Love (letters), marriage, divorce and agent advertising were the topics addressed in PAR’s Legal Hotline webinar yesterday.
PAR Staff Attorney Kacy Clouser highlighted love letters from potential buyers to sellers can be problematic.
“Buyers often feel the need to put something in their offer package that no one else can,” Clouser said. “But love letters can cause fair housing issues for both the seller and the agent, whether on purpose or inadvertently.”
“For example, if the buyer mentions how much their children would enjoy Christmas in the home or how their church is nearby, they’ve brought religion into the discussion. Or if they send a photo of their family, they’ve potentially brought ethnicity into the conversation. And this means the seller could have the opportunity to discriminate against a potential buyer or change their mind after reading a love letter. If they’re basing their decision on those issues, that’s a fair housing violation,” she said.
She added that this can also expose the agent to a potential fair housing violation. “A broker or agent can’t unilaterally refuse to send a love letter, but this should be discussed ahead of time and clients should be given written notice that you won’t be conveying any type of love letter on behalf of the client.”
In working with clients, Staff Attorney Brian Carter said it’s important not to make assumptions about who’s buying the property and who will be listed on the deed.
He noted that according to NAR’s Profiles of Home Buyers and Sellers, married couples make up 60% of buyers, single females are 19%, single males are 9% and unmarried people are 9%.
“It’s important to ask up front who’s buying the property and whether they’re buying as a couple or individually,” Carter said. “Making assumptions could be cause for fair housing violations.”
Providing this information in advance to the title company is also important. How married couples hold the property can be different than unmarried couples. “We’ve received calls on PAR’s Legal Hotline with examples of a single man who purchases a property, then gets married and then separated. If the man wants to sell the property to purchase another property, can he sell the first property? It’s important to know who holds the deed, are they separated, or have they filed for divorce. Having all of the information in advance will make the transaction go more smoothly.”
Staff Attorney Desiree Brougher said, “Learn to ask the uncomfortable questions, particularly when working with clients who are separated or divorced. You need to ask where they are in the divorce proceedings. There’s a world of difference if one spouse has left and they’re separated, or their divorce is being finalized and there’s a decision on the division of property.”
Brougher said talking to the divorce attorneys involved is helpful because they have a complete understanding of the process. “In Pennsylvania, assets gained during the marriage are considered the property of both, so properties purchased before the marriage but have continued to gain value may be considered assets to both. Assets in a divorce are not divided 50/50, it’s decided on what is fair in each situation.”
She stressed that knowing the divorce status from the beginning of the transaction, starting with the listing contract, is crucial because agents will need some level of cooperation to complete the transaction. “Be prepared for a difficult transaction,” she added. “A bitter divorce can be a recipe for disaster, so you need to help shape the expectations of your clients.”
PAR Chief Legal Officer Hank Lerner added that the association has received ethics complaints from consumers regarding transactions and divorced clients. “Even with a court order and the agent doing everything that they are supposed to, the other spouse may accuse the agent of not having the best interests of everyone in mind during the transaction.”
Carter said it’s also important to clearly define who will be receiving the money at settlement. “Advise the closing company as soon as possible about how the assets will be distributed. If only one person is signing for a jointly held property, you’ll need a power of attorney for the other property owner.”
Brougher said the Seller’s Property Disclosure Statement can also be problematic in a divorce. “The Seller’s Disclosure is hard enough in a normal transaction,” she said. “Both parties should be expected to sign the Seller’s Disclosure if both names are on the deed. And refusal to sign doesn’t mean the liability goes away. Both may be responsible, even if one person didn’t know about the material defect.”
The option may be to have each spouse fill the form out separately and sign. Or the agent can attach a cover sheet to the disclosure form explaining why only one seller signed the form. “Either of these will raise a red flag to buyers,” she added.
For real estate agents who have recently married or divorced and changed their name, the attorneys said you must use the name on your license. “You can’t choose to use one name in one place, but not use it in another,” Clouser said. “If the agent has used her maiden name for many years, then gets married, she can’t choose to use both her maiden name and married name – nicknames for the last name are not permitted. You’ll need to reflect a name change in the Pennsylvania Licensing System – or PALS – first before advertising with your new name.”
Watch the replay of the Best of the Legal Hotline: Love (Letters) and Marriage.