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April 1, 2014 | Stay Connected!

Legal Hotline

Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Pleasesubmit questions to [email protected] or call (800) 562-6027. Please have your NRDS numberready when you call or e-mail the Hotline with your question. The Legal Hotline lawyer does notrepresent Washington Association of REALTORS® members or their clients and customers. Research thistopic and thousands of others online.

Question:PSA was written with "buyer and/or assigns". The PSA is contingent upon a FinancingAddendum which gives the buyer five days to make written application for the loan. Thebuyer does so and ten days into the transaction the buyer (assignor) assigns all of theirinterest in the contract to another individual (assignee). The problem is with five day loanapplication time. Obviously, the assignee cannot step into the assignor's loan. Should theassignee make written application for a loan within the same five day time period allowed tothe assignor?

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Answer:Just because the buyer chooses to assign the buyer's interest in the purchase agreementdoes not mean that seller must extend buyer's opportunity for making loan application. When a buyer assignee takes an assignment of buyer's interest in a PSA, the assignee trulysteps into the shoes of the buyer. The assignee operates under all existing time frames anddeadlines. If the inspection contingency has already expired, for example, then the assigneedoes not get a new inspection contingency.

In the context of this question, since the deadline for making loan application under theterms of the financing contingency has already run, assignee cannot make timely loanapplication. Therefore, by accepting the assignment, assignee agrees to proceed with thepurchase in the absence of a financing contingency.

Moreover, the original buyer is still liable to seller for performance of the purchaseagreement. Using the Form 32 Assignment, seller is not required to consent to theassignment so seller never agrees to release the original buyer from performance. If buyerassignee fails to close the transaction, seller will still have whatever remedy is identified inthe purchase agreement, against the original buyer.

The Form 32 Assignment provision does require the buyer assignee to indemnify the originalbuyer against losses but that does not alter seller's claims against the original buyer.

At the end of the day, this assignee takes the buyer's interest in the purchase agreementwith no ability to perform the requirements of the financing contingency. That means that ifbuyer assignee is unable to secure financing and thus, unable to timely close the transaction,the original buyer will be in default of the purchase agreement. If seller's remedies arelimited to collection of the earnest money and buyer assignee has already repaid the earnestmoney to the original buyer, there is probably no harm. However, if seller has additionalremedies against buyer, the fact that buyer assignee fails to close the loan could result in avery complicated situation.

Broker should advise his client, in writing, to seek legal counsel with respect to thistransaction.

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Career Help

We have scanned and selected interesting tips & tricks articles from a variety of industry publications soyou don't have to. Always check with your broker/owner to see if these practices fit within yourcompany policies.

Send a Melodigram to Your Clients...Take a picture of a home, add some background


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ambiance, record your message, and share with yourclients. This is a neat app you can use to add a littleemotion and a personal touch to your messages...

6 Incredibly Easy Tips All New GooglePlussers Need to Expand Their RE Reach(Inman) Google Plus is not only a social network, but also apowerful social platform. From hangouts and communities tosocial signals, Google Plus is a virtual wonderland of opportunityfor the marketing-minded real estate professional.

REALTOR.com Branded iPad -Coming Soon(REALTORMag) Move Inc. announced that it hassigned an agreement with PCM Inc., a technologysolutions provider, to produce a realtor.com-branded iPad that will be available later this spring.The iPad will include the realtor.com® real estateapp as well as more than 10 third-partyproductivity applications, all specifically geared toreal estate professionals.


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FREE International RealEstate Transactions EventThis free class addresses how to workwith an international real estate buyer &seller. Featuring a panel of ImmigrationAttorneys, a Tax attorney, a CPAspecializing in cross-border clients,lending institutions such as banks &stock portfolio options, Money Corps (aninternational currency exchange group),a Title company, Property Management,& REALTORS serving an internationalclientele.

Learn how to safeguard yourself, andyour client, by being well-educated ininternational real estate practices!

April 8th, 2014 - 2:00 pmRegister today!

Top Stories

Home Prices Increase into Second Year(HousingWire) Home prices, including distressed sales, jumped 12.2% in February 2014compared to a year prior, marking 24 months of consecutive year-over-year increases inhome prices nationally, the latest CoreLogic report said. Month-over-month it slightlyincreased by 0.8% in February compared to January. And the same level of ferocity is seenat the state level. Fourteen states showed double-digit growth year-over-year, in addition to22 states posting at or within 10% of their price peaks.

Fannie Extends Closing Cost Incentive to Buyers(REALTORMag) Due to strong buyer response, Fannie Mae has announced it will extend the


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deadline for an incentive program that allows home buyers to receive up to 3.5 percent inclosing cost assistance on purchases of its HomePath foreclosed properties. Home buyersnow have until April 30 to submit offers on the REO homes, and transactions must close byJune 30 to be eligible. Originally, the incentive applied for offers submitted by March 31 andtransactions that closed before May 31. The incentive offers qualified buyers up to 3.5percent of the final sales price to pay closing costs. In some cases, buyers may opt to usethe savings to buy down their interest rate through upfront points, Fannie Mae notes.

Home Sales in U.S. Poised to Surge With Spring(Bloomberg) "The housing market, like the rest of the economy, is on a gradual recoverypath," said Hanson. "In the next months, we're going to see the Spring market come to life."

Mortgage


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National Averages 30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM

Average Rates 4.40% 3.42% 3.10% 2.44%

Change (from prior week) +0.08% +0.10% +0.08% -0.05%

Fees & Points 0.6 0.6 0.5 0.4

Margin N/A N/A 2.74 2.71

Regional Averages(West)

30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM

Average Rates 4.35% 3.40% 2.90% 2.18%

Change (from prior week) +0.07% +0.11% +0.08% -----%

Fees & Points 0.7 0.6 0.7 0.5

Margin N/A N/A 2.73 2.65

Source: Freddie Mac - Weekly mortgage rates released every Thursday.

Freddie Mac's Primary Mortgage Market Survey

Government Affairs


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Ready to Invest?With our secure, Online RPAC investment site, it's easierthan ever for busy REALTORS® to protect their business.Invest to ensure that when government acts there is noharm to real estate, no new taxes and no addedunnecessary complications to the real estate transaction.

President Signs Flood Rate Bill(REALTOR.org) In 2012, REALTORS worked together to obtain a five-year extension of theNational Flood Insurance Program. Afterwards, REALTORS heard from clients aboutexorbitant rate hikes and wildely inaccurate rate quotes in the program. Watch the videopodcast...

Proposed Rule Issued on AMC's(REALTOR.org) On March 24, 2014, six federal agencies issued a joint proposed rule toimplement minimum requirements for state registration and supervision of appraisalmanagement companies (AMCs).


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Education

For your convenience, Washington REALTORS® Education offers both online education and live classes,including webinars! To participate in a webinar, all you need is internet access and a phone. For moreinformation, or to sign up for classes, visit www.warealtor.org/education.

Upcoming Live Classes:

Date Course Title CEHours Instructor Location Registration

Options

4/3/2014 CORE 4.0 AnnieFitzsimmons Everett (425) 339-1388

4/3/2014 Best of the Legal Hotline 3.5 AnnieFitzsimmons Everett (425) 339-1388

4/9/2014 Statewide Forms (Full day) 7.5 AnnieFitzsimmons

TPCAR (TacomaREALTOR Office)8:30am-5:00pm

(800) 748-7053 orRegister Online

4/10/2014 CORE 4.0 MichaelAlvarez

TriCities Association1:00pm-5:00pm (509) 783-2184

4/10/2014 Statewide Forms - 1/2 Day 4.0 AnnieFitzsimmons Skagit Casino (360) 671-5477

4/10/2014 Attorney Survivor! 3.0 AnnieFitzsimmons Skagit Casino (360) 671-5477

4/11/2014 Introduction to Social MediaMarketing for REALTORS 3.5 Terry Eccles-

PettetOlympia/Webinar8:30-12pm

(800) 748-7053 or Register Online

4/16/2014 NAR Code of Ethics 3.0 JanEllingson Pullman (509) 338-0949

4/16/2014 CORE 3.5 JanEllingson Pullman (509) 338-0949

4/17/2014 CORE 3.5 MichaelAlvarez Wenatchee (509) 663-1211

4/23/2014 Statewide Forms (Full day) 7.5 AnnieFitzsimmons Yakima (509) 457-8191

4/30/2014 The Principles & Punch ofAd Writing 3.5 Pili Meyer Olympia/Webinar

9:00am-12:30pm(800) 748-7053 orRegister Online

5/7/2014 Effective Negotiation forReal Estate Professionals 7.5 Pili Meyer Tacoma


5/7/2014 CORE 3.5 AnnieFitzsimmons Longview (360) 560-9987

5/7/2014 Best of the Legal Hotline 4.0 AnnieFitzsimmons Longview (360) 560-9987


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5/8/2014 List to Sell 7.5 Pili Meyer Tri City8:30am-5pm (509) 783-2184

5/8/2014 One Size Doesn't Fit All 7.5 DougTingvall Yakima (509) 457-8191

5/20-21/2014 Seniors Real EstateSpecialist (SRES) 13.0 Pili Meyer Vancouver (800) 748-7053 or

Register Online

5/22/2014 Core 3.5 AnnieFitzsimmons Olympia (360) 491-3910

5/22/2014 Best of the Legal Hotline 4.0 AnnieFitzsimmons Olympia (360) 491-3910

5/28-29/2014 Seniors Real EstateSpecialist (SRES) 13.0 Pili Meyer Tacoma


6/5/2014 CORE 4.0 Pili Meyer Yakima (509) 457-8191

7/10/2014 Legal Aspects of RE Tech &Intellectual Property 4.0 Doug

Tingvall Tri-City (509) 783-2184

7/10/2014OSCAR: OutrageouslySloppy Contracts AgentsRite

3.5 DougTingvall Tri-City (509) 783-2184

8/27/2014 VA & Military Real EstateSpecialist 7.5 Pili Meyer Yakima (800) 748-7053 or

Register Online

Visit Washington REALTORS Education for a complete list ofclasses, how to register, and more...

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Best of the Legal Hotline Q & A

QuestionOne of my agents is the listing agent for a large farm .It is currently under contractand the seller and buyer have agreed that the buyer will pay after closing in 3payments for a boiler auxiliary heating system that the seller owns it is alsoattached to the homes exterior. The home has 2 other sources of heat and this wasnot included in the listing. The buyer and the seller know one another. Should weuse a promissory note for this and attach it to the contract? Click here for the ANSWER! Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of theWeek. Please submit questions to [email protected] or call (800) 562-6027. Pleasehave your NRDS number ready when you call or e-mail the Hotline with your question. TheLegal Hotline lawyer does not represent Washington Association of REALTORS® members ortheir clients and customers. Research this topic and thousands of others online.

Member Resource Quick Links

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