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Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For technical questions, call 800-263-6317.

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Page 1: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Commercial Webinar Series1 hour presentation

Top 5 Commercial Broker Legal Issuespresented by

Rick Albers

Questions will be answered at the end.

For technical questions, call 800-263-6317.

Page 2: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Commercial Webinar Series

Top 5 Commercial Broker Legal Issues

Presented by

Rick Albers Kuperman Orr & Albers, P.C.

2500 Bee Cave RoadBuilding 2, Suite 150Austin, Texas [email protected]

September 24, 2015

Page 3: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Topics

1. Misrepresentation & Failure to Disclose

2. Environmental Issues

3. Unauthorized Practice of Law

4. Americans with Disabilities Act

5. Agency Concerns

Page 4: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Misrepresentation:• Misstatement of a material fact or

feature of the property

• Failure to disclose:• Not revealing a known defect of the

property

Page 5: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Known Defect– a significant defect, including a latent

structural defect, known to the license holder that would be a significant factor to a reasonable and prudent buyer in making a decision to purchase real property

(TRELA 1101.652(b)(3)&(4))

Page 6: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Common misrepresented features:– Foundation or structural problems– Property boundaries– Roof condition– Termite problems– Quality of tenants

Page 7: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Common failures to disclose:– Hazardous materials / environmental

problems– Flooding issues– Improvements not properly permitted– Easements– Other title problems

Page 8: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Best Practice:– Attribute the information to the source

• "According to the seller, the roof is four years old and does not leak.”

– Phrase the comment as: • your opinion and not as a fact, or • as someone else’s opinion.

Page 9: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Actions to take:– Encourage the Seller to use a Seller

Disclosure Form.– Avoid making predictions

• “this pond will not be classified as a wetland”• “this well will never run dry”• “the value of this property will appreciate over

the next 5 years”

Page 10: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Misrepresentation & Failure to Disclose

• Actions to take:– Add a disclaimer to the information you

provide• The materials contained herein are based

on information and sources deemed to be reliable, but no representation or warranty, express or implied, is being made by Broker.

Page 11: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Environmental Issues

• Asbestos• Soil or groundwater contamination • Lead-based paint• Actions to take:

– Recommend that the Buyer engage a professional to evaluate

– Use Lead-based paint disclosure form

Page 12: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For
Page 13: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Unauthorized Practice of Law

• TRELA says you engage in the unauthorized practice of law if you:– draft an instrument not on an approved

form that transfers or otherwise affects an interest in real property; or

– advise a person regarding the validity or legal sufficiency of an instrument or the validity of title to real property.

Page 14: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Unauthorized Practice of Law

• Authorized actions:• Modifying the Contract at the direction of

your client

• Unauthorized actions:• Modifying the Contract because you think

it is best to do so

Page 15: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Unauthorized Practice of Law

• Special Provisions problems

“Seller agrees to extend the financing contingency if Buyer’s lender is waiting for delivery of 3rd party reports or appraisal.”

Page 16: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Unauthorized Practice of Law

• Special Provisions problems

“The Earnest Money will be non-refundable after 30 days.”

Page 17: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Americans with Disabilities Act

• Applies to places of “Public Accommodation”

• Most commercial properties are places of Public Accommodation

• The property must be equipped with ramps, curb breaks, and other considerations to allow a disabled person to access the building.

Page 18: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Americans with Disabilities Act

• Changes must be made that are “readily achievable with reasonable effort and expense" to serve clients with disabilities.

• Your brokerage office might be a place of public accommodation.

• Private persons may sue to enforce the ADA.

Page 19: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Agency Concerns

• Unwanted representation• Fiduciary duty• Intermediary• Commission agreements• Handling other people’s money

Page 20: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Unwanted Representation

• If a client thinks you represent them, then you probably do.

• Written agreement not required.• All duties apply.• Solution:

−Say: “I do not represent you.”−Put in writing: “I do not represent you.”

Page 21: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Fiduciary Duty

• The agency relationship creates a fiduciary duty.

• Must hold your clients interest above that of your own.

Exception: Commercial Broker’s Lien

• Duty is to act in the principal’s interest, but:• owe a duty of honesty and fairness to all parties• must disclose known defects

Page 22: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Intermediary

Saying you are an intermediary does not make you an intermediary.• Both sides must be clients.• Both sides must authorize intermediary in

writing.• Written agreement must state source of

compensation.• Notice must be included.

Page 23: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For
Page 24: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Commission Agreements

Must include:

• Commission amount or formula to calculate the commission

• Legally sufficient property description

• Termination date

• Signed by the party obligated to pay the commission

Page 25: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For
Page 26: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Handling Other People’s Money

• “Designated Trust Account”Trust account requiredUse “trust” in the account name

Page 27: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Handling Other People’s Money

• Only Brokers can maintain trust accounts• Salespersons must immediately deliver

trust money to sponsoring broker• Deposit not later than the close of business

of the second working day after receipt

Page 28: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Questions ?• NOW –

Type your questions now.

• LATER –

TAR Legal Hotline 512-480-8200

Rick [email protected]

Page 29: Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For

Conclusion

• Thanks for your participation in the TAR Commercial webinars!

• Next Webinar: October 22, 2015

Water issues every broker should know

• Give us your feedback!