Dishin' Dirt with Gary Pickren

Dishin' Dirt on Seller Disclosure Exemptions with Gary Pickren

November 05, 2020 Gary Pickren Season 1 Episode 5
Dishin' Dirt with Gary Pickren
Dishin' Dirt on Seller Disclosure Exemptions with Gary Pickren
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Dishin' Dirt with Gary Pickren
Dishin' Dirt on Seller Disclosure Exemptions with Gary Pickren
Nov 05, 2020 Season 1 Episode 5
Gary Pickren

THIS IS A MUST LISTEN FOR REAL ESTATE AGENTS! Today I discuss who is exempt and who is not exempt from completing the South Carolina Seller Disclosure Form. I also have added a new feature called "What Happened While you Were Showing." In this feature I discuss what the Real Estate Commission is doing to you or for you while you were out showing properties. This week we examine the use of nicknames such as Bob, Will, Beth, Buddy and other common derivatives of names in your advertising and what the Commission is doing about it. Hint . . . Right now, you can't use them! Also, I discuss a problem with HOA estoppel fees and no episode would be complete without "Gary's Good News Only!"

Please like, share, subscribe and tell other agents about our podcast.



Show Notes Transcript

THIS IS A MUST LISTEN FOR REAL ESTATE AGENTS! Today I discuss who is exempt and who is not exempt from completing the South Carolina Seller Disclosure Form. I also have added a new feature called "What Happened While you Were Showing." In this feature I discuss what the Real Estate Commission is doing to you or for you while you were out showing properties. This week we examine the use of nicknames such as Bob, Will, Beth, Buddy and other common derivatives of names in your advertising and what the Commission is doing about it. Hint . . . Right now, you can't use them! Also, I discuss a problem with HOA estoppel fees and no episode would be complete without "Gary's Good News Only!"

Please like, share, subscribe and tell other agents about our podcast.



Unknown:

Welcome back to another episode of The not yet award winning podcast edition dirt is South Carolina's only podcast that talks about real estate matters important to real estate agents. I am your somewhat talented host, Gary Pickering. And this week, we got a fantastic show for you. Now, last week, we had Steven Cooley, the number five agent in the entire world for Keller Williams, and he spent a good amount of time talking about how you can grow your business, as well as whether adding an assistant or creating a team would be right for you. And Steven has agreed to come back and do another show. And he'll be back with us next week to continue that fantastic conversation. If you have not had a chance to listen to that podcast, you can check it out on any podcast platform. Now this week, we're gonna have a great show because we're going to spend some time talking about seller disclosure exceptions. Some of you may not know that I served on the committee that wrote the most recent form that we use in South Carolina for seller disclosure. And so what I'm going to do is spend a few minutes talking to you about who is exempt from doing the disclosure, as well as those parties that are mistakenly not exempt. A lot of people think they're exempt and they are not. So we're gonna spend a little time doing that. We're also going to talk about what happened while you were showing. And this is a new segment where we talk about what the real estate Commission has done either for you or to you, while you were out showing properties. I'm also going to talk to you about a big issue with Hoa is and of course, no episode would be complete without Gary's good news only. So let's roll right into our show and start talking about the seller disclosure form. So I have a long history with seller disclosure. Several years ago, the real estate Commission issued a new seller disclosure form. And I was c ncerned that the new form is goi g to cause a lot of potential awsuits for real estate agents as well as sell or s I began speaking out about this form across the state of Sout Carolina. And the real estat commission got wind of a lo of my concerns and asked me to appear before their commission nd tell them exactly w at was wrong with the form. Afte spending about an hour and a half eviscerating their document Tony Cox, who was the he d of the commission at that poi t, said that they had a proble that he needed me to help ix and he had no money to pa me. So I would have to volunte r to help fix it. So I did And together with commissione s like Hamlin Kelley a d Jonathan Stackhouse, you may k ow Jonathan Stackhouse from my v deo series. It can be found on Y uTube by searching Blair Cato, i 's a video series on The Bachelo . Yes, Jonathan Stackhouse And I actually do a we kly video series during the bac elor show and talk about all t e absolutely asinine things that go on in that show. So it's a lot of fun to check out. But we oined a bunch of real estate a ents from across the state of So th Carolina. And we went deep i to the bowels of the LLR buildin . And we started working o a new seller disclosure form, w ich was the form we are currentl using today. Now, what I have noticed over the years as I continue to get phone calls abou seller disclosure, asking fo legal advice, or to represent ne or the other parties in a lawsuit, is that ther 's a big misunderstanding abo t when the seller disclosure f rm has to be used, as well as wh 's exempt and who is not. And s today, what I'm gonna do is tal very quickly about when the s ller disclosure form is to be us d. And then we're going to talk about the 15th actions to the statute, meaning that these ar the people that don't have to o the disclosure. And then we' l talk about the most misunder tood exception exemptions that people believe are accepted, but they really aren t. And so we'll talk about th se starting with seller disclos re form, what it is and wh re it has to be used. South Car lina law requires that a selle disclosure form be complete by the seller and given o the buyer prior to enteri g into the contract keyword there's prior to entering nto the contract. So eve if you're a for sale by owner seller, you still have to do the seller disclosure and provi e it prior to the buyer givi g you a contract. Now the tra sfers that are included are re idential real estate property c osings that consists of at least one but not more than four d elling units. Well, what in the orld does that mean? Well, we re talking about a single famil homes duplexes, triplexes a d quad plexes. But apartment bui dings and so forth that are la ger than four dwelling units ar not included Norwood commercia or agricultural land. I includes the seller exchange of property, also things that are nown as in sale installment s les contracts as your your data n or contract, purchase, and leases with options to purchas . There are several exempt ons under the statute as to parties that do not have to pro ide the disclosure. In fact, t ere are 15 exemptions to the sta ute. So the first exemption under the statute and these can be found in South Carolina code 27 days 5030 and you can Google that is when a court order requires a transfer of title. What we're getting at here is when the property has gone through a foreclosure sale, a bankruptcy or receivership or eminent domain transfer, a court has ordered the property to be Usually, the property has been foreclosed on the cup, the mortgage company that had the lien against the property has received the property back and now they are transferring the property. The seller that purchases the property from the lender who has completed the foreclosure sale, that seller must complete a seller disclosure with the lender who sells the property receiving the foreclosure sale does not have to provide that disclosure. The second exemption is a deed issued in lieu of foreclosure. So when somebody is facing foreclosure, and they deed the property back to the lender to avoid the foreclosure process, that lender does not have to do a disclosure to someone buying the property from them. However, if somebody buys the property from the lender, that was a deed in lieu of foreclosure, and then decides to transfer the property to somebody else, that person would in fact have to do the seller disclosure. Number three is an individual serving in a fiduciary duty in the course of administration of the estate, guardianship, conservatorship or trust. So what a fiduciary is, is someone who is ethically and legally bound to act in the interest of another. So for an example would be an estate or trust selling property. For example, personal representative of the estate would be a fiduciary, the trustee of a trust would be a fiduciary. In these situations, there is no requirement for a seller disclosure. So let me delve a little bit further into that. So if the estate of Gary pequin is selling the property, then there is no seller disclosure, because as the personal representative of the estate, I'm transferring the property, I don't have to do a disclosure. The rationale behind that is the personal representative oftentimes has no information about the quality of the house, or any repairs that need to be done or have been done. Keep in mind, this is extremely different than if you inherit the property and take title to the property through the estate, and then you sell the property as the individual. In those cases, you absolutely have to do a disclosure. Same thing with the trust. A trustee might or should not know. Now, here's a tip for you. I don't believe that a power of attorney even though that is a fiduciary duty has the right to be exempt. So for example, if my wife and I own the house, or as I say my wife owns the house, and I am acting as her power of attorney and I live in the house with her. I don't believe that that's the intent of the statute to exempt me from having to do the disclosure, because I'm acting as her power of attorney. Or the same thing with a trust. If the trust is selling the property and the trustee is a an attorney or a bank officer, they have no knowledge of the property. And so they should be able to sell it without a disclosure. But if I set my house up in the Gary picker and family trust, and I'm the trustee, and I live in the house, I clearly have knowledge about the what's going on with the property. And I think a disclosure should be done there. The statute is not very clear on that. But I believe that is how that would work. Now the next example, or exemption rather, is for one co owner to another co owner. So if my wife and I own the property and I'm transferring the property solely into her name, I would not have to give her a disclosure. The fifth one would be a deed to a spouse or family member that is in a lot lineal lot of consequent nuti. That means basically, if I'm transferring my house to my spouse, or my children, my parents, then I don't have to provide that disclosure. Number six between spouses resulting from a divorce decree or support order. So if two owners of the property are married, and they are getting a divorce, the spouses don't have to give disclosures to each other. Number seven is a tax deed. If you're buying property at a tax sale, the fee typically comes from the treasurer, the treasurer does not have to give you a disclosure. If you buy the property from a tax deed and then you transfer title to someone else to a sale, then yes, you would have to provide the disclosure. Number eight is to are from the federal government. This is very important, oftentimes Fannie Mae, Freddie Mac, which are quasi government agencies, HUD, the VA. Those types of agencies have properties and they transfer them and those transfers. The federal government is never required to provide you a disclosure. But if you are an agent who is representing one of these companies, or entities, please understand that if you have knowledge of a material adverse fact that adversely affects the property, you must disclose that even though your client does not have to do the disclosure. The same goes for number nine, which is the state government or any of his agencies. So a State Housing or the city of Columbia, or the city of Greenville, or a county or whatever, is transferring property and is a state agency, county agency or city agency, they do not have to provide you a disclosure either. 10th exemption is for sale of a house which has never been inhabited. This exemption applies to new construction. This one's also misunderstood. If a builder builds a house, new construction sells it to your client, they do not have to do a disclosure but if somebody has lived in this house, or if the builder has rented the house, then yes, there is a disclosure is required. So if I'm a builder, and I cannot sell my house, so I move into it for a year and then decide to sell it, I now have to do a disclosure. Similarly, if I build a house, I can't sell it and I rent it to somebody for even a week. I now have to do the disclosure. Number 11. The exemption is for property sold at auctions. We don't have a lot of auctions around here, though I do represent an auction company out of Greenville, and Spartanburg and they do occasionally do some auctions around this area, but they don't have to provide disclosures number 12 is deed from a residential trust. So if there's a reason those are commercial type trusts are there some type of trust holding properties, that trust does not have to do it. Number 13. When the parties agree in writing that no disclosure statement will be completed. This is very important. If the buyer and seller get together and agree that notice or no disclosure is going to be required, then this item allows the parties agree amongst themselves not to do it. The most common times that you will see this is when the property has been rehabilitated by the seller. The seller has bought the property they've gone in and gutted it or they've gone in and done massive rehabilitation. Secondly is when it's for sale by owner for sale by owners have to do a disclosure unless the parties agree that one won't be provided. So where's that agreement done? that agreement typically is done in the real estate contract both the state contract as well as ccra contract both have provisions in there for the parties to select that a disclosure has been provided or the parties have agreed that one will not be provided. Number 14 is vacation timeshares. Finally, vacation, vacation, multiple ownerships. Those are called interval ownerships, those were very big right before the crash of 2007 and eight, this is where people would buy a beach house and then share intervals to other parties, so that parties on intervals, they would own 1/4 and that would set out a calendar as to when they would be able to use that house. So those are the 15 statutory exemptions. So now I think it's very important that we explore who is not exempt from seller disclosure. Now. This is a tremendous problem in our industry that for some reason real estate agents have come to believe that certain people or entities are exempt that clearly are not the number one misunderstood or mis believed exemption is companies corporations and partnerships. Have a lot of agents Tell me Well, they're a company they don't have to do a disclosure that is not true. It does not matter how big how small how many transaction the company is completed. Doesn't matter whether they're based in Columbia, South Carolina or they're based in North Carolina or Georgia. If a company owns a property that is a one to four residential dwelling which is single family duplex triplex quad Plex, the seller must complete a seller disclosure unless the parties agree otherwise. The most misunderstood, I would say is landlord, I have many agents and clients saying that they don't have to provide a disclosure because their landlord? Well, there is no exemption. As you've seen, we've gone through the 15 exemptions, there's no exemption for landlords. In fact, I would argue, the person who knows most about the quality of their house, and whether it needs repairs or not, is a landlord because a tenant will always complain. Now, if you live in a house with a spouse or a partner, oftentimes, they may not tell you that they saw a nail pop or league some issue with the house because it's just not worth listening to the whining and complaining about it. That's what my wife does. She doesn't like to tell me a lot about it because she knows I'm gonna lie. But if you're a tenant, you always complain. And so the landlord always knows so do not be mistaken into believing that a landlord is exempt from seller disclosure. They are 100% not number three owners who have never lived in the house. I get this a lot where an owner says Well, I never lived in the house so I don't have to do one. That's also not true not living in the property does not eliminate your duty to complete the disclosure. In fact, a non occupying owner can and must complete the seller disclosure. We often hear the sellers complain How would I know what's wrong with the house? I've never lived in the house. But that's not what the law asked the seller to disclose. The seller is required not to investigate, but they're required to disclose what they have knowledge of and the fact the format's that. Do you sell or have knowledge of a problem or a defect? So if you've never lived in that house and you don't know have those problems, then the answer is yes or no that you don't know the answer to the problem. The next area where people are mistaken as to an exemption is property being sold as is and this means property has been sold with all its defects and issues with the seller making no repairs. As is However, it does not void the sellers responsibility to disclose known defects problems and issues with the property. Seller disclosure clearly does not exempt. And as is property now the buyer and the seller could be in agreement not to do a seller disclosure, but in and of itself, it is not an exemption. The fifth exemption I hear a lot in closings, nonprofits, such as churches and charities. A lot of agents think that if you're a nonprofit, or that it's a church that they don't have to do a disclosure, that is also incorrect, they have to do disclosures. The sixth one we've already talked about multiple times for sale by owners. Anytime a property is being for sale by owner, it absolutely has to have a seller disclosure unless both parties agree otherwise. And then lastly, flippers and wholesalers. This is where the seller takes title and either through a an agreement or a contract. And they immediately try to flip the house to somebody else. Sometimes they take title and flip it sometimes they try not to take title and just assign it. If they actually take title, then they have to do a seller disclosure. So as you can see, there are multiple situations where agents and sellers often are confused and believe that they are exempt. There's only the 15 exemptions, and you need to make sure that your client understands those, your client claiming an exemption that doesn't exist puts not only your seller at risk for failure to disclose, but it also puts you as a real estate agent at risk as well. And now we're to our new segment called what happened, why you are showing. And what this segment does is we're going to give you information about what the real estate commission is either doing for you or perhaps even to you why you're out showing property. And in this week's installment, we're going to talk about a meeting at the real estate commission concerning nicknames. Now with nicknames, it's been a problem ever since the revision of the law in 2017. And I've represented numerous agents that have had grievances filed against them because they were not using their full legal name as shown on their real estate license when they were doing marketing and advertising. And under our current law, that is what is required you to use your full legal name. Well, this causes a problem for people that have names like Christopher, or William, or Andrew or Margaret, because a lot of those people go by the shorter version of those names Chris, and the bill Robert goes by Bob, Margaret may go by Peggy and names like that. And so even those, those are the names that we know you by, according to the law, you have to market yourself using your full legal name, which really makes no sense because if you go let's say your name is Jonathan Smith, but you go by buddy's myth, no one's going to know you as Jonathan, they're gonna know you as buddy. And so it creates quite a problem. But the real estate Commission says The reason for this is that they can't find you if somebody wants to file a grievance against somebody named buddy because they look up a buddy Smith. They're really trying to find a Robert Smith and they can't find you because buddy's not in their system. So I've long advocated for let's just put our license number on our marketing and advertising and business cards and it takes care of that. That is what mortgage lenders are required to do by federal law. But it looks like they've tried to come up with another solution. And so Gigi Lewis, who is the counsel for the real estate commission board stated in the minutes and I pulled the minutes off their website that the Commission had previously been requested or at redhead brother had asked staff to present a draft of guidelines for nicknames. Ms. Lewis reported that investigations on this matter had been halted pending this guideline. And so this is what they've come up with per first names only you could submit to the commission, a first name nickname, and what this would be no that would not allow any changes or amendments to the submission of the first name once it's meant but what they're looking at is you could have a derivative of a legal first name that is logically associated with that first name. For example, if your name is Elizabeth, you could submit Beth if your name is Andrew, you can submit drew or Andy. Now non derivative of first live legal first name could include the use of your middle name or your initials or use of an American name for an ethnic first name, or for use of a known name first name such as Baba tre Sandy Jr, buddy obviously would be part of that as well. They're not going to allow nicknames such as john the real estate man because they say that it's unacceptable and I get that that's not the purpose of the nicknames and there are going to say that all submissions of these nicknames have to be required a Commission approved only legal last names can be used. You cannot use a nickname for your legal last name. So this is what's been present. However, it looks like the commission motion to table the item. And they voted unanimously in favor of tabling it. So I'm not really sure when this will come out. Rod Atkinson is one of my good friends over there who's Chief of Staff recognize that Mr. Smallwood of the association, South County Association of Realtors provided remarks on this issue and stated that this is quite a big issue for the realtors Association and ask that this be brought up before the next meeting or as soon as possible. So thank you, Mr. Smallwood for advocating for that, because yes, it does need to be resolved. So that is what your commission is doing for you or to you while you're out showing houses. So now let's talk about homeowners associations. So in the last few weeks, we have seen a proliferation of fees being charged by the HOA as we're seeing more estoppel fees, more transfer fees, capital contribution fees, and things of that nature. So let's first of all, look at what the contract say, as to who pays those fees. And then let's look talk about a problem that has result there of So first of all, in the state contract Association contract. Let's see what it says under paragraph six. It says all calls to obtain information from or pertaining to Owners Association, and the call similar to transfer fees, ag Certificate of assessments, capital contributions, working capital stopple, fees and otherwise named but similar fees are the blank sellers or blank buyers transaction costs of no boxes check, these costs will be added to the seller transaction cost. Then looking at the CCR, a contract that's used in the Midlands, it says under paragraph five, all calls to obtain information from or pertaining to any association owner association is a buyer transaction cost. But what about the situations where the estoppel letter says that the buyer has a $300 estoppel fee, and the seller has a $300 estoppel fee. And we started seeing that recently here in Colombia, where instead of just charging one estoppel fee for the information, they're now charging two, I'm not really sure why they do that it's the exact same information. So I'm not sure why they get to double dip. But there's an association in town that is doing that where it's a $300 buyer estoppel fee and a $300, seller estoppel fee. The problem with that is the HOA doesn't control in these situations a contract does. So when the HOA puts in the contract that the fee is $300 to the buyer and $300 to the seller, we actually have to look at the contract and see what the contract says. So under the situation of using the state contract, both of those fees could be the buyers or the sellers, depending on how the box is checked. Under the CCR a contract that fee, even though it says seller estoppel fee is going to be put on the buyer, because the contract says all information costs of obtaining information pertaining to homeowners associations is going to be a buyer cost. So that's a problem that the HOA is are creating, the only way really to fix that is to add a provision in the contract that states unless the estoppel letter designates otherwise, but that's going to be a negotiated term between the two parties. So that is a problem that a lot of Hoa is are calling, causing, and you guys need to be aware of it. And now we're going to roll right into Gary's good news only. And there's only a few topics we have to hit on this week, because the good news is just astounding. So the first piece of great news happened actually last week that the Gross National Domestic Product rose by our annual as rate of 33.1%. And to put that into context, since we've been measuring these things since the 1940s. It's more than double the best month from 1950, our best quarter since 1950, when we started really seeing the growth post World War Two. And so the amount of growth is just astounding, astounding. You can add basically four or five years together and it doesn't come up with 33.1%. And it's actually higher than they even anticipated which was at 32%. So what we're seeing is a V shaped recovery caused by this pandemic and it looks like things are looking certainly up in the economy. As for the Coronavirus, the CDC issued some important information to help people understand where this really is coming from the United States today is the is amongst the lowest case fatality rates of any major country. And according to their best estimates at the CDC 99.997% of individuals age 19 and younger who can track Coronavirus make an absolute for recovery. 99.98% of those who are 20 to 49 make a full recovery and 99.5% aged 50 to 69 also fully recover now of those under the age of 70 that have been come affected like I said 99% recover from the disease. deaths are also down 80% and are at their lowest level since March. hospitalizations are also due to Coronavirus or near their lowest level nationally. Less than 6% of beds currently occupied are with patients who have COVID. Not necessarily there for COVID, but patients that have it. And finally, COVID like illnesses make up less than 3% of all emergency room visit. So if you look at the deaths, the 200 plus 1000 deaths we have they all the vast majority were in the first few months, it is clear that what is happening now is that the numbers of deaths have dropped 80% because our frontline workers know what they're doing. They know how to treat this and know how, when to do certain things. So it looks like things are getting so much better. Gary's news, good news only is certainly good news this time around. So that's our show for the week. I hope you guys enjoyed it and got something useful out of it. We will be back next week once again with Steven Cooley, who's going to again teach you how to grow your business. Don't miss that episode. Also, don't forget to go back and listen to all of our episodes. They can be found on any other podcast platform by simply searching Gary picker in podcast. You can follow me on Instagram at pequin Gary PCKRE nga ROI and if you liked this episode with estrogen please like us, share us and subscribe but mainly I need you to please get the word out to other agents throughout South Carolina regardless where they are showing and selling properties. Until next week. We hope you have a wonderful week and we'll see you back next Thursday morning.