The 1-5-16 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville


1. Top Realtor Concerns Heading Into 2016
2. Eat The Frog!
3. The 2016 Code of Ethics
4. Five Trends That Will Shape 2016
5. TREC Disciplinary Actions — November, 2015
6. Upcoming Courses & Events
7. HOT LINE: Handling Property Management for an Owner?
8. HOT LINE: Misrepresenting the Property Condition?
9. HOT LINE: Removing the Home Inspection Contingency?
10. Check Your Own CE Hours, Etc.

“I would rather be a superb meteor, every atom of me in magnificent glow, than a sleepy and permanent planet. The proper function of man is to live, not to exist. I shall not waste my days in trying to prolong them. I shall use my time.” — Jack London

NOTE: If you’re reading this on a mobile device (iPhone, etc.), GO HERE for a mobile-friendly DIGEST.


1. Top Realtor Concerns Heading Into 2016

There are definitely some positive signs of a growing economy ahead of us. Nevertheless, a national survey of over 2,500 Realtors by NAR this past November revealed several concerns on members’ minds as we move into the new year:

1. New mortgage disclosure rules (delaying closings)
2. Difficulty in obtaining condo financing
3. Tight housing inventories
4. Tight credit
5. “Late” and “low” appraisal valuations

To read more, go HERE.


2. Eat The Frog!

If you’re wondering about the frog, the full quote comes from Mark Twain: “Eat a live frog first thing every morning, and nothing worse will happen to you the rest of the day.

Twain refers to whatever it is that you dread doing, the chore that you tend to put off or avoid. That’s your “frog”. If you’ll make a point of completing that task early in your day, it will “give you the momentum you need to get other tasks done throughout your day.”

Eating the frog is actually Number 3 on a list of “15 Small Things You Can Do Every Day To Become Highly Successful“, a VERY practical article by Kerry Petsinger. We can’t think of a better way to ensure a productive start to 2016 than to follow these small but powerful steps to success!

To read his article, go HERE.


3. The 2016 Code of Ethics

The updated 2016 Realtor Code of Ethics and Standards of Practice is now available to view, print, or download HERE.

It’s a PDF document, and this would make a great handout for a sales meeting in early 2016!

REMINDER: The current four-year cycle ends on 12/31/16THIS year — within which every NAR member MUST complete a 2.5-hour ethics education course! [After this year, the four-year cycle becomes a two-year cycle!]


4. Five Trends That Will Shape 2016

REALTOR.COM‘s chief economist Jonathan Smoke recently published “The 5 Real Estate Trends That Will Shape 2016“, and his article is well worth reading as you chart your own path to success in the new year.

His five trends to anticipate:

1. We’ll return to normal (Anyone remember normal?)
2. Generational shuffle will make 2016 the best year to sell in the near future
3. Builders will focus on more affordable price points
4. Higher mortgage rates will affect high-cost markets the most
5. Already unaffordable rents will go up more than home prices

To read his entire article, go to: http://www.realtor.com/news/trends/five-key-trends-for-2016/


5. TREC Disciplinary Actions — November, 2015

At its November meeting, the Tennessee Real Estate Commission (TREC) assessed significant fines (ranging from $1,000 to $6,000) and additional penalties on three (3) individuals for the following offenses:

Engaging in unlicensed activity
Failing to diligently exercise reasonable skill and care
Failing to notify of a conviction involving theft of property

In addition, one of the licensees had her license automatically revoked.


6. Upcoming Courses & Events

Jan. 21: TAR Forms 102 (7 hrs. CE) — TAR Office, Nashville. For more information or to register, go HERE.

The 2016 GRI schedule has been posted! Go to: http://tnrealtors.com/education/gri/

For an overview of all UPCOMING COURSES, as well as links for more information or registration, go to: http://tnrealtors.com/education/ …and scroll down the page to see all upcoming courses!


7. HOT LINE: Handling Property Management for an Owner?

QUESTION: Can a licensed agent be paid directly from an owner to do property management and not have to go through the firm with which they are licensed as long as the broker is aware of it and the property owner is aware that they are a licensed agent?

ANSWER: Probably NOT. It will depend upon what you term “property management”. Any activities which require a real estate license are required to be done through the real estate firm, and you must be paid via your principal broker through the firm.

A broker is defined in Tenn. Code Ann. 62-13-102(4) as:

(A) …any person who for a fee, commission, finder’s fee or any other valuable consideration, or with the intent or expectation of receiving the same from another, solicits, negotiates or attempts to solicit or negotiate the listing, sale, purchase, exchange, lease or option to buy, sell, rent or exchange for any real estate or of the improvements thereon or any time-share interval as defined in the Tennessee Time-Share Act, complied in title 66, chapter 32, part 1, collects rents or attempts to collect rents, auctions or offers to auction, or who advertises or holds out as engaged in any of the foregoing.

(B) …also includes any person employed by or on behalf of the owner or owners of lots or other parcels of real estate, at a salary, fee, commission, or any other valuable consideration, to sell such real estate or any part thereof, in lots or parcels or other disposition thereof. It also includes any person who engages in the business of charging an advanced fee or contracting for collection of a fee in connection with any contract whereby the person undertakes primarily to promote the sale of real estate either through its listing in a publication issued primarily for such purpose, or for referral of information concerning such real estate to brokers, or both.

Please note that property management is a VERY specialized area of real estate and is a completely different animal from sales.

There is a lot of information which an agent should know before engaging in property management. If the property is located in a county in which the Landlord and Tenant law applies, then the agent must be familiar with this set of statutes as it contains very specific rules on how everything is to be done. For example, under the Landlord and Tenant Act (which only applies to certain counties in Tennessee), all deposits must be kept in a separate account which only holds deposits. In addition, the information on where those funds are held must be disclosed to the tenant. The Landlord and Tenant Act only applies to certain counties which have populations over 68,000. Counties which are included in this are Shelby, Davidson, Knox, Hamilton, Anderson, Blount, Bradley, Madison, Maury, Montgomery, Sevier, Sumner, Sullivan, Rutherford, Williamson, Washington and Wilson. We strongly recommend that you take some classes on property management through your local board or a real estate school. Make sure that you are taking a class which covers Tennessee law. If you are in a county which is governed by the LTA, we highly recommend that you speak to an attorney to get some assistance in drafting the lease agreements since there are many things which must be included in the lease under the law.

You should also consult with your E & O carrier to determine whether you need additional coverage for property management. You very well could have liability in showing rental properties and representing landlords. However, many E & O carriers require additional insurance for property management and/or rental properties.

You will also have to have a separate escrow account for security deposits, even if you are not in a county under Landlord and Tenant. TREC Rule 1260-2-.09 (12) states “In addition to the escrow or trustee account referenced in paragraph (2), all trust money received and held which relates to the lease of property must be held in one (1) or more separate escrow or trustee accounts.” Therefore, this would need to be in a separate account from any earnest money or rent money.

Before engaging in any property management activities, we strongly recommend that you take at least one class concerning property management which conforms to Tennessee law. Consult with your local board to see if one is offered in your area. Make sure that the class focuses on Tennessee law as law governing rental property varies widely from state to state.

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


8. HOT LINE: Misrepresenting the Property Condition?

QUESTION: It is apparent that the seller made several misrepresentations on the Tennessee Residential Property Condition Disclosure form. What recourse does the purchaser have after discovering the actual condition of the property?

ANSWER: There are penalties for a seller blatantly lying on the form. The buyer has several different remedies available to him under the Tennessee Residential Property Condition Disclosure Act. Tenn. Code Ann. 66-5-208(a) states:

“The purchaser’s remedies for an owner’s misrepresentation on a residential property disclosure statement shall be either:

(1) An action for actual damages suffered as a result of defects existing in the property as of the date of execution of the real estate purchase contract; provided, that the owner has actually presented to a purchaser the disclosure statement required by this part, and of which the purchaser was not aware at the earlier of closing or occupancy by the purchaser, in the event of a sale, or occupancy in the event of a lease with the option to purchase. Any action brought under this subsection (a) shall be commenced within one (1) year from the date the purchaser received the disclosure statement or the date of closing, or occupancy if a lease situation, whichever occurs first;

(2) In the event of a misrepresentation in any residential property disclosure statement required by this part, termination of the contract prior to closing, subject to the provisions of 66-5-204; or

(3) Such other remedies at law or equity otherwise available against owner in the event of an owner’s intentional or willful representation of the condition of the subject property.”

There may be additional claims such as violation of the Tennessee Consumer Protection Act and/or fraud. The buyer should speak with his own attorney if he has questions concerning his legal rights.

Pursuant to Tenn. Code Ann. 62-13-403(2), a real estate agent is required to “[d]isclose to each party to the transaction any adverse facts of which the licensee has actual notice or knowledge.” Tennessee law defines an adverse fact as “conditions or occurrences generally recognized by competent licensees that have a negative impact on the value of the real estate, significantly reduce the structural integrity of improvements to real property or present a significant health risk to occupants of the property.” — Tenn. Code Ann. 62-13-102(2).

Therefore, if an agent has actual knowledge of an adverse fact, he must disclose it. If the agent finds something in that report which constitutes an adverse fact, he must disclose it.

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


9. HOT LINE: Removing the Home Inspection Contingency?

QUESTION: What form do I need to use to remove the buyer’s home inspection contingency?

ANSWER: This seems to come up again and again. You do not need a contingency removal form for the inspection contingency. In actuality, an inspection contingency should not be removed until repairs have been negotiated, completed, and approved by the buyer since this is all part of the same section of the contract. In fact, we would recommend that most contingencies (with the exception of sale of property and similar types of contingencies) not be removed until closing.

The Repair/Replacement Proposal (RF 654) is not part of the purchase and sale agreement. It is merely a worksheet on which the parties can propose repairs and replacements. It is used as a negotiating tool. Once the parties have agreed to repairs and/or replacements, the information is transferred to the Repair/Replacement Amendment (RF 655) which IS a part of the purchase and sale agreement.

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


10. Check Your Own CE Hours, Etc.

To check your own CE hours, go to: http://verify.tn.gov/default.aspx

Tennessee Real Estate Commission: http://tn.gov/commerce/section/real-estate-commission

To go to the TAR website: http://tnrealtors.com

To access current and past TAR DIGESTS: http://www.tardigest.com

Follow TAR on Twitter at: http://twitter.com/tnaor

TAR’s LinkedIn page: http://www.linkedin.com/groups?gid=852077&trk=hb_side_g

TAR’s page on Facebook: http://www.facebook.com/pages/Nashville-TN/Tennessee-Association-of-RealtorsR/15041383689

To ask a TAR Legal and Ethics Hot Line question:†http://tnrealtors.com/technology-support/legal-ethics-hotline/

For CE classroom courses around the state, go to:†http://tnrealtors.com/education/

For online CE courses, go to:†http://tnrealtors.com/education/online-courses/