Brian, can a buyer waive her rights under Virginia Property Owner’s Association Act?

In a word, no. Va. Code § 55-509.4, which sets forth the Act’s contract disclosure requirements and rights of cancellation, says:

F. Except as expressly provided in this chapter, the provisions of this section and § 55-509.5 may not be varied by agreement, and the rights conferred by this section and § 55-509.5 may not be waived.

(emphasis added).  So, that would seem to be a pretty definitive statement.  In fact, I’m pretty sure Lem Marshall takes the position that this provision means the REIN contract requirements obligating a buyer to acknowledge receipt, etc. or waive are not valid and enforceable.  Now, I’m not sure I would go that far but it is certainly possible a court might so rule.  I would point out though that under the Act a buyer does waive the right to cancel if not exercised by settlement.

As a practice pointer I would like to see our agents get an email from buyer clients acknowledging they have read and understand the packet, which might be prompted by a “do you have any questions” sort of email to them (print the reply).

Feel free to contact me if you have questions.

 

Brian, what is the difference between special and general warranty, and should my buyers be worried?

A general warranty seller warrants (promises or guarantees) that he holds clear title to the property and has a right to sell it.  This warranty covers (all) problems created back in the chain of title.  A special warranty seller, however, basically only promises or guarantees that he has not created a title problem.  Obviously then  general warranty is better than special warranty.

If you are a listing agent there is no need to strike the boilerplate REIN language unless you represent a fiduciary (executor, trustee, etc.) or perhaps an institutional seller.

If you are a buyer’s agent protect your buyer by recommending (insisting really) that he purchase an enhanced owner’s title policy.   I would question why a non-institutional seller would want to convey by special warranty and that ought to raise a red flag.

Never accept a deal where the seller strikes the clear, marketable and insurable title language of the contract, and I would prefer that you let me review any contracts where the mechanic’s lien or seller affidavit language is struck.

Feel free to contact me if you have questions or concerns.

Brian, when should my seller's cancel their homeowner’s insurance?

To be safe sellers should not cancel until the deed is recorded, the payoff is received, and they have proceeds in hand.

 Sellers want to cancel as soon as possible because they get the balance of their premium refunded.  But they should make sure they are no longer deemed to be the owners of the property because they run the risk that they will be responsible for a loss without insurance to pay for it (a house fire for example).

So, when are the sellers no longer the owners? Since the contract says the “seller bears the risk of loss until settlement” it might well be that once all the conditions of the contract, the lender, and the Wet Settlement Act are met that “settlement” has occurred, but it makes no sense whatsoever to test that theory in court with one’s fortune at stake.  Rather, prudence would dictate that they wait until the three conditions I noted above are met.  Typically, these are completed within 7 days.

Use that as an opportunity to touch base with your seller.  Remind them not only to cancel insurance, but also to look for an escrow and excess payoff refund from their lender (and perhaps pursue an MIP refund also).

I would think they would feel very well represented if you do.  And so they should.

Brian, I have a listing where the couple is divorcing. They hate each other. I can’t get them to agree on a thing. What are my obligations?

Even though you may feel sympathetic to one party, and believe the other party is simply being an obstructionist, please be reminded that both of them are clients to whom you owe a duty.  Read on.

 

I am frequently asked, and was last week, what a listing agent should do when she finds herself representing an estranged husband and wife with at least one of whom hating the other so much that all you get is one obstruction and objection after another, making it nearly impossible, if not impossible, to actually get the house sold.  Listing agents want to know their legal obligations and get some practical advice.

 

First, both are your clients.  Neither the law in general nor VREB in particular provide for a different duty of care to nice clients versus mean clients.  You don’t really need me to tell you that.  But you must remember it because it is all too easy to fall into the trap of dealing with the nice person one way and the mean one another way.  You simply cannot start providing different advice to one client for whom you feel some sympathy, or taking sides in a marital dispute.  Do not, I repeat do not, send emails to your nice client saying “I know this isn’t your fault, your ex is such a jerk” or send an email to only one of them providing advice – always send any such advice emails to both.  The important thing to understand, I think, and guide you is that this situation is really no different than if you had a single client who wouldn’t follow your advice, etc. and you should proceed accordingly.

 

But you are not without recourse and leverage.  If one of your sellers is not cooperating and abiding by the terms of the listing agreement (or to the contract if one has been signed) then you can threaten the obnoxious spouse with a suit for commission.  As a reminder, you must get Donna, Elaine, and/or Liz involved before doing so, and they will involve me if they think it necessary.  Also, depending on the posture f the case, you can get the divorce attorneys involved and they might bring a contempt action if necessary.   After all, unlike your duty as an agent you do get to choose which party you sue in that lawsuit.  So, in summary, simply work with both of them the best you can, being mindful of that fact that both are clients, and then use the leverage you have to force the crazy spouse to cooperate.  

 

But this is way too far down the road to start trying to solve the problem, and threatening lawsuits (and filing them) isn’t the most productive use of your time.  There are proactive steps you can take at the outset of any such listing to avoid such problems, which I will discuss and provide some forms at my next Lytle Law Lunch and Learn on Divorce (general information for my staff and consumers, with an emphasis on real estate related issues for agents).  Please mark it on your calendar for October 29 at noon in the Newport News training room if you would like to attend, and email Lara at the law office so we have a handout for you.