcement Network recently reported that there were 52,868 reports for mortgage fraud in 2007, up from 37,313 a year earlier. Mortgage fraud reports were the third-most common type of suspicious activity.

The most common type of mortgage fraud was misrepresentation of income or assets, followed by forged documents, misrepresentation of a borrowers’ intent to occupy a property as a primary residence occupancy fraud and inflated appraisals, the government said in an analysis of the report.

“The financial community is becoming increasingly adept at spotting and reporting suspicious activities that may indicate mortgage fraud,” James Freis, FinCen’s director, said in a statement.

The Treasury Department’s enforcement unit singled out mortgage brokers for criticism, noting a growing number of them listed as initiators of the suspected fraud. Brokers were “intermediaries that did not verify information submitted on the loan application,” the report said.

It also cited growth in fraud reports tied to “cash-out” refinancing, in which borrowers are able to pull out equity from their homes.

[SOURCES: Yahoo News; AP]


5. Holding Successful Open Houses

With a larger-than-average number of homes on the market, there also seem to be – in many areas – an abundance of Open Houses each weekend! How do you hold a SUCCESSFUL one? That’s the question a new article by Denise Lones, writing in Realty Times, attempts to answer!

Her article, “Open House Secret Formula,” is well worth reading if an Open House is in your future …unless, of course, contact with other human beings is something you want to avoid on Sunday afternoons!

Ms. Lones offers a few good tips and some good reminders of things that you know you ought to do (but may neglect doing anyway). I especially enjoyed the discussion of her “Stupid Open House Book”!

To read the entire article, click HERE.

[SOURCE: Realty Times]


6. Rates Hold Steady

The average interest on the benchmark mortgage rate held below the 6-percent threshold for the fourth consecutive week as 30-year loans remained at 5.88 percent this week, according to Freddie Mac. “Once again, mortgage rates held relatively steady this week amid release of subdued economic data,” said Freddie Mac chief economist Frank Nothaft, who cited a government report on the number of jobs that were eliminated by businesses last month. There was little movement involving the other mortgage rates as 15-year, fixed loans held steady at 5.42 percent, five-year adjustable-rate mortgages fell 0.03 percent to 5.56 percent, and one-year ARMs declined 0.01 percent to 5.18 percent.

[SOURCES: Information, Inc.; Freddie Mac]


7. ALERT: To Continue Receiving the TAR DIGEST…

After MAY 1, 2008, readers will ONLY receive the TAR DIGEST if they subscribe on their own, EVEN IF THEY HAVE RECEIVED IT BEFORE! We will not be able to add anyone’s address for them! It’s important that readers subscribe themselves by May 1, using the following method!!! They can subscribe anytime, from now on!

We WILL continue to send it out weekly – as we’ve done FOR WELL OVER 10 YEARS – just by a different method! And it’s still free!

WHY CHANGE? Spam blockers and a growing number of company mail servers are now blocking the TAR DIGEST …making it increasingly difficult to send this newsletter, unsolicited, to all TAR members.

At this website — www.tardigest.com — readers should simply look down the left-hand column for “Get News By E-Mail”. They simply need to click on that and follow the instructions.

After entering their email address, the subscriber will receive an email from with a link that they MUST click to ACTIVATE their subscription! This extra step protects everyone from having someone else subscribe their name without their permission!

We value your privacy! The TAR DIGEST will only be sent to subscribers, AND we do not release or sell the email addresses of subscribers to anyone else, for any reason!


For information on using the TAR Legal & Ethics Hot Line, look under “More TAR Services” at the TAR website: tnrealtors.com