1. © 2015 OnCourse Learning Texas Real Estate Brokerage and Law of Agency, 6 th Edition

2. FEDERAL LEGISLATION AFFECTING REAL ESTATE BROKERS--PART III © 2015 OnCourse Learning Chapter 13

3. Federal Asset Foreclosure Crime Control Act of 1954 and the Racketeer Influenced and Corrupt Organization (RICO) Act – give the government the power to seize and take control of real estate without notice A real estate licensee needs to be aware that these statutes are effective and know what to do to avoid enforcement © 2015 OnCourse Learning

4. Civil Forfeiture If property is used to commit or facilitate the commission of a violation of the Act, the property is subject to forfeiture – language is extremely broad and all real property is subject to forfeiture – United States v. James Daniel Good Real Property – U.S. v. 92 Buena Vista Avenue © 2015 OnCourse Learning

5. Property Seized Regardless of scope of the activity, entire tract of land may be subject to forfeiture Act also provides for forfeiture of real property acquired for exchange of an illegal substance Applies to property that is purchased with proceeds traceable to an illegal transaction © 2015 OnCourse Learning

6. Standards for Forfeiture Three standards exist for determining whether property is subject to forfeiture: – the substantial connection test – the minimal connection test – the probable cause standard © 2015 OnCourse Learning

7. Forfeiture Under RICO RICO was originally intended to require divestiture of legitimate businesses that organized crime control Courts have construed it to reach any person who is convicted of investing in, acquiring control of, or conducting an enterprise with money derived from a pattern of racketeering activity © 2015 OnCourse Learning

8. Standards for Forfeiture Under RICO, the standard is whether the property is part of a criminal enterprise Government employs a relation back doctrine; once the government proves that the property was used to further an illegal drug transaction then the government is deemed to have title to the property © 2015 OnCourse Learning

9. Defenses to Forfeiture Under RICO, a statutory defense is provided for any owner who establishes that the illegal activity occurred without their knowledge Defense can prevail if owner shows they – were uninvolved in and unaware of the activity – had done all that reasonably could be expected to prevent prescribed use of the property © 2015 OnCourse Learning

10. Forfeiture Procedures The U.S. Attorney’s Office may bring an action by filing a complaint in the U. S. District Court Court will issue an order authorizing a warrant for seizure Government must provide public notice Government files an order for forfeiture with the Federal District Court © 2015 OnCourse Learning

11. RICO Cases United States v. Ursery Bennis v. Michigan Van Oster v. Kansas Calero-Toledo v. Pearson Yacht Leasing Co. © 2015 OnCourse Learning

12. RICO Cases U.S. v. James Daniel Good Real Property U.S. v. A Parcel of Land Known as 92 Buena Vista Avenue Lot 39, Section C, Northern Hills Subdivision, Grayson County, Texas v. State of Texas 1018-3rd St. v. State © 2015 OnCourse Learning

13. Guidelines for Agents Sources of income of tenant or purchaser Note purchaser’s income experience, education, or skills Obtain chain of title search Inquire about the source of any down payments or deposits or large pre-payments of rent © 2015 OnCourse Learning

14. Guidelines for Agents Note cash payments and source of cash Tour the premises periodically Interview employees of the premises Obtain financial statements from all prospects Investigate three years’ prior tax returns © 2015 OnCourse Learning

15. The Flood Disaster Protection Act of 1973 The purpose of the Act was to – authorize a flood insurance program through which flood insurance could be made available on a nationwide basis – provide flexibility in the program – encourage state and local governments to make appropriate land use adjustments © 2015 OnCourse Learning

16. The Flood Disaster Protection Act of 1973 guide the development of proposed future construction encourage lending and credit institutions to assist in furthering the program ensure that any federal assistance will be related closely to all flood-related programs authorize continuing studies of flood hazards © 2015 OnCourse Learning

17. National Flood Insurance Program HUD was originally authorized to establish and carry out a national flood insurance program Enabled purchase of insurance against loss resulting from physical damage to or loss of real property arising from any flood Eventually FEMA replaced HUD © 2015 OnCourse Learning

18. Scope of Program Make flood insurance available to cover residential properties, church properties, and small business properties The Director can make the flood insurance available only in those states or areas that evidence a positive interest in securing flood insurance © 2015 OnCourse Learning

19. Identification of Flood-Prone Areas Director is authorized to consult with Secretaries of the Army, the Interior, Agriculture, and Commerce, the TVA, and heads of other departments or agencies Allows the Director to (1) identify and publish information about all areas which have special flood hazards and (2) establish flood risk zones © 2015 OnCourse Learning

20. Effect on Real Estate Brokers Designation of a flood plain, (or lack thereof) will affect financing, the purchaser’s ability to get building permits, and the common law duty of knowing whether an area is subject to special flood hazards – because there has been a common knowledge in the community that the area is prone to flooding. © 2015 OnCourse Learning

21. Copyright Act The Copyright Act of 1976 enables authors and other talented creators to exercise exclusive control over their creations The Act provides for both civil and criminal relief – Supermarket of Homes v. San Fernando Valley Board of Realtors © 2015 OnCourse Learning