Courtside Newsletter: NEW LAWS THAT MAY AFFECT YOUR REAL ESTATE BUSINESS & More!

WHAT THESE NEW LAWS MEAN FOR PRACTITIONERS

BY: CASEY MCINTOSH, PARALEGAL

The current session of the California State Legislature recently passed a number of Bills that will affect REALTORS®, real estate agents, and their clients in numerous ways. As these new laws will come into effect in 2012, it is important to be informed now in order to make implementation as easy as possible. The following are simply a few of the new laws and how they will pertain to real estate practitioners when they become effective.

Senate Bill 510: Branch Offices

This piece of legislature will become effective July 1, 2012 and will amend Section 10164 of the Business and Professions Code as it applies to the management of branch offices. Pursuant to existing law, a real estate broker is required to procure a separate license for each branch office maintained by the broker. SB 510 will authorize an employing broker to appoint a branch manager, pursuant to a written contract, and delegate responsibility to oversee and supervise operations and activities of that branch, as specified in the employment contract. The employing broker will also be required to send a written notice to the Department of Real Estate identifying the appointed manager and, should the broker-manager relationship be changed or terminated, the broker will be required to notify the Commissioner of those changes as well. SB 510 also outlines that the appointed manager must have at least two years of full-time real estate experience in the five years prior to appointment, and must not hold a restricted license or be subject to debarment. The Commissioner is authorized to suspend or suspend revoke the license of the appointed licensee for failure to properly oversee and supervise operations.

What This Means for Real Estate Practitioners
This Bill will be of interest to employing/designating brokers in that they now must notify the Department of Real Estate of their designations. However, it is also important to note the higher standard to which the appointed branch manager will be held. SB 510 will create accountability that will extend beyond the employing broker and to the manager of the branch. It is anticipated that Regulations will follow to detail the criteria for this statute.

Senate Bull 53: Escrow Transactions

As of now, real estate brokers engaging in certain escrow activities are required to make certain disclosures and recordings regarding those activities. Beginning on July 1, 2012, Business and Professions Code Section 10141.6, et seq., will be amended regarding real estate brokers who, pursuant to the exemption from the Escrow Law contained in Section 17006 of the Financial Code, engage in escrow activities for five or more transactions in a calendar year or whose escrow activities equal or exceed one million dollars in a calendar year. Within 60 days of the completion of the calendar year, those brokers subject to this section will be required to file a report with the Department of Real Estate documenting the number of escrows conducted and the dollar volume escrow was during the calendar year in which the threshold was met. Those brokers who fail to submit the required documentation will be assessed per diem penalties that will continue to increase until the Department receives the report. Further, if those penalties are not paid, the Commissioner may suspend or revoke the license of the offending broker.

What This Means for Real Estate Practitioners
SB 53 is important as it applies to brokers who may find themselves reaching the statutory limits outlined in B&P Section 10141.6, et seq. It is essential to keep track of any amendments in legislation that may change the way a real estate practitioner conducts business. SB 53 is a bill that goes on to amend other sections of the Business and Professions Code with regards to the Real Estate Law and will thereby interest agents and brokers alike. It can be found in its entirety at www.leginfo.ca.gov.

Senate Bill 837: Changes to Transfer Disclosure Statement

Existing law requires that, “on or before January 1, 2017, a single-family residential property built on or before January 1, 1994, be equipped with water-conserving features…” Such features include low-flow toilets, showerheads, and faucets (pursuant to Civil Code § 1101.3). Beginning January 1, 2012, SB 837 will make amendments to the Transfer Disclosure Statement (TDS) to disclose whether the property is equipped with these water-conserving plumbing features. (CAR will publish a new TDS form in November, 2011 that will contain this disclosure.)

What This Means for Real Estate Practioners
The amendment of Civil Code Section 1102.6 to include the disclosure of water-conserving features is one more item for real estate practitioners to look out for when assisting their clients with the TDS. Whether filling out the form or reviewing it, it is important to note whether these items are checked, so your client either knows what they need to do to the property in the future (as buyers), or, if they are already installed, what is increasing the value of the home (for sellers).

Senate Bill 4: Changes to Notice of Sale

Current law requires lenders to file Notices of Default in the case of nonjudicial foreclosure prior to enforcing the power of sale as a result of a default on an obligation secured by real property. Further, a Notice of Sale is to be given and recorded prior to exercising the power of sale. Effective April 1, 2012, SB 4 will now require additional language on the Notice of Sale notifying potential bidders of the risks and liabilities of bidding at the auction, as well as where they can find additional information regarding these risks. The Notice of Sale will also contain language for the property owner regarding how to obtain information about sale dates and postponements. This information is required to be provided by any means that provides continuous access.

What This Means for Real Estate Practitioners.
The changes in the Notice of Sale do not necessarily affect the salesperson, broker or their business directly, but keeping up with the changes will also help you to keep up with current trends in real estate and potentially the market.

These four bills are not the only new legislature that may affect a REALTOR®, real estate agent, or his or her client. As was aforementioned, it is important to keep track of the new laws and changes to existing laws—even those that do not seem pertinent at this exact moment. As an agent or broker, it is essential to be as informed and well-rounded as possible. Keeping up-to-date on the law will better ensure that this is the case.

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More in this newsletter, please download the PDF version for the full release.


Courtside Newsflash: GOVERNOR SIGNS NEW LAW CREATING LIABILITY FOR MANAGERS OF REAL ESTATE BRANCH OFFICES

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Branch Manager Liability – Governor Signs SB510

BY: SYLVIA J. SIMMONS, ATTORNEY AT LAW
THE GIARDINELLI LAW GROUP, APC
31594 RAILROAD CANYON ROAD
CANYON LAKE, CA
(951) 244-1856 WWW.GLAWGROUPAPC.COM

Existing Real Estate Law requires a real estate broker to obtain a license for each branch office and be liable for supervising the sales agents in that office. If the Department of Real Estate (DRE) requirements are not met, the designated broker risks license suspension or revocation. It is common practice for a broker to employ an office manager to supervise the operations of a branch office. Before passage of Senate Bill 510, a branch office manager did not share the designated broker’s responsibility for violating Real Estate Law if the real estate agents within the branch office were not properly supervised.

Under the new law, to be effective on July 1, 2012, the employing broker or corporate designated broker officer is permitted to contract with an eligible real estate broker or licensed salesperson (manager) to operate a branch office. The manager will be subject to disciplinary action for failure to properly supervise licensed activity of the sales agents and may have her/his license temporarily suspended or permanently revoked for failure to properly oversee and supervise operations of the branch office.

The new law includes the following requirements:

  •  The manager must:
    • Hold an unrestricted license,
    • Not be or have been subject to an order of debarment, and
    • If a salesperson, have at least 2 years full-time real estate experience within the preceding 5 years
  • There must be a written contract between the designated broker and the manager
  • The designated broker must give written notice to the DRE, in a form approved by the commissioner, identifying the manager and branch office or division
  • The designated broker must give immediate written notice to the DRE if the manager is changed or terminated

Senate Bill 510 was supported by the California Association of REALTORS®. The law was enacted to make office managers accountable if they fail to properly supervise their sales agents and is expected to ensure that consumers in California are afforded the best practices and highest quality of service from the real estate industry.

Designated brokers who have branch offices should review the qualifications of their branch managers and the provisions of their agreements and policies for compliance with the new requirements, and seek competent legal assistance to revise or create policies and employment contracts that meet the new legal requirements.

Biography
The Giardinelli Law Group, APC, Sylvia J. Simmons, Attorney.
Sylvia J Simmons is a business and transaction attorney at The Giardinelli Law Group, APC. Ms. Simmons has been providing legal services to businesses and REALTOR® Associations, brokers, residential, commercial and vacant land buyers and sellers for more than 14 years. The services she provides include business entity formation, corporate maintenance, buy-ins and buy-outs, succession planning, director disagreements, leases, contracts, employment policies and handbooks, hiring, discipline and termination. Ms. Simmons may be reached atsylvia@glawgroupapc.com or (951) 244-1856.


Courtside Newsletter September 2011

The Giardinelli Law Group has released their September 2011 Courside Newsletter which is available for you to download. Below is one of the articles in this release.

Please click on the image below for the Courtside Newsletter Spet. 2011

MARS Enforcement Stayed Against Short Sale Listing Agents -REVISIONS TO C.A.R.’s MARS RULE Q&A

BY: SYLVIA J. SIMMONS

The California Association of REALTORS® revised its Q & A on the MARS rule in late August 2011 to reflect the announcement by the Federal Trade Commission (FTC) of its current position regarding enforcing the rule against REALTORS®. As of July 15, 2011, the FTC is generally not seeking enforcement of the Mortgage Assistance Relief Services (MARS) rules against REALTORS® who are simply trying to help their clients complete a short sale.

Short sale listing agents must meet three criteria:

  1. Be licensed and maintain good standing under state law;
  2. Be acting in compliance with state law governing the practices of brokers and agents; and
  3. Be assisting or attempting to assist a consumer in negotiating, obtaining or arranging a short sale of a dwelling in the course of securing the sale of the consumer’s home.

Agents who do not meet these requirements must:

  • Provide the C.A.R. form MARSSN when they take short sale listings
  • Provide the C.A.R. form MARSSN when they obtain a lender approval letter
  • Include general commercial notice in advertisements marketing properties
  • Comply with MARS’ other record keeping and monitoring requirements

The following agents must comply with the MARS rules:

  • Agents who are pure short sale negotiators
  • Agents who promote their services as a way to avoid foreclosure
  • Agents who offer various foreclosure and loan related services

Of course, the FTC will enforce the MARS rules against any REALTOR® who engages in unfair or deceptive practices in the handling of a short sale. At this time, the Consumer Financial Protection Bureau (CFPB) is responsible for the rule-making functions of the FTC. The two agencies are required by federal law to coordinate their activities for consistent regulations. Therefore, the CFPB will follow the FTC policy, but the enforcement approach may change in the future.

For the complete MARS rule Q & A, contact the California Association of REALTORS®, or visit their website at www.car.org. For in-depth legal advice regarding the MARS rule or other real estate matters, feel free to contact The Giardinelli Law Group, APC.

 

 


Courtside Newsletter: New Protections for Short-Sale Sellers – August 2011

By: J Niswonger, Riverside County Office

There is some good news for homeowners who have to sell their properties for less than they owe (known in the industry as short sales).  The California Legislature has passed Senate Bill 458, which mortgage holders from seeking to recover additional money from the seller after approving a short sale.  This month’s newsletter addresses the effects of Senate Bill 458 and the benefits to homeowners of this change to an existing statute.

Senate Bill 458 was signed by Governor Brown on July 11, 2011 and filed with the Secretary of State on July 15, 2011.  The Bill modifies Code of Civil Procedure Section 580e and, by its terms, takes effect immediately.  The most significant effect of this new law is that now any bank or other lender that holds a note secured by real property (i.e., a mortgage) may not seek to recover a deficiency on that note after a short sale.  That is, lenders who approve a short sale are entitled to receive only the money received through the sale of the property and may not collect any remaining balance from the seller.  Previously, only the holder of the first mortgage was prohibited from recovering a deficiency.  Thus, before this law recently changed, second mortgage holders (and other junior lenders) commonly approved short sales on the condition that they retain the right to recover from the seller any balance owed after the sale.  This practice is now illegal.

To illustrate, assume that a seller owes $350,000.00 on a first mortgage, and $60,000.00 on a home equity line of credit (HELOC).  Assume also that a buyer offers to purchase the property for $200,000.00, and the first mortgage holder offers to pay the HELOC lender $10,000.00 to approve the sale.  Before the law was amended, only the first mortgage holder was prohibited from recovering additional money from the seller (i.e., it could only receive the proceeds from the short sale, which, in this example would be $200,000.00 minus $10,000.00 to the HELOC lender minus costs and real estate commissions).  A HELOC lender in this situation, however, would often include a provision in the short-sale approval that gave it the right to recover from the seller the remaining amount owed ($50,000.00 in this example).  Junior lenders, such as the HELOC lender in this example, can no longer recover any money outside of the short sale.  Like first mortgage holders, a junior lender that approves a short sale now receives only the money it agreed to receive under the terms of the short sale.

Under the law as amended, junior lenders cannot even ask sellers to contribute additional funds as a condition of approving the short sale.  Thus, in the example above, the HELOC lender may not ask that the seller agree to contribute any additional funds as a condition of approving the short sale.  Previously, junior lenders often negotiated with sellers to receive an additional lump sum payment to satisfy the obligation in full.  For example, lenders like the HELOC lender above regularly negotiated an additional $5,000.00 or $10,000.00 from the seller with the promise that the loan would be treated as paid-in-full.  This practice is no longer allowed.

Like the original, the modified law continues to apply only to dwellings of four units or less.  Unlike the original statute, however, the new law distinguishes between loans that are secured “solely” by the property subject to the short sale and those that are secured by additional collateral (either other real property or personal property).  If the loan is secured “solely” by the property subject to the short sale, the lender may not recover any deficiency.  If the loan is secured by other property as well, then a lender may recover a deficiency only to the extent that a deficiency would have been available if the property had been sold through non-judicial foreclosure (see our September 2009 Courtside Newsletter for a discussion of judicial and non-judicial foreclosures).

The amended statute retains the exceptions for fraud and waste that were in the original version.  This allows lenders to recover compensation from sellers who try to defraud lenders or who damage the property.  An example of fraud would be if the seller received money from the buyer outside of escrow.  The amended law also retains exceptions for sellers that are corporations or “political subdivisions of the state,” and adds exceptions for limited liability companies and limited partnerships.  The result of these exceptions is to make the law applicable only to sellers who are natural persons.

IS THE LAW RETROACTIVE?

Senate Bill 458 officially became law on July 15, 2011 when it was filed with the Secretary of State, and applies to all short sales after that date.  Questions arise regarding whether the amended statute provides any protection for sellers who completed short sales before July 15, 2011, or for sellers who entered into short-sale agreements before July 15, 2011 with escrow closing after that date.  The analysis of whether a law is retroactive is complex, and involves a number of considerations beyond the scope of this newsletter.  It appears, however, that the revised law will protect many sellers who closed escrow before July 15, 2011 or who entered into contracts before that date.

The precise wording of the amended statute states, “No deficiency shall be owed or collected, and no deficiency judgment shall be requested or rendered for any deficiency. . . .”  Based upon this wording, a reasonable argument may be made that a lender who has not yet obtained a deficiency judgment will be prohibited from recovering any deficiency from a seller.  This analysis is consistent with current California court determinations regarding whether and to what extent a statute is retroactive.  It is possible that the words “no deficiency shall be owed or collected,” may even prevent lenders from collecting existing deficiency judgments.  How the courts will determine these issues, however, remains to be seen.  The legislative history of this amendment strongly suggests that the lawmakers intended immediate protection for all sellers, including those who do not yet have judgments against them.  The Giardinelli Law Group is currently vigorously defending deficiency claims based on the interpretation that such claims are absolutely barred as of July 15, 2011.

A LIKELY REPERCUSSION OF THE NEW LAW

 

Nothing in the amended law requires junior lenders to agree to a short sale.  Thus, it will likely likely be more difficult in the future to convince junior lenders to approve a short-sale offer.  Instead of accepting a fraction of the amount owed by approving a short sale, junior lenders may prefer to allow the property to go into foreclosure and pursue a deficiency judgment after the foreclosure sale (see our September 2009 Courtside Newsletter for a discussion of when a junior lender may seek a deficiency after a foreclosure sale).

Also, junior lenders may initially withhold approval of a short sale in the hope that the seller may offer additional compensation as an incentive for the lender to sign the short-sale approval.  While the law specifically states that junior lenders “shall not require” the seller to pay additional compensation, nothing in the law prohibits sellers from voluntarily offering additional compensation.  Whether such a tactic is permissible will likely be the subject of future court decisions.

Senate Bill 458 closed a large loophole in short-sale law, but while it provides important protections for sellers, it creates a likely cost that fewer short sales will be approved by junior lenders.  Only time will tell whether this law will have a positive impact on the current mortgage crisis.

 *              *              *

 Biography

J Niswonger is the senior litigation attorney at The Giardinelli Law Group, APC.  Mr. Niswonger has been a general civil litigator for more than 18 years, and has litigated real estate matters for more than 16 years.  In addition to his litigation experience, Mr. Niswonger has successfully mediated a significant number of real estate cases.  Mr. Niswonger may be reached at jniswonger@glawgroupapc.com or (951) 244.1856.

This Newsletter is a copyrighted publication and may not be reproduced or transmitted in any form or by any means without written permission.  This article does not necessarily reflect the point of view of the Giardinelli Law Group, APC, or other person or entity who publishes it.  This article provides legal information abridged from statutes, court decisions, and administrative rulings and contains opinions of the writers.  Legal information is not the same as legal advice, which is the application of law to an individual’s specific circumstances.  Although every effort is made to ensure the information is accurate and useful, it is recommended that you consult with a lawyer to obtain professional assurance that the information provided and your interpretation of it is appropriate for a particular situation. To request further information or to comment on this newsletter, contact us at (951) 244-1856 and visit our website at www.glawgroupapc.com.

 

 


Courtside Newsletter: Of MARS and Short-Sales

According to statistics compiled by the California Association of REALTORS® (C.A.R.), short sales comprised 23 percent of all California home sales in February 2011; that number was 20 percent in March 2011 (see www.car.org/marketdata/data/distressedsales/). Because of the high percentage of short sales, almost every REALTOR® in California will participate in a short sale transaction at some point. This month’s newsletter addresses what every REALTOR® should know about a new Federal Regulation applicable to REALTORS® involved with short sales.

Effective January 31, 2011, a new Federal Law (Title 16, Code of Federal Regulations, Part 322) imposes certain requirements on anyone who provides Mortgage Assistance Relief Services (MARS). Many REALTORS® may incorrectly assume from the title that this new regulation applies only to those who assist homeowners with loan modifications. As written, however, this regulation also applies to REALTORS® involved in short sales. This new law defines Mortgage Assistance Relief Service to include any service “to assist or attempt to assist” a person with “Negotiating, obtaining or arranging: (i) A short sale of a dwelling, (ii) A deed-in-lieu of foreclosure, or (iii) Any other disposition of a dwelling other than a sale to a third party who is not the dwelling loan holder.”

By this definition, any REALTOR® who lists a short sale property is a provider of Mortgage Assistance Relief Services and must comply with the MARS rule. Further, under a strict reading of the MARS rule, even a REALTOR® who represents a buyer of a short sale property may be required to comply with the rule. For example, a REALTOR® who makes a phone call to the seller’s lender in order to provide information to assist the lender in approving the short sale has arguably assisted the seller with obtaining the short sale. Thus, a buyer’s agent who actively participates in the short sale approval process should be aware of and consider complying with the MARS rule. In general, REALTORS® need to be aware of three primary provisions of the MARS rule: 1) Prohibition Against Advance Payments; 2) Prohibited Representations; and, 3) Required Disclosures.

Prohibition Against Advance Payments

The MARS rule prohibits anyone who performs covered services from receiving any advance fee for the services. This does not usually apply to a REALTOR® who agrees to a commission, since commissions are generally not paid until escrow closes, when most services have already been performed. This may be a problem, however, for any REALTOR® who retains a short sale negotiator. Requiring the short sale negotiator’s fee up front probably violates the MARS rule. Further, the MARS rule prohibits a person from assisting or facilitating someone who violates the rule. Thus, a REALTOR® could be held in violation of the MARS rule if he or she sends a client to a short sale negotiator who collects an up-front fee. Of course, as reported in our June 2010 and July 2010 Courtside Newsletters, there are other potential serious issues related to the use of short sale negotiators (past issues of our Courtside Newsletter may be found on our website at www.glawgroupapc.com).

Prohibited Representations

Any REALTORS® who provide services covered by the MARS rule are prohibited from making certain representations. First, REALTORS® may not tell the sellers to avoid contact or communication with the lender or servicer. Second, REALTORS® may not represent to sellers any specific benefits or anticipated results of a short sale negotiation unless the REALTOR® is able to support the representations with reliable information. Finally, REALTORS® may not make any misrepresentations related to the short sale. The MARS rule lists 12 categories of misrepresentations, but makes it clear that misrepresentations which fall outside of these categories are also prohibited. Included in these categories are statements regarding the likelihood of success, time estimates for accomplishing results, affiliation or compliance with government programs, whether or not the seller should continue making payments, the possibility of refunds, the conditions that create the right to compensation for the service, and whether the seller is obligated to accept the relief offered.

Thus, for example, unless statements are true and can be supported by reliable documentation, REALTORS® should not tell sellers that they are likely to get an answer in three to four weeks, or that the lender is likely to approve a particular purchase offer from a buyer. REALTORS® should not tell sellers that a particular transaction complies with government regulations, or is part of any government program designed to help homeowners. REALTORS® should not tell sellers that they are required to pay for the services of a short-sale negotiator, or that the REALTOR® is entitled to a commission even if the sale does not close. This last issue is problematic for REALTORS® who use the standard C.A.R. Listing Agreement, which entitles the Broker to damages if the seller terminates the agreement early. The Federal Trade Commission (FTC) is currently reviewing this and other REALTOR® specific issues. According to the National Association of REALTORS® (N.A.R.), the FTC is not likely to strictly enforce some of these provisions against real estate practitioners until such conflicts are addressed and resolved. The MARS rule is essentially designed to protect homeowners from any sharp sales tactics.

Required Disclosures

Probably the biggest trap for the unwary REALTOR® arises from the disclosure requirements. A REALTOR® who advertises short sale services must make specific disclosures, as does a REALTOR® who assists a single client in a short sale transaction. The MARS rule sets forth what disclosures must be made, and under what circumstances.

1. General Commercial Communications.

If a REALTOR® represents to the general public that he or she can help short sell a residential property, disclosures are required to be part of every communication. All written communications, such as advertisements, flyers, brochures, newsletters, and even business cards, (if they identify the REALTOR® as knowledgeable in short sales), must contain the following disclosures:

IMPORTANT NOTICE (in bold-face type that is two points larger than the font size of the disclosure) (Name of company) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

If the REALTOR® orally communicates his or her ability to assist with short sales, these same disclosures must be made, and must be preceded by the statement “Before using this service, consider the following information.” In any telephone communication, this wording must be used at the beginning of the call.

If the REALTOR® makes any statement regarding whether a seller should stop making mortgage payments, the following disclosure must be added:

If you stop paying your mortgage, you could lose your home and damage your credit rating.

2. Specific Commercial Communications.

REALTORS® who handle short sales without generally advertising this fact are also required to comply with the MARS rule disclosures. In such cases, the following disclosures must be made at the moment the REALTOR® becomes aware that the transaction will be a short sale:

IMPORTANT NOTICE (in bold-face type that is two points larger than the font size of the disclosure) You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender or servicer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our services. (Name of company) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

If the REALTOR® makes any statement regarding whether a seller should stop making mortgage payments, the following disclosure must be added:

If you stop paying your mortgage, you could lose your home and damage your credit rating.

As noted above, the part of the required disclosure stating, “If you reject the offer you do not have to pay us,” causes a conflict with the standard C.A.R. Listing Agreement. Both C.A.R. and N.A.R. are awaiting clarification from the FTC on this and other issues unique to REALTORS®.

3. Fee Disclosures.

As stated above, the MARS rule prohibits all up-front fees. It also requires that fees be disclosed before the seller signs the listing agreement (if it is a known short sale at that time). More importantly, the fee must be disclosed once again before the seller completes a transaction. The MARS rule requires that the stated fees be the same on both disclosures.

This creates a problem when, as commonly occurs, lenders reduce the amount of commissions that will be paid to listing agents before closing. In such a situation, it may be impossible for REALTORS® to comply with the requirement that the fee disclosed to consumers be the same on the two required disclosures. This is another of the issues that N.A.R. has addressed with the FTC, and for which a resolution is expected.

C.A.R. Forms

The California Association of REALTORS® has created two forms to help REALTORS® comply with the MARS rule. If the REALTOR® knows at the time the listing is taken that the transaction will be a short sale, the REALTOR® should use form MARSSN. This form should be part of the Listing Agreement. If the REALTOR® later learns that the sale proceeds will not cover the amount owed on the property, the REALTOR® should immediately present form MARSMRN to the seller. These forms contain the required language set forth above.

It is important to be aware of two potential pit falls. First, these forms are specifically drafted for listing agents. As stated above, circumstances may arise where the buyer’s agent contacts the seller’s lender in an effort to facilitate negotiation of the short sale. Under a strict reading of the MARS rule, the buyer’s agent in such a situation would also be providing Mortgage Assistance Relief Services, and therefore would be required to make disclosures to the seller. If that occurs, it is recommended that the buyer’s agent modify form MARSMRN and provide it to the seller’s agent for the seller’s signature. This matter has been discussed with the C.A.R. legal department, which is likely to review it further depending on how the FTC clarifies the MARS rule as it applies to REALTORS®.

The second and more important pit fall arises for REALTORS® who think that using the standard C.A.R. forms will assure that they have complied with all of the requirements of the MARS rule. This is not true for any REALTOR® who publicizes the fact that he or she can handle short sales. If the words “short sale” occur in any communication to the general public (such as advertisements, flyers, brochures, newsletters, business cards, or even conversations), that communication must contain the required disclosures for General Commercial Communications (above). Simply using the standard C.A.R. forms does not fulfill the disclosure requirements for commercial communications.

This article has discussed the MARS rule only in the context of short sale services. There are many other provisions of the MARS rule that could create exposure for a REALTOR®. For example, if a REALTOR® gives any general advice about loan modifications or foreclosures, or advises clients regarding whether or not to continue making mortgage payments, that REALTOR® could be found to violate the MARS rule. As with any legal issue, it is important to receive guidance from qualified legal professionals.

This Newsletter is a copyrighted publication and may not be reproduced or transmitted in any form or by any means without written permission. This article does not necessarily reflect the point of view of the Giardinelli Law Group, APC, or other person or entity who publishes it. This article provides legal information abridged from statutes, court decisions, and administrative rulings and contains opinions of the writers. Legal information is not the same as legal advice, which is the application of law to an individual’s specific circumstances. Although every effort is made to ensure the information is accurate and useful, it is recommended that you consult with a lawyer to obtain professional assurance that the information provided and your interpretation of it is appropriate for a particular situation. To request further information or to comment on this newsletter, contact us at (951) 244-1856 and visit our website at www.glawgroupapc.com.

 

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Tender Rule in California May Stop a Homeowner From Fighting Against Foreclosure

By: Ryan D. Miller
Riverside County Office

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Last July, our newsletter article focused on the Garcia case, where a lender promised not to foreclose, but did anyway.  The borrower was able to maintain a lawsuit against the lender because as the borrowers relied upon the lender’s promise, to their detriment.  In January of this year, our newsletter article focused on the landmark case in the Massachusetts Supreme Court, also related to overcoming foreclosure.  Recently there was another case in the California Courts of Appeal, 2nd District, Aceves v. U.S. Bank, N.A., Cal. App. 2d Dist. Jan. 27, 2011, where another homeowner was successful at maintaining a lawsuit against a lender for allegations of fraud and promissory estoppel.

While the cases illustrate that lenders often violate laws in pursuing non-judicial foreclosures, many do not know that in order to even bring a wrongful foreclosure case, the borrower likely must first offer to tender the full amount of the loan, where the trustee’s sale already occurred, or cure any default, where the trustee’s sale has not yet occurred, in order to get a court to set aside a foreclosure sale.  This “tender rule” is not limited to cases where the homeowner seeks to set aside a foreclosure sale, cancellation of a trustee’s deed or quiet title.  It is also applied to causes of action related to a foreclosure, including negligence and fraud.

The tender rule was set forth in Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575,579-580.  It is based on the notion that one who seeks to set aside the foreclosure sale must first comply with any requirements they are obligated to first.  This rule tends to be the biggest hurdle for the wrongfully foreclosed to fight against wrongful foreclosures, and it is a big hurdle.  If borrowers had the money to tender to the lender, they would not need a loan in the first place.  Additionally, if a borrower could get a loan through another lender, they could use that money to tender.  However, once a borrower is in default, their credit is such that they can no longer obtain additional financing.

There are ways around the tender rule.  One of the most successful ways to avoid having to tender the entire amount of the loan is to show that because the lender lacked the authority to foreclose, the sale was void.  Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, 876.  That means the trustee’s sale was a complete nullity with no force or effect as opposed to one which may be set aside.  Indeed some cases have held that it is not “equitable” nor does it make sense to require a homeowner to tender the amounts owing because of a lender’s actions.  One can certainly see the problems that could arise with a rogue lender wrongfully foreclosing, where the borrowers were helpless to fight the foreclosure because they could not tender the full amount of the loan.

Other cases have held that notice defects void a trustee’s sale so tender would not be required.   Bank of America, N.A. v. La Jolla Group II (2005) 129 Cal.App.4th 706, 715-716 and Little v. CFS Service Corp. (1987) 188 Cal.App.3d

However, despite these decisions, local courts have sometimes been reluctant to entertain these arguments.  I speculate that the reason for this reluctance is that many homeowners filed wrongful foreclosure actions against the lender, when they had no basis for doing so, simply to stay in the home one more month.  It is possible that the courts want to discourage this type of behavior, and therefore require tender.

Additionally, I have seen that where a homeowner has the ability to pay all arrears, the court seems more likely to allow a wrongful foreclosure action.  And usually, it is more persuasive to the court if a homeowner can provide proof of their ability to pay all arrears, fees, etc.  Additionally, when an unlawful detainer is also pending, the court may ask that the homeowner provide a bond, in the event the homeowner loses and must pay the fair rental value of the foreclosed-upon home.

When a lender’s actions are egregious and fraudulent activity is apparent, a court may not focus so much on the tender rule.  However, when the facts come short of showing fraud, the tender rule may bar the average homeowner from pursuing a wrongful foreclosure case.

A foreclosed upon homeowner should consider the tender rule before committing to the time and expense associated with a lawsuit.  Additionally, if a lender is engaged in conduct that is obviously fraudulent, a foreclosed upon homeowner should know they should not have to tender the full amount of the loan.


New Rulings in Massachusetts Could Impact Foreclosure Cases in California


By: Kelly A. Neavel
Orange County Office

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Two new, pivotal foreclosure cases were decided this month by the Massachusetts Supreme Court that could have an impact on foreclosure cases here in California.

In U.S. Bank N.A. v. Ibanez and Wells Fargo Bank NA v. LaRace, the lenders foreclosed on the mortgages secured by the properties owned by Ibanez and the LaRaces.  Both properties reverted back to the lenders.  The lenders brought an action to perfect title in order to sell the properties.  Both Ibanez and the LaRaces argued that the lenders did not have the authority to foreclose.  Under Massachusetts foreclosure law (as in most states, including California) only the present holder of the mortgage is authorized to foreclose, and the statutory law must be strictly followed because there is no judicial oversight.  If the Notice of Sale does not identify the current holder of the note at the time of the notice and sale, the Notice of Sale is void.  In Ibanez and LaRace, the Court noted that this often occurs when the party is identified as the “beneficiary” in the Notice of Default or the Notice of Sale, but later it is learned through Fannie Mae and Freddie Mac that the beneficiary as stated is not the real owner of the loan.

The Massachusetts Supreme Court held that the lender must prove that it has authority to foreclose.  In both Ibanez and LaRace, U.S. Bank and Wells Fargo Bank were assignees of the original mortgages only.  Therefore, they had authority to exercise the power of sale contained in the original mortgages if they were the assignees at the time of the Notice of Sale and foreclosure sale.  The court went on to discuss what is required to prove ownership of securitized loans (loans that are pooled with other loans and assigned to a securitized trust), as was the case in Ibanez.  The court held that an executed agreement that assigns the pool of mortgages, and contains a schedule of the loans clearly identifying the mortgage at issue may be sufficient.  However, the court stressed that there must be proof that the assignment was made by a party that itself held the mortgage.  U.S. Bank and Wells Fargo argued that because they held the notes, they had sufficient financial interest in the mortgages to allow them to foreclose.  The Massachusetts Supreme Court rejected this argument stating, “Where a note has been assigned but there is no written assignment of the mortgage underlying the note, the assignment of the note does not carry with it the assignment.”  The court went onto note that in most cases there is never any proof that the securitized loan trustee ever has the original note properly endorsed and assigned.

Ultimately, in Ibanez and LaRace, the court held that, “the Plaintiffs (U.S. Bank and Wells Fargo Bank) did not demonstrate that they were the holders of the mortgages at the time they foreclosed on the properties and therefore, failed to demonstrate that they acquired fee simple title to these properties by purchasing them at a foreclosure sale.”  The court also held that the foreclosure sales were void.  To add insult to injury, the court further held that because U.S. Bank and Wells Fargo Bank failed to abide by well-established case law and statutes, this holding would apply retroactively to all previous foreclosures conducted by both banks.  This ruling could affect to thousands of properties foreclosed upon by U.S. Bank and Wells Fargo Bank.

Even though Massachusetts law is not controlling in California, California courts can look to this ruling when addressing similar issues, which may impact California foreclosure cases.  Here is the Massachusetts Supreme Court standard that may impact California law in the future:

  1. Foreclosures must be done by the real party in interest;
  2. Chain of title must be perfected, meaning all assignments of the mortgage must be in order;
  3. All documents have to be proper at the time of the foreclosure proceedings or the foreclosure can be deemed improper, and
  4. Mere possession of the Note is not enough – lenders must demonstrate that they have proper standing to foreclose.

It should be noted that currently in California, the courts have rejected the argument raised by borrowers that lenders have to produce the original note in order to have standing to foreclose.  However, it will be interesting to see how this new ruling by the Massachusetts Supreme Court, will affect future foreclosure cases in California and other states.

Application to REALTORS®:

  1. If this ruling is applied here in California, foreclosures will be harder to complete, which will impact the REO market with less inventory;
  2. REALTORS® may see an increase in short sales and loan modifications; and
  3. REALTORS® should always advise their buyers to obtain their own owner’s title insurance policy to protect themselves in the event it is later proven that the property had defective title at the time of the foreclosure sale.

RISKS AND BENEFITS OF A DEED IN LIEU OF FORECLOSURE

This month we provide a brief overview of whether a property owner facing foreclosure should consider giving the property back to the lender through a deed in lieu of foreclosure.  If the property owner is willing to let go of the property, the lender may be willing to accept a deed for the property from the owner instead of going through with a foreclosure sale.  This is known as a “deed in lieu of foreclosure.”  Property owners facing foreclosure should be aware that it may be possible for them to avoid some negative consequences of foreclosure if they are willing to give the property to the lender before the foreclosure sale.

A deed in lieu of foreclosure is a transfer of title in real property from the property owner/borrower to the lender in order to avoid foreclosure entirely or to stop the foreclosure process.  The deed in lieu of foreclosure consists of an agreement between the borrower and lender that is negotiated after the possibility of a foreclosure arises.  Such an agreement cannot be part of the original loan documents.  That is, the lender cannot agree in advance that it will accept a deed in lieu of foreclosure.  Thus, borrowers cannot create a contractual obligation at the time they borrow money that would allow them to force a lender to accept the property instead of going through the foreclosure process.

Lenders cannot force borrowers to surrender a deed in lieu of foreclosure, as this would infringe on a borrower’s rights.  An agreement to accept a deed in lieu of foreclosure must be negotiated between the borrower and the lender.  The HAFA program provides for a deed in lieu process if a loan modification fails.  However, a borrower faced with losing property through foreclosure cannot simply execute and record a deed granting the property to the lender.  If a borrower attempts to do this, the lender will record a “Notice of Nonacceptance,” which provides legal notice that it has not accepted the deed in lieu of foreclosure.

A senior lienholder may not want to accept a deed in lieu of foreclosure.  If the property owner has other liens against the property, such as a second mortgage or judgment liens, a senior lender who accepts a deed in lieu of foreclosure accepts the property subject to those other liens.  A foreclosure, on the other hand, will wipe out any junior liens (a junior lien is one that is recorded after the lien foreclosed upon).  It may be more economically advantageous, therefore, for the lender to go through the foreclosure process.  Other reasons that a lender may not wish to accept a deed in lieu of foreclosure include the risk that the borrower may seek to set the deed aside and the risk that a borrower’s creditors may claim that the deed constitutes a fraudulent conveyance.  Lenders generally do not face these risks if they proceed with the foreclosure.

Even if the lender is willing to accept a deed in lieu of foreclosure, it may not be in the borrower’s best interest to execute the deed.  If the property is worth more than the amount owed to the lender, a deed in lieu of foreclosure results in the borrower waiving any right to the excess proceeds from the sale of the property.  It is rare in this economic climate that a property is worth more than what is owed on it, but there is another situation where a borrower may benefit from a foreclosure.  If a borrower has more than one loan against the property, for example, a foreclosure sale may result in a junior lien holder receiving part of the money owed. In some situations, payment through foreclosure of part of the money owed to a junior lien holder may prevent that lien holder from seeking a deficiency judgment.

To illustrate, assume that a borrower owes $150,000.00 on a first mortgage and $50,000.00 on a second mortgage.  Assume also that the property that secures these mortgages is worth $175,000.00.  If the property sells for $175,000.00 at the foreclosure sale, the second mortgage holder will receive $25,000.00 (for purposes of this illustration, assume that foreclosure costs are negligible).  The fact that the second mortgage holder receives some payment through the foreclosure will prevent it from obtaining a deficiency judgment.  Of course, if the second mortgage is a purchase-money mortgage no deficiency judgment is available anyway.  (See the September 2009 Courtside Newsletter for further discussion of purchase-money and non-purchase-money loans at www.glawgroupapc.com.)  Nonetheless, there may be circumstances under which the borrower benefits from a foreclosure sale.

A deed in lieu of foreclosure, however, may create a significant benefit to a borrower.  If the lender agrees to accept a deed in lieu of foreclosure, a borrower can minimize the injury to his or her credit.  Further, a lender may agree to cancel the debt and forego any claims to recover a deficiency in exchange for a deed in lieu of foreclosure.  The lender benefits by avoiding the costs of foreclosure, including costs associated with a delay in recovering the property.  Under the right circumstances, a deed in lieu of foreclosure can be a win-win situation for both the borrower and the lender.

As discussed above, a number of factors must be considered in determining whether to execute a deed in lieu of foreclosure.  As with all legal issues, it is important to consult a qualified legal professional in order to understand all of the risks and benefits associated with such action.

The author of this month’s newsletter is J Niswonger, an attorney with The GIARDINELLI LAW GROUP, apc.  Mr. Niswonger may be reached at jniswonger@glawgroupapc.com or 951/ 245-9163.


SPECIAL REPORT: SHORT SALE NEGOTIATORS: Fiduciary Duties / Contractual Relationships / MLS Issues

In the current real estate market, a significant number of transactions are short sales.  The enactment of federal legislation (HAFA) to streamline and provide rules for short sales is expected to further increase the number of attempted short sale closings.  The increase in short sale transactions has caused changes in how buyers, sellers, real estate brokers, agents and lenders conduct business.  The traditional ways of handling a transaction do not always fit in a short sale, nor, in many instances, do traditional rules.  New business models are being created, and opportunities for fraud schemes and ambiguities are abundant.  Many agents are using the services of short sale negotiators.  Real estate professionals are faced with multiple and complicated legal and ethical issues and new rules and regulations that have been enacted to address these changes.

The Giardinelli Law Group, APC has prepared this Special Report to discuss some of the duties and obligations of agents and the contractual relationships involved in the use of short sale negotiators, and MLS listing issues.  Subsequent reports should be available soon covering other topics related to short sales (flipping schemes, additional MLS Rules issues, DRE Regulations, legislation and reporting violations).  We acknowledge and thank the California Department of Real Estate (“DRE”) for permission to use material from the recent short sale article by Wayne Bell and Mark Tutera published in the DRE California RealEstateBulletin, Spring 2010.

Short Sale Defined

A short sale is a transasction where title transfers and the sale price is insufficient to pay the total of all liens and costs of sale, and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies.  Before foreclosure by the lender or lienholder that holds the trust deed on a residential property (referred to in this article as the “Lender”), the Lender agrees to allow the homeowner to “sell short” — sell the property for less than the outstanding amount owed on the mortgage loans — and release the property from the trust deed the lender holds.  The lender benefits by removing the non-performing loan asset from its financial books, avoiding the costs and time delays of foreclosure, and incuring the holding costs associated with owning the property after foreclosure (such as taxes, maintenance, insurance, eviction, and listing and selling).  The homeowner benefits by avoiding the forclosure action which severely damages a credit rating and ability to obtain financing for a replacement residence in a shorter time frame.  However, an undesirable factor for the homeowner is that the “shortage” may be treated as “debt forgiveness” by the lender and in some circumstances may be taxable as “phantom income.”  There are both federal and state laws that govern tax issues.  In some circumstances where the lender has recourse, the lender may even have a potential claim for damages for the “deficiency” (shortfall).

Use of Short Sale Negotiators

Completing a successful short sale often requires time-consuming negotiations with the lender or lender’s representative.  Many agents or offices are inexperienced, unskilled, or just too busy to efficiency and effectively conduct such negotiations.  They prefer to utilize the services of a third-party negotiator who often has an established relationship with a person in the lender’s loss mitigation department.  Use of such a third-party negotiator, particularly one who is not “in‑house,” may raise a multitude of legal and ethical issues, including questions relating to fiduciary and ethical duties, license requirements, contractual relationships, compensation, disclosure, confidentiality, compliance with MLS Rules and civil and criminal law, insurance coverage and liability.  Some brokerages bring the negotiators in-house and under the umbrella of the supervision of the broker and the company’s insurance coverage.

DRE License Required for Negotiators

Real estate licensees who take short sale listings must ensure that the third party conducting the negotiations is properly licensed.  The DRE has made it clear that a real estate broker or salesperson license is mandatory to represent the parties to a short sale, unless negotiations are conducted by an attorney or the party.  If the negotiator is a licensee, then he or she must have a supervising broker.  Careful consideration must be given to whom the fiduciary duty is owed.  Is the negotiator an agent of the seller, a dual agent, or an employee/agent of the listing broker, the cooperating broker or both?

If the transaction involves a loan secured directly or collaterally by liens on real property, California Business and Professions Code section 10131(a) and (d) requires a person to be licensed who negotiates as a representative of another for the purchase, sale or exchange of real property, or who, for or in expectation of compensation, acts in a representative capacity for another to negotiate loans or perform services for borrowers or lenders.  (Narrow exceptions exist for attorneys acting in the course and scope of their law practice and a person or entity acting solely on his or its own behalf).

A license is required regardless of the title used by the negotiator.  For example, none of the following are exempt from the license requirement:  debt negotiator, debt resolution expert, loss mitigation practitioner, foreclosure rescue negotiator, short sale procesor, short sale factilitator, short sale coordinator, or short sale expeditor.  Persons who engage in short sale negotiations without a DRE license are in violation of California law and could be fined and/or imprisoned under section 10139 of the Business and Professions Code.  Persons who knowingly hire them may also be in serious difficulty.

Obligations of Listing and Selling Brokers and Agents

Seller’s Written Agreement and Disclosure

The listing broker/agent must have the seller’s written agreement for the negotiator to provide services.  This is required for several reasons:

  1. The listing broker/agent must disclose to the seller that the negotiator’s services will be used.
  2. The negotiator must have authority from the seller (borrower) to communicate on the seller’s behalf with Lender.
  3. The agreement of the seller is required regarding compensation to be paid to the negotiator.
  4. Use of the negotiator must be disclosed to the buyer’s agent.

These requirements may be met by completing the appropriate C.A.R. Form – Short Sale Addendum and providing the buyer’s agent a copy of the form.  In addition, it is this author’s opinion that an agency disclosure form may often be required.  If the licensed negotiator is acting on behalf of the seller (and/or buyer) in a principal/agency capacity, an Agency Disclosure form is mandatory.

Relationships between Listing Broker or Agent and Negotiator and/or Outside Broker

The listing agent generally has an independent contractor relationship with the listing broker.  The negotiator may be an employee, an affiliated independent contractor, or an outside vendor of either the listing broker or the listing agent.  If the negotiator is not an affiliated licensee of the listing broker, he must himself be a broker or be affiliated with another “outside” broker.  The listing broker/agent should have a clear written agreement establishing the relationship with the negotiator.

If the negotiator is affiliated with an outside broker, there should be a written agreement between the listing broker and the outside broker confirming that the outside broker will meet the fiduciary and legal duties to supervise the negotiator’s activities, not delegate tasks requiring a license to unlicensed persons, and provide insurance coverage for worker’s compensation and liability coverage for negligence or unintentional misprerensetations by the negotiator to the lender, buyer, seller or others.  The agreement between the brokers should also establish their rights regarding commission splits and method for compensating the negotiator for his services.  Providing for mediation or arbitration and attorney fees in the brokers’ agreement is also advisable.

Additional issues arise if the lender requires or designates a negotiator or if the listing broker/agent is also the buyer’s agent (dual agency) and uses a negotiator who is an employee or independent contractor of the lender.  In a dual agency transaction, the agent has a fiduciary duty to the seller to negotiate the best terms for the seller, not obtain the highest price for the Lender.  All appropriate disclosures regarding affiliate business relationships and referrals must be made to comply with the Real Estate Settlement Procedures Act (“RESPA”).

Compensation to Negotiator

The negotiator must comply with all DRE regulations and California law for advance fees.  Disclosure of all fees, including short sale negotiator compensation, must be made on the HUD 1 Statement.  Payment to the negotiator must be made through escrow. Conditions for valid payment to a short sale negotiator include the following:

  • Seller consent (written),
  • Agency Disclosure,
  • DRE license affiliated with licensed broker,
  • Performance of licensed activities,
  • Entitlement to compensation as an agreed commission split, a flat fee, or hourly rate as an independent contractor or employee of the listing agent, listing broker, or outside broker.

Will the fees still be due if the transaction fails to close or if the lender fails to grant approval?

Listing Broker/Agent Liability

Claims for breach of fiduciary duty, failure to disclose, or failure to supervise may be brought by a seller or buyer.  DRE discipline and criminal and/or civil liability may attach even if the listing broker/agent is unaware that the negotiator is engaged in mortgage fraud.

MLS Listing Re Short Sale Negotiator Fees

Short sales present a special problem with conditional compensation being offered to a cooperating broker.  The listing agent may not be entirely sure what the commission will be until the terms of a short sale are approved by the lender.  The Multiple Listing Service (MLS) has adopted NAR-approved language giving participants in the MLS the ability to disclose or may require disclosure to other participants that there is a potential for a short sale.  If the property is being listed as a short sale, that should be disclosed in the private agent remarks section.

A listing that requires the buyer’s agent to pay a portion of the negotiator’s fee may be a prohibited contingent offer of compensation.  To avoid an MLS Rule violation, rather than requiring the cooperating broker to pay a stated amount of the negotiator’s fee, the listing agent may lower the percentage of the commission offered to the cooperating broker, subject to discussion with the seller and full written disclosure.

The purpose of the MLS is to exchange information regarding available properties for sale or lease and to establish legal relationships with other participants by making blanket unilateral offers of compensation.  The MLS Rules govern the behavior of the participants.  However, it must be abundantly clear that the Rules do not alter California law, including the DRE regulations, Statutory Law, and Case Law.

MLS Rule 7.12 sets forth the criteria for an offer of compensation as being a specific dollar or percentage amount.  The Rule states, “… The amount of compensation … may not contain any provision that varies the amount of compensation offered based on conditions precedent or subsequent or on any performance, activity or event.”  Rule 7.16 limits the manner by which compensation may be altered.

There are a number of rules relating to the rights of brokers who present offers that may also impact this issue and will be a topic of the next report.  In the next report, we will discuss these issues and the Code of Ethics, particularly Articles 1, 2, 3, 7, 9, 12, and 16, as they apply to this subject matter.  See for example MLS Rules 7.16, 9.4, 9.5, 9.6 and 9.7.

As with all real estate communications, all statements in the MLS must be accurate and truthful.  (For example, see Rule 12.10)

 

In our next article we will discuss the impact of the Code of Ethics, other MLS rules, flipping, and several fraud schemes.

IMPORTANT POINTS TO REMEMBER:

  • A real estate licensee’s fiduciary duty is to his client and CANNOT be signed away.
  • A listing agent’s duties cannot be delegated to an unlicensed third party.
  • A dual agency disclosure does not eliminate the listing agent’s duty to the seller which may conflict with getting the best price for the investor.
  • A real estate licensee who is collecting an advance fee for performing the short sale MUST follow the federal law, DRE guidelines and California law for advance or other fees.
  • Not getting the best offer for the seller may expose the seller to a higher potential deficiency judgment and a greater tax liability.

The authors of this month’s newsletter are John V. Giardinelli and Sylvia J. Simmons, Attorneys with The GIARDINELLI LAW GROUP, apc.  They can be reached at jvg@glawgroupapc.com and Sylvia@glawgroupapc.com or 951/ 245-9163.

The GIARDINELLI LAW GROUP, apc

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This article is a copyrighted publication and may not be reproduced or transmitted in any form or by any means without written permission.  This article does not necessarily reflect the point of view of the Association or other person or entity who publishes it.  This article provides legal information abridged from statutes, court decisions, and administrative rulings and contains opinions of the writers.  Legal information is not the same as legal advice, which is the application of law to an individual’s specific circumstances.  Although every effort is made to ensure the information is accurate and useful, it is recommended that you consult with a lawyer to obtain professional assurance that the information provided and your interpretation of it is appropriate for a particular situation. To request further information or to comment on this article, contact The Giardinelli Law Group, apc, at jvg@glawgroupapc.com, or 951/ 245-9163 and visit our website at www.glawgroupapc.com