5 Hot Legal Issues
April 1, 2008
The legal issues getting the most buzz in real estate circles these days are:
1. The risk of identity theft.
A 2007 study by Javelin Strategy & Research found that the average identity theft victim lost $5,720 to fraud. Access to clients’ confidential information makes brokers attractive targets for identity theft. To protect yourself, institute document management policies for both paper and electronic files. NAR has partnered with the Federal Trade Commission to develop brochures and other educational materials on protecting against identity theft, available at the Government Affairs section of REALTOR.org.
2. Sham affiliated business arrangements.
As a recent crackdown against real estate licensees and title company agents in Minnesota demonstrates, both state-level law enforcement and HUD are ready to play hardball against affiliated business arrangements that function only as shells for illegal kickbacks. Review NAR’s advice in The Letter of the Law section of REALTOR.org.
3. Outlawing rebates and incentives.
While the dozen or so state laws that prohibit real estate practitioners from paying incentives to consumers aren’t new, the recent focus on the legality of such statutes by the U.S. Department of Justice in states such as Kentucky have put this marketing practice under the microscope. Read more about the issue at REALTOR.org.
4. Disclosure obligations when a seller faces financial woes.
As declining home prices make short sales more common, the issue of how, when, and how much real estate professionals must disclose to other brokers and prospective buyers is getting a lot of attention. Do you have to tell cooperating brokers that they run the risk of a bank cutting the offered commission in the MLS? Will doing so breach your duty to a seller? NAR’s Short Sales Issues Work Group plans to have policy recommendations by summer, so stay tuned.
5. The persistence of mortgage fraud.
Current price instability in many local real estate markets provides an easier opening for fraud and makes it more challenging for appraisers to assess value. Brokers and sales associates who are eager to close deals and help pressured sellers may be tempted to turn a blind eye to one price on the HUD1 statement and another on the check. More recent fraud schemes include both foreclosure experts who take the title to the home without satisfying the loan and those who offer fraudulent reverse mortgages to hard-pressed seniors. Remember that even if you don’t profit and you’re only trying to help, it’s still fraud.
Source: NAR Legal Department
Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.