Winter 2011

Winter 2011

UPDATE to the Advance Fee Discussion
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See my earlier blogs on Advance Fees
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Effective December 29, 2010 the Federal Trade Commission (FTC) issued the Final Rule concerning the Mortgage Assistance Relief Services which bars the collection of advance fees to work on behalf of consumers to help them obtain modifications to the terms of mortgage loans or to avoid foreclosure on those loans.
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Does this apply to real estate agents in Nevada?  I do not think so.
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Persons holdings NRS 645 real estate licenses would not appear to be covered by the FTC ruling, taking into consideration the October 2009 NRED position paper.  Provided the Nevada real estate agent is only performing real estate activities and not loan modifications.  Real estate activities are, “assisting, soliciting or negotiating the sale, purchase, option, rental or lease of real property.”  Per the NRED, there can be no advance fees paid to a real estate broker except in accordance with NRS 645.322 – 324, there may be no separate or distinct payment or compensation for performance of activities defined as loan modification, foreclosure consulting or  providing of covered services outside of a real transaction, and should the transaction not close and thus no commission is paid, no separate or other payment is allowed for services that are defined as loan modification, foreclosure consulting or providing covered services.  An advance fee listing in Nevada can only be, “for assisting, soliciting or negotiating the sale, purchase, option, rental or lease of real property, or the sale, exchange, option or purchase of a business…” and “means a fee contracted for … an advance fee listing …to sell …property, issued for the purpose of promoting the sale … of … real estate … to … real estate brokers or salespersons…

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What is not clear in Nevada is what the Advance Fee accounting should look like per NRS 645.322.  For example with
trust accounts in Nevada per NRS 645.310, NAC 645.806, the Nevada Real Estate Division issued form 546, the Trust Account Reconciliation.  NRED also issued Trust Fund Accounting And Record Keeping For Nevada Brokers.
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As stated above, an advance fee can be paid to a real estate broker provided it is in accordance with NRS 645.322 – 324.  The FTC’s 12.29.2010 Rule addresses only mortgage lenders.  The California Department of Real estate on October 11, 2009 ruled that advance fees for Loan Modification and/or similar services are unlawful unless a “no objection” letter has been issued.  Nevada does not yet have such a ruling.  On December 8, 2010 my office asked of the Honorable Nevada Attorney General and Administrator of the Nevada Real Estate Division to issue a position similar to the October 15, 2009 Position Paper further clarifying the NRED’s position as to advanced fees.  Specifically clarifying what the accounting should entail, if the Prudential, Americana Group, REALTORS® suggested form is approved and finally if there is interest in setting up a task force to address this issue, I am willing to volunteer my time to attempt to create a form that can assist the Nevada real estate licensee community to address this issue and/or to assist in preparing the position paper.
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I will keep you posted.
Any comments are appreciated.
Darren J. Welsh cell 702 245 1787 Phone: (702) 733-9310   Cell (702) 245 1787 Fax: (702) 862-4576
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