John A. Daugherty, Jr. & Dick Hargis
Attorney Dick Hargis of Hargis & Harpold, LLP gave a presentation at yesterday’s sales meeting at John Daugherty, Realtors to address lease purchase transactions and other legal issues currently facing many of our sales associates. Hargis & Harpold, L.L.P. is a law firm concentrating its practice in the areas of Houston real estate, commercial litigation, insurance defense, trade associations, business transactions, employment and subrogation. We are always very glad to have Hargis share his legal insights with us, as it always leads to a very eye-opening discussion.
Watch what you say in emails!
Hargis began by reminding everyone how important it is to always make sure that you watch what you say every time you hit the send button on an email. This is excellent advice, especially given how often an email can be misinterpreted. Whenever in doubt about how your words or tone might be interpreted, it is a good idea to save the email as a draft and go back and read it, and if needed, edit it before sending.
Lease Purchase Transactions
Hargis says, “Just say no!” This is the best advice, he says. A lease purchase is actually a contract for deed. It is a transaction in which statutory rules burden the seller (or Broker) with many of the following:
- Pre-contract disclosures
- Pre-contract documents
- Annual accounting
Not only that, but non-compliance can lead to DTPA violation, contract rescission and refund of all payments. The list of pre-contract disclosures alone can be very daunting. Real estate agents and brokers can’t write a lease purchase; it requires the use of an attorney for drawing up the agreement. Hargis recommends telling the seller that he or she should call a lawyer to discuss if they are considering this type of transaction. “Under no circumstances should an agent attempt to draw up a lease purchase contract,” says Hargis. In general, a much better option might be owner financing.
From time-to-time I run across a transferee who is interested in discussing lease purchase options with me. I can tell you that they have no idea what this entales. Especially in today’s market, people relocating to Houston are often looking to explore all of their options and inquiring doing a lease purchase. Fortunately, when they are relocating to Houston through a relocation company, they are often counseled about the necessity of using an attorney and discouraged from exploring this type of transaction.
Buyer’s Rep Agreement & Information About Brokerage Services
Why are both needed? Hargis says that the Information About Brokerage Services Form is a good introduction and a lead in to a Buyer’s Representation Agreement. The IABS is informational, and is important because it addresses Intermediary. The Buyer’s Rep Agreement is a sign of some sort of loyalty between the agent and the buyer.
Who Should Hold Open Houses?
This is always an important consideration. According to Hargis, an agent employed assistant who has a real estate license is fine to hold an open house; however, if the assistant is unlicensed, the assistant should not be allowed to hold and open house. As for unlicensed persons, they can hold open houses, but Hargis does not recommend it. He says that they are not supposed to say anything, but you can never be sure whether that person will give out information or say something that he or she shouldn’t.
What legal issues or questions do you have? It’s very important to have reliable legal resources whenever controversial issues or questions arise.
