Lou Tulga CCIM CRB Disclosure in Real Estate in New Mexico
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Lou Tulga CCIM CRB Disclosure in Real Estate in New Mexico

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Supporting PowerPoint slides for the Commission Approved 6 Education CE Credit Hours in New Mexico

Supporting PowerPoint slides for the Commission Approved 6 Education CE Credit Hours in New Mexico

Lou Tulga CCIM CRB

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Lou Tulga CCIM CRB Disclosure in Real Estate in New Mexico Presentation Transcript

  • 1. Disclosure in Real Estate 6 Education Credit Hours Lou Tulga CCIM CRB February 2012 www.loutulga.com Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 1
  • 2. Background to Disclosure in Real EstateUnder caveat emptorUnder an agency relationship with sellerUnder expanding consumer rights License Law Common Law Code of Ethics Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 2
  • 3. When NOT to Disclose________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 3
  • 4. Breadth of Disclosure ItemsBrokerage RelationshipsInherent/Situational Conflicts of InterestProperty Condition and RepairPotential for AllergensCounty Assessor Estimated Tax LevyLead Based Paint Hazard DisclosureRequired RESPA DisclosuresEtc. ____________________________________ Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 4
  • 5. Significance of ―Material Fact‖Black’s Law Dictionary DefinitionReal Estate Broker’s ParaphraseMaterial Facts about What? Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 5
  • 6. Disclosure IssuesActual KnowledgeShould Have KnownOn the PremisesOff-SiteInvolvement with Sources of InformationCommunication to other BrokersCommunication/Documentation to Clients Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 6
  • 7. Disclosure and Common SenseDisclosure and determination of material factDisclosure and use of as is clauses in contractsDisclosure and use of disclaimersDisclosure and documentation andacknowledgmentEtc. ________________________________ Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 7
  • 8. Sources of Potential LiabilityStatute Liability Federal State LocalCommon Law Contract Agency Tort Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 8
  • 9. Failure to DiscloseActual DamagesPossible Punitive DamagesPossible Criminal ChargesRescission where Damages Insufficient Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 9
  • 10. Common Law of TortFraud Active Passive―Actual fraud consists of deceit, artifice, trick, design…[and] the successful employment of any cunning, deception, or artifice used to circumvent or cheatLou Tulga CCIM CRB (Black’s Law Dictionary) Copyright 2012 another‖ All Rights Reserved 10
  • 11. Common Law of TortNegligent Misrepresentation―Negligent misrepresentation occurswhere a person misrepresents a materialfact which is believed to be true but isfalse and it is made for the purpose ofbeing relied upon and is acted upon by theparty to the party’s injury‖ Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 11
  • 12. Disclosure and Common SenseDisclosure and red flagsDisclosure and stigmatized propertyDisclosure and fair housing: properties,notpeopleDisclosure and consumer consent Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 12
  • 13. Disclosure and Common SenseDisclosure and determination of material factDisclosure and use of as is clauses in contractsDisclosure and use of disclaimersDisclosure and documentation andacknowledgment Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 13
  • 14. Negligent MisrepresentationThe Language of Real Estate, John W. Reillystates: "It is not necessary that a person actuallyintend to misrepresent a fact. A broker orsalesperson is liable if he or she knows orshould have known of the falsity of a statement.Thus, if a broker makes a negligentmisrepresentation of a material fact to induce abuyer to buyer, and the buyer relies on this factto his or her detriment, then the broker is liable.The seller is also liable because the statementwas made by his or her agent within the scopeof authority of the agency." Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 14
  • 15. Common Law of TortsNegligence Negligence is ―the omission to do something which a reasonable person, guided by those ordinary considerations which ordinarily regulate human affairs, would do, or the doing of something which a reasonable and prudent person would not do.‖ (Blacks’ Law Dictionary) Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 15
  • 16. New Mexico Case LawNeff v Bud Lewis (1976)Amato v Rathbun (1982)Gouveia v City Corp (1984) Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 16
  • 17. Seller’s Property Disclosure Statement Easton v. Strassburger (CA 1984) Colorado Model: ―Yes, No, Don’t Know, N/A‖ New Mexico Model--"Is the Seller Aware of?‖ Yes □ No □ Benefit of Seller’s Disclosure Statement Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 17
  • 18. MANDATORY LEAD-BASED PAINT/HAZARD DISCLOSURERationale.The Residential Lead-Based Paint HazardReduction Act of 1992.Applies only to ―target housing‖—dwellingsbuilt prior to 1978.The law does not require testing orabatement. Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 18
  • 19. Agent’s CertificationAgent has informed the Seller of the Seller’s obligationsunder 42 U.S.C. 4852d and Agent is aware of Agent’sresponsibility to insure compliance. UnderRegulations, agent means ―any party who enters into acontract with a seller or lessor, including any party whoenters into a contract with a representative of the selleror lessor, for the purpose of selling or leasing housingconstructed prior to 1978. This term does not apply toBuyers or any Buyer’s representative who receives allcompensation from the Buyer.‖ This definition includesany cooperating licensee or subagent, and any buyer’sagent who receives any compensation from the listingbroker or the seller. Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 19
  • 20. Superfund Responsible Parties Strict Liability Current owner and operator of the site Party who generated the contamination Party who transported the contamination Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 20
  • 21. PSYCHOLOGICALLY IMPACTED PROPERTYDefinitionReal Estate Disclosure Act 47-13-1through 3 NMSA 1978Section 1. Disclosure of Material Fact inReal Estate Transactions Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 21
  • 22. ExemptionsA seller, lessor, or landlord of realproperty, including a participant in an exchangeof real property, and any agent involved in sucha transaction, shall not be liable for his failure todisclose and shall not have a duty to disclose toany person who acquires by voluntary orinvoluntary transfer, a legal or equitable interestin the real property, including any leaseholdinterest or security interest for an obligation, thefact that the real property is or has been: Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 22
  • 23. Exemptions The site of a natural death; The site of a homicide, suicide, assault, sexual assaultor any other crime punishable as a felony; orOwned or occupied by a person exposed to, infected orsuspected to be infected with the humanimmunodeficiency virus or diagnosed to be sufferingfrom acquired immune deficiency syndrome or any otherdisease which has been determined by medicalevidence to be highly unlikely to be transmitted to othersthrough occupancy of improvements on real property orthat is not known to be transmitted through occupancy ofimprovements located on the real property Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 23
  • 24. ExemptionsThe failure to make a disclosure of any ofthe facts or suspicions described inSection 1 shall not be deemed to begrounds for termination or rescission ofany sale, lease, exchange or anytransaction in which an interest in the realproperty has been or will be conveyed toanother Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 24
  • 25. No Cause of ActionNo cause of action shall arise against aseller, lessor or landlord of realproperty, including a participant in an exchangeof real property, and any agents involved in sucha transaction, for failure to disclose to anyperson who, by voluntary or involuntarytransfer, acquires a legal or equitable interest inthe real property, including any leaseholdinterest or security interest for an obligation, inany action at law or in equity because of thefailure to disclose that the real property was or issuspected to have been the site of the incidentsdescribed in Section 1. Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 25
  • 26. No Duty to Disclose in New MexicoThe site of a natural death,homicide, suicide, assault, sexual assault or any othercrime punishable as a felony Owned or occupied by a person exposed to, infected orsuspected to be infected with the humanimmunodeficiency virus or diagnosed to be sufferingfrom acquired immune deficiency syndrome or any otherdisease which has been determined by medicalevidence to be highly unlikely to be transmitted to othersthrough occupancy of improvements on real property orthat is not known to be transmitted through occupancy ofimprovements located on the real property. Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 26
  • 27. Part 19 Required Disclosures—‖Trigger Event‖Prior to the time the Licensee generates orpresents any written document that has thepotential to become an Express WrittenAgreement, written disclosure of (a) anywritten Brokerage Relationship that theLicensee has with any other Parties to theTransaction and/or (b) any material interestor relationship of a business, personal, orfamily nature that the Licensee has in theTransaction; Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 27
  • 28. Required DisclosuresRange of Brokerage Relationships in NMWritten Copy of Broker DutiesWritten Disclosure of Existing WrittenContract with the other party to a potentialtransactionWritten Disclosure of Broker’s conflicts ofinterest –personal, business, financial, etc. Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 28
  • 29. RANM Cover Page DisclosuresListing Cover PageBuyer’s Broker Agreement Cover PagePurchase Agreement Cover Page Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 29
  • 30. Disclosure in Real EstateApproved by the New Mexico Real Estate Commission for 6 Education CE Credit Hours Contact--Lou Tulga CCIM CRB3200 Carlisle NE Suite 224 Albuquerque, NM 87110 Voice 505-889- 4569 Fax 505-212-0148 loutulga@gmail.com www.loutulga.com Copyright 2012 Lou Tulga CCIM CRB All Rights Reserved 30