Commercial Webinar Series 1 hour presentation Top 5 Commercial Broker Legal Issues presented by Rick Albers Questions will be answered at the end. For technical questions, call

Commercial Webinar Series Top 5 Commercial Broker Legal Issues Presented by Rick Albers Kuperman Orr & Albers, P.C Bee Cave Road Building 2, Suite 150 Austin, Texas September 24, 2015

Topics 1.Misrepresentation & Failure to Disclose 2.Environmental Issues 3.Unauthorized Practice of Law 4.Americans with Disabilities Act 5.Agency Concerns

Misrepresentation & Failure to Disclose Misrepresentation: Misstatement of a material fact or feature of the property Failure to disclose: Not revealing a known defect of the property

Misrepresentation & Failure to Disclose Known Defect –a significant defect, including a latent structural defect, known to the license holder that would be a significant factor to a reasonable and prudent buyer in making a decision to purchase real property (TRELA (b)(3)&(4))

Misrepresentation & Failure to Disclose Common misrepresented features: –Foundation or structural problems –Property boundaries –Roof condition –Termite problems –Quality of tenants

Misrepresentation & Failure to Disclose Common failures to disclose: –Hazardous materials / environmental problems –Flooding issues –Improvements not properly permitted –Easements –Other title problems

Misrepresentation & Failure to Disclose Best Practice: –Attribute the information to the source "According to the seller, the roof is four years old and does not leak.” –Phrase the comment as: your opinion and not as a fact, or as someone else’s opinion.

Misrepresentation & Failure to Disclose Actions to take: –Encourage the Seller to use a Seller Disclosure Form. –Avoid making predictions “this pond will not be classified as a wetland” “this well will never run dry” “the value of this property will appreciate over the next 5 years”

Misrepresentation & Failure to Disclose Actions to take: –Add a disclaimer to the information you provide The materials contained herein are based on information and sources deemed to be reliable, but no representation or warranty, express or implied, is being made by Broker.

Environmental Issues Asbestos Soil or groundwater contamination Lead-based paint Actions to take: –Recommend that the Buyer engage a professional to evaluate –Use Lead-based paint disclosure form

Unauthorized Practice of Law TRELA says you engage in the unauthorized practice of law if you: –draft an instrument not on an approved form that transfers or otherwise affects an interest in real property; or –advise a person regarding the validity or legal sufficiency of an instrument or the validity of title to real property.

Unauthorized Practice of Law Authorized actions: Modifying the Contract at the direction of your client Unauthorized actions: Modifying the Contract because you think it is best to do so

Unauthorized Practice of Law Special Provisions problems “Seller agrees to extend the financing contingency if Buyer’s lender is waiting for delivery of 3 rd party reports or appraisal.”

Unauthorized Practice of Law Special Provisions problems “The Earnest Money will be non-refundable after 30 days.”

Americans with Disabilities Act Applies to places of “Public Accommodation” Most commercial properties are places of Public Accommodation The property must be equipped with ramps, curb breaks, and other considerations to allow a disabled person to access the building.

Americans with Disabilities Act Changes must be made that are “readily achievable with reasonable effort and expense" to serve clients with disabilities. Your brokerage office might be a place of public accommodation. Private persons may sue to enforce the ADA.

Agency Concerns Unwanted representation Fiduciary duty Intermediary Commission agreements Handling other people’s money

Unwanted Representation If a client thinks you represent them, then you probably do. Written agreement not required. All duties apply. Solution: −Say: “I do not represent you.” −Put in writing: “I do not represent you.”

Fiduciary Duty The agency relationship creates a fiduciary duty. Must hold your clients interest above that of your own. Exception: Commercial Broker’s Lien Duty is to act in the principal’s interest, but: owe a duty of honesty and fairness to all parties must disclose known defects

Intermediary Saying you are an intermediary does not make you an intermediary. Both sides must be clients. Both sides must authorize intermediary in writing. Written agreement must state source of compensation. Notice must be included.

Commission Agreements Must include: Commission amount or formula to calculate the commission Legally sufficient property description Termination date Signed by the party obligated to pay the commission

Handling Other People’s Money “Designated Trust Account” Trust account required Use “trust” in the account name

Handling Other People’s Money Only Brokers can maintain trust accounts Salespersons must immediately deliver trust money to sponsoring broker Deposit not later than the close of business of the second working day after receipt

Questions ? NOW – Type your questions now. LATER – TAR Legal Hotline Rick Albers

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