Question (AZ): I am on the board of directors for our HOA. Recently, in an open meeting, a homeowner who had received a violation letter was told by the community manager that a board member had submitted it. The homeowner was more upset about this fact than his violation. Is this action by the community manager ethical?
Answer: Assuming the issue is not addressed in the HOA's governing documents, and that the Community Manager is an employee position governed by the Board of Directors, then your question would seem to be where does the duty of the Community Manager to represent the interests of the HOA (comprised of all the homeowners) cross the line to the Community Manager's perception of his (or her) duty to disclose to a specific homeowner who the homeowner's accuser is.
A Member of the Board of Directors ("BOD") has fiduciary obligations that he or she must adequately discharge to the HOA. When a member of the BOD learns -- whether witnessed by the member of the BOD or received through a report from another homeowner -- that a homeowner has allegedly violated the governing documents of the HOA then the member of the BOD cannot simply ignore the allegation.
The member of the BOD, however, would probably be well-advised to relay the allegation to the Board Chairman rather than confront the homeowner who is the subject of the complaint. That way, the BOD makes the decision as to how the complaint should be handled. This would include whether or not to send the alleged offending homeowner a letter. Whatever the BOD's decision, it is a Board decision. Since the homeowner in question received the letter, he or she is entitled to a defense. The key here, however, is that the homeowner is being accused of non-compliance by the Board of Directors, not by a single Board member.
You asked whether the Community Manager's disclosure to the homeowner was ethical. We believe the Community Manager's actions were at least inappropriate, if not unethical. Who submitted the complaint doesn't matter. The entire Board received the complaint and took what it considered to be justifiable action on behalf of the HOA. What matters is that people, who have purchased in a community with an HOA, are aware of and comply with the HOA's governing documents.
Question (CA/TX): I live in California and was referred to a Texas real estate agent to secure a tenant for an investment property I have in Houston. We did not have a written contract. However, she found me a tenant and I paid her the fee for which she asked. The tenant signed a TAR Residential Lease and an Addendum that controls which I personally drew up. The Addendum was presented to the tenants at the same time the lease was signed.
The tenants have signed the all appropriate papers, but the real estate agent was not present at signing. She faxed it to a friend who gave it to the tenants. Evidently, the real estate agent had changed the Addendum without consulting me by making the due date five (5) days later. Also, she did not read the Addendum or explain it to the tenants (who also did not read it).
The signed Addendum puts the rent at $1,100.00 which is $50.00 more per month than the agent quoted to the Tenants and what the lease contract specified. The tenants have therefore already breached the lease contract because of the negligence of their leasing agent.
When I discovered this I informed the real estate agent and told her I was willing to adjust the addendum to show the rent at the quoted fee of $1,050.00 but that the due date for the rent could not be changed. Or, the tenants could have the new due date but would have to pay the $1,100.00 rent. And, in order to facilitate the agreement, a new lease and addendum would have to be signed.
The real estate agent has procrastinated and put me off, although she did say that the tenants would sign for the new rent of $1,050.00. Now that the rent is due again next week, she is refusing to handle the transaction and trying to get me to deal directly with the tenant.
Please advise me about where the real estate's legal, professional and ethical responsibility ceases in this case and/or what recourse these tenants may have against the leasing agent now that she has done them this disservice and dropped the ball.
Answer: We searched the Houston Association of REALTORS® membership database and located the agent you identified as well as her Sponsoring Broker. You can file a complaint with the Texas Real Estate Commission or "TREC " against her as well as her broker who is legally responsible for her actions.
In your complaint submit copies of your emails, any contracts and written disclosures you have, and any other written documents such as emails, etc. (or at least inform TREC that you have them and will make them available to the field investigator assigned to your case). Since you live in CA you may have to be interviewed by telephone.
As for how you can avoid this type of catastrophe in the future, we suggest that you do the following:
- Always interview (by telephone if that is the only way available) at least three real estate firms;
- Use a Realtor firm because Realtors are governed by the Realtor Code of Ethics at all levels;
- Look at real estate licenses (of faxed or scanned copies thereof) and at Realtor Membership Cards;
- Check out the firm with the Better Business Bureau;
- Whether you are selling or leasing a property, always list the property for sale or for lease (or sometimes both) with the Texas Realtor firm by whom you are being represented as a Seller or Landlord. It defines the obligations of both parties under the Listing Agreement; and,
- Require that every communication be in writing (email is OK) and that valid, written contracts (Lease or Sale) are used.
Question (NJ/NY): We live in NJ and are selling a property in NY. The sale price is $282,000, but the buyer is asking for a seller's concession of $10,000 for closing costs. They will obtain a mortgage as though they were paying $292,000 although we will only get $282,000. As the seller, am I responsible for capital gains on the extra $10,000?
Answer: Your question opens up a slippery slope of additional questions. First of all, in order for you to sell the property for $10,000 more than your asking price of $282,000, the buyer is going to have to have the property appraised for $292,000 by the lender supplying the purchase money. If the property is accurately priced at $282,000, then for the lender's appraisal to come in at the higher price, it would require that a fraud be perpetrated upon the lender. If that occurs, it is highly likely that all parties to such a fraud will have civil and criminal penalties.
But let's say that the lender is fully disclosed as to the disparity between your original asking price and the $292,000 purchase agreement and is OK with it. The lender is convinced through its honest and reputable appraiser that your property is worth $292,000. Now, you can offer, and the buyer can receive, the $10,000 seller concessions, provided that the program the buyer has selected to finance the purchase of his home allows the concessions.
Let's say the lender does just that and you actually sell the home to this buyer. You have sold a home for $292,000, of which $10,000 you have spent to pay the buyer's closing costs, or at least a good portion of the buyer's closing costs. The amount of money that comprises the proceeds you have realized from the sale is the selling price less certain costs and selling expenses, one of which is the $10,000 seller's concessions.
We strongly recommend that you hire a CPA, an Enrolled Agent ("EA") or other licensed financial advisor to look at your complete financial picture, not just this sale. In the meantime you may wish to check out the Internal Revenue Service publication 544, "Sales and Other Dispositions of Assets ."
Question (NY): I bought a home 3 years ago in Clifton Park, NY. I just found out I am on a septic system and not hooked up to the public sewer as was originally stated to me. The seller's disclosure and the real estate firm's sales pamphlet for the home state that this home was on public sewer. The owner I bought the home from had owned the home for two years. When she bought the home it was disclosed to her that she was on a septic system.
My question is, "What recourse do I have against the seller and the real estate agent?" Since it was disclosed by the previous owner to the owner that I bought it from that the property was on a septic system, then I would think this is something the Realtor should have investigated more thoroughly. I found out I was on a septic system when I started having plumbing problems. I had the county sewer department confirm this. I appreciate any input you can give me.
Answer: New York State requires a seller of certain residential properties -- of which yours is one, to provide a Seller's Disclosure Statement or credit the purchaser $500 at the closing. The additional information you provided in response to our inquiry was that you were not credited $500 at closing, but were actually provided the Seller's Disclosure Statement that is required by the Property Condition Disclosure Act ("PCDA").
In that case, should you wish to pursue the matter further, we suggest you hire a New York Licensed attorney with successful litigation experience, since the owner's disclosure will have some degree of significance to your potential case. The attorney you select should be able to review the facts -- perhaps even in a no-charge or reduced-fee, initial interview, and advise you as to the merits of your case.
However, have you considered that one of the problems you may run into should you file a complaint regarding this matter, is that you had an opportunity to question the apparent discrepancy in the Seller's Disclosure Statement when the seller disclosed the septic tank on the premises, but under Utilities stated that there was public sewer? Why did you not question that discrepancy? Also, you should compare the cost of litigation (both financial and emotional) with the cost of fixing the problem. What is the cost of connecting the septic system to the public sewer? Or, alternatively, what would be the cost of just repairing the septic tank?
