what realtors ® need to know. steve byrd, carolina multiple listing services, inc. (cmls) h....
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LEASE/PURCHASES AND RENTALS
What Realtors® Need To Know
Steve Byrd, Carolina Multiple Listing Services, Inc. (CMLS)
H. Frazier Wallace II, Esq., Doyle & Wallace, PLLC
Stephanie Gossett, Lake Norman Realty, Inc.
Dana Rhodes, DREI, instructor, Mingle School of Real Estate
Debbie Wey, CMLS
PRESENTERS
LEASE/PURCHASES AND RENTALS STATISTICS
Presented by: Steve Byrd
STATISTICS: LEASE/PURCHASE LISTINGS
STATISTICS: RENTALS
2,328 listings 671 agents
LEASE AND AGREEMENT TO PURCHASE,
AKA LEASE/PURCHASE
Presented by: H. Frazier Wallace
Difference between a Lease/Purchase and:
a lease agreement with an option to purchase
traditional mortgage seller financing buyer possession before closing agreement
LEASE AND AGREEMENT TO PURCHASE, AKA LEASE/PURCHASE
When should I call a lawyer?
When should the buyer do inspections?
What needs to be in the agreement?
PurchaseThe tenant is obligated to purchase the property at the end of the term based on the terms of the Offer to Purchase and Agreement that is entered into contemporaneously with the Lease/Purchase, and attached as Exhibit A and incorporated into the Lease/Purchase.
LEASE/PURCHASE-TERMS OF THE AGREEMENT
TermThis paragraph lays out the term of the Lease/Purchase, when the first monthly rental payment is due, and the amount of the first payment if it has been prorated.
LEASE/PURCHASE-TERMS OF THE AGREEMENT
Non-Refundable FeeHow much needs to be paid to the seller for taking the property off the market for the length of the term? This payment is non-refundable, and if agreed to, can be credited at closing.
LEASE/PURCHASE-TERMS OF THE AGREEMENT
RentHow much is the rent per month, and what, if any, of that monthly rent shall be credited against the purchase price at closing?CommissionsHow do I as the agent get paid for
bringing this deal together?
LEASE/PURCHASE-TERMS OF THE AGREEMENT
Obligations during the term of the lease for
Tenant Landlord
Default If the tenant does not perform
under the terms of the lease? If the landlord does not perform
under the terms of the lease?
LEASE/PURCHASE-TERMS OF THE AGREEMENT
Personal property of landlord left in/on the property during the term of the lease
Eminent Domain and Casualties: What happens if the house is struck by lightning and burns to the ground?
Landlord’s insurance requirements
Tenant’s insurance requirements Landlord bankruptcy: What
happens if the landlord files for bankruptcy?
What happens if the landlord is foreclosed upon?
Presented by: Stephanie Gossett
LEASE/PURCHASES AND RENTALS
Presented by: Dana Rhodes, DREI
N.C. LICENSE LAWCOMMISSION RULES
ARTICLE 1 93A-2 (A)
o Compensationo Real estate brokerageo For others
REAL ESTATE BROKERAGE
o Lists or offers to list
o Sells or offers to sell
o Buys or offers to buy
o Auctions or offers to
auction
REAL ESTATE BROKERAGE, CONT’D
o Leases or offers to lease
o Sells or offers to sell
leases
o Rents or offers to rent
COMMISSION RULE A.0104 (A)
o Every agreement
o Brokerage services
o Shall be in writing
o Signed by parties
COMMISSION RULE A.0104 (A) CONT’D
o Every agreement
o Brokerage services
o Between broker and
owner
o Writing from time of
formation
Fair housing language must be included.
COMMISSION RULE A.0104 (B)
oBrochure
oSales transactions
COMMISSION RULE A.0104 (C)
ESSENTIAL ELEMENTSIN AGREEMENT WITH OWNER
o Parties identifiedo Consideration spelled outo Legally competent partieso Performance of legal acts o Be specific
ESSENTIAL ELEMENTS OF A RENTAL AGREEMENT
o Parties identified
o Land must be identified
o All material terms set
forth
PROPERTY OWNERSHIP
o Rent – intangible right
o Appurtenant to land
o Needs to be addressed
COMMISSION RULE A.0107 (A)
o Tenant security depositso Deposited in trust or escrow account
o PB must deliver immediately to BIC
NORTH CAROLINA REAL ESTATE LAW
o Chapter 42, Article 6
o “Tenant Security Deposit
Act”
o Outlines three major areas
of security deposits
TENANT SECURITY DEPOSIT ACTHOW MUCH AND KEPT WHERE
o Security deposit based on term of lease
o Rental income and tenant security deposits
o Trust account
TENANT SECURITY DEPOSIT ACTPERMITTED USES
o Outlined in Article 6
o Tenant’s money – not
owner’s
TENANT SECURITY DEPOSIT ACTACCOUNTING TO TENANT
o Trust account location o Notify tenanto Accounting letter 30 days/60 days
o Abandoned property/deposits
CODE OF ETHICS – ARTICLE 11
o Standards of practice
o Competence
N.C. REAL ESTATE LAW
o Residential Rental Agreements ActoAct prohibiting retaliatory eviction
o Tenant Security Deposit ActoAct prohibiting self-help eviction
o Unfair and Deceptive Trade Practices Act
N.C. REAL ESTATE LAW, CONT’D
o Pet feeo Eviction procedureo Tenant’s personal propertyo Service Members Civil Relief Act
o Rental insurance
N.C. REAL ESTATE LAW, CONT’D
oRemedies for returned check
oMethod of eviction for violation of lease
oSexual harassmentoForfeiture of real propertyoContracts requiring writing
N.C. REAL ESTATE LAW, CONT’D
o Damage to property
o Summary Ejectment
o Victims of domestic
violence, sexual assault or
stalking
N.C. REAL ESTATE LAW, CONT’D
o Mortgages and deeds of trust
o Escheats and abandoned property
o Persons with disabilitieso Damage to property
Presented by: Debbie Wey
LEASE/PURCHASES & RENTALS
ADD/EDIT: LEASE/PURCHASE
o Casho Conventionalo Federal Housing
Administration (FHA)o Farmers Home
Administration (FMHA)o Lease purchaseo Loan assumption
o N.C. bondo Othero Owner financingo Personal loano Trade/exchangeo Veterans Administration
(VA)
Proposed Financing
SEARCHING: LEASE/PURCHASE
STATUS: LEASE/PURCHASE
o “Pending” (ignore the 60-day e-mail)o Some agents include a statement in the
“Remarks” explaining that the listing is a lease/purchase.
o “Sold” when sale is finalo TEMPO™ Advisory Group to consider a
suggestion for a separate status for lease/purchase listings that are under contract
MLS RULES: RENTALS
o Rental listings are optionalo Written agency agreement requiredo A single-family or condo/townhouse
property listed for sale or lease is permitted to have a second listing in the rental section of the MLS. o “Agreement to Procure Tenant” (Use w/
NCAR standard form 101)
MLS RULES: RENTALS
o Member Participants and Subscribers must disclose in the listing if they are the owners of or have an ownership interest in the property submitted to the service.
o Subscribers must sign an agency agreement with the listing brokerage when listing their own property in the MLS.
MLS RULES: RENTALS
o There is no standard NCAR form for listing a residential rental only to find a renter, without also acting as a property manager.
o Proceed with cautiono Ask an attorney to draft an agency agreement.o Commercial form 572 “Exclusive Right to Lease
Listing Agreement” is not designed for residential listings.
o Listings cannot be full service, i.e., “Full Service=No”
COOPERATIVE COMPENSATION
o All listings must offer cooperative compensation. o Percentage of gross sales priceo Set (or fixed) dollar amount
o Cooperating brokerages have a right to know what their compensation shall be prior to their endeavor to sell/lease.
o Cooperative compensation depends upon sale/lease.
LEASE/PURCHASEo If not specified in the listing, any
amount paid prior to the sale is a matter of mutual agreement.
o Examples:o ½ of first month’s rento ½ of cooperative compensation paid at
inception of leaseo Remainder paid at closing
COOPERATIVE COMPENSATION:
COOPERATIVE COMPENSATION: RENTALS
o Set (or fixed) dollar amount
o Percent of first month’s rent (common)
o Other
Q & A