Disclosures


The Winter SnowForeign Investment in Real Property Tax Act (FIRPTA) is a unique tax. It requires the buyer, that’s right, the buyer to withhold from a foreign seller and pay to the Internal Revenue Service (IRS) a tax on a percentage (formerly 10%) of the amount realized (sales price) upon the sale of any U.S. real property.

FIRPTA changed in December, 2015 for those closings on or after 2/17/16. There are some exceptions to the rule and an increase of the tax to 15%.

 

 

  1. If the sales price is $300,000.00 or less, the buyer intends to occupy the subject property and executes a certification of the facts (Buyers Affidavit of Residency, Intent and Price), the withholding rate is 0%.  This exception remains unchanged and was reconfirmed by the PATH Act.
  2.  If the sales price exceeds $300,000.00 but does not exceed $1,000,000.00, the buyer intends to occupy the subject property, and executes a certification of the facts (Buyers Affidavit of Residency, Intent and Price), the withholding rate is 10%.  This exception was newly created.

For all other transactions the withholding rate is 15% unless the foreign seller has obtained from the IRS a written Determination of Reduced or Waived Withholding.

Questions? 702 245 1787. Darren

IMAG0383[1]

The Nevada Supreme Court has ruled in:

LAND BARON INVESTMENTS, INC. vs. BONNIE SPRINGS 131 Nev., Advance Opinion 69

The holding confirms a 1993 case, Mackintosh v. Jack Matthews & Co., 109 Nev. 628, 633, 855 P.2d 549, 552 (1993). -“Nondisclosure arises where a seller is aware of materially adverse facts that “could not be discovered by the buyer” after diligent inquiry” – IN OTHER WORDS, if buyer is able to discover a material fact on its own, a seller does not have a duty to disclose it. In this case specifically the allegation was that a seller was a aware of a defect, that the buyer discovered during escrow.  The Court’s take on this was “..even if the Seller had known about these facts and not disclosed them, there would still be no viable nondisclosure claim because the facts were discoverable and the Buyer had an equal opportunity to discover those facts before closing.”

ImageThis is a continuation of my August 24, 2007 entry How Nevada Probate Affects Listings and Sales Contracts.

Listing Property during Probate. Real property can be sold during probate. That is prior to the real estate being transferred to the heir(s).  Per Nevada law 148.110 the personal representative of the estate can enter into an exclusive listing agreement. The commission must not exceed 7% for improved (that’s both residential and commercial) and 10% for raw land.

Warnings to Buyers.  If you are the listing agent, make sure and make a note in the agent to agent remarks that the “sale is subject probate court approval/confirmation hearing.”  Also, counter any offers with this same language.

Buying During Probate.  If you are the buyer’s agent, remember your purchase is subject to Nevada law 148.270 which requires that after the estate representative has agreed to sell, a hearing is held for Court Approval. The hearing is a public auction in open court.  Bids are accepted at this hearing as follows: if the sales price is less than $100,000, competing bids must be at least 5 percent of the sales price, if more than $100,000, then bids $5,000 above the sales price are accepted.  It is best that the buyer be present at the hearing. In the event the buyer’s contract is out bid at the hearing; that first buyer can participate in the bidding process to potentially save their purchase.

Real Estate Sales Commissions.  If the procuring buyer is outbid, the first buyer’s agent is still paid ½ of the real estate commission per Nevada law 148.120.

This is a continuation of my August 24, 2007 entry How Nevada Probate Affects Listings and Sales Contracts

Don’t hesitate to contact me with questions or a referral for a real estate – probate attorney.  darren@dwelshlaw.com

 

 

Darren Welsh (c)

2014 DC Emancipation Day

Did I say it was over March 31, 2012? This is America, it’s never over ‘till it’s over.’

One more shot to claim your Kitec money.

Please go to http://www.plumbingdefect.com/ to read about the limited extension.

“On February 26, 2014, the Court extended all deadlines for owners of Clark County homes that contain Kitec plumbing systems to file claims requesting the available settlement relief. The Court extended the deadlines by three (3) years or until the limited funds are exhausted. The Court also opened up the settlement relief program to individuals who were previously barred either because they failed to act before the applicable deadline, their home was not included in the original Kitec fittings litigation, or they previously opted out of this class action.”

§ PREVIOUS POSTS §

Kitec Claims Deadline Expires March 31, 2012.

Kitec Claims Deadline – March 31, 2012 – Jan 24, 2012

TGIF Legal Tip:  Kitec Litigation Update – July 2, 2010

TGIF Legal Tip: Litigation Affecting Real Estate – June 8, 2007

ImageThe Nevada Seller’s Real Property Disclosure Form (SRPD) has changed effective March 8, 2013.  The changes clarify the section warning “purchaser may not waive the requirement to provide this form and a seller may not require a purchaser to waive this form,” per N.R.S. 113.130(3) removing the former citation of the Senate Bill 34(3)/Senate Bill 314. It kept the “type of seller” can be selected from a Bank, an Asset Management Company, Owner-occupier or Other.”

I want to take this time to address waiver of rights in a Nevada residential real estate transaction. Specifically the Buyer’s Remedy Waiver Of NRS 113.150 Rights.

The issue is that even though a seller may not require a purchaser to waive the receipt of the SRPD per N.R.S. 113.130(3), a buyer may waive any of her rights as to remedies under NRS 113.150.  The section 150 is where the Buyer finds their remedies for a non-disclosure.

Although the law says the Seller cannot force a Buyer to waive the right to receipt, if the Seller does not provide the SRPD, the transaction may still close. More importantly a Seller can simply avoid the subject of not providing the form and focus on getting the Buyer to waive the remedies of the non-performance by a Seller.

As described in the form Buyer’s Remedy Waiver Of NRS 113.150 Rights:  The Buyer may waive their right to:

  1. rescind the purchase pursuant to NRS 113.150(1)
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to cancel the transaction because they did not receive the form. This waiver is the least potentially damaging to a buyer. If a seller is “demanding” as a contingency that this form be signed, number 1 is the safest for a buyer to check.  The reason is that a buyer can still conduct their own inspection, find a defect and cancel the transaction per NRS 113.150(2), subject to the terms of the purchase agreement.
  2. rescind the purchase agreement pursuant to NRS 113.150(2)(a)
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to cancel the transaction even if they are informed of a new defect during escrow.  Remember NRS 113.150(2) is when…before the conveyance of the property to the purchaser a seller informs the purchaser of a defect in the property of which the cost of repair or replacement was not limited by provisions in the agreement to purchase the property… This is potentially more damaging to a Buyer.  As described above, checking number 1 on the Waiver Of Rights form still allows the Buyer the chance to cancel if they are informed of a new defect.  By waiving this right in #2, the Buyer is potentially not able to cancel the transaction without penalty even if the Seller discloses a new material defect during escrow.
  3. recover from the Seller three times the amount necessary to repair or replace any defect per NRS 113.150(4).
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to collect treble damages.  This waiver is powerful.  It eliminates the Buyer’s ability to pursue treble damages as described in my March 2012 entry, Disclosure In Real Estate Sales, As Is, NRS 113, Treble Damages, basically nullifying the clarification the Nevada Supreme Court describes in Webb v. Shull.  If a seller is “demanding” as a contingency that this form be signed, number 1 is the safest for a buyer, number 2 the next safest, number 3 is highly suspect.  Arguably a seller could not disclose, perhaps even intentionally, and not be held liable.
  4. All of my legal rights under NRS 113.150.
    This means – that although the buyer cannot be forced to waive the right to receive the SRPD form, they can waive their right to cancel the transaction because they did not receive the form; they can waive their right to cancel the transaction even if they are informed of a new defect during escrow and they can waive their right to collect treble damages.

This is a series of Disclosure Entries see also:

Disclosure In Real Estate Sales, As Is, NRS 113, 

Treble Damages

Nevada Disclosure In Residential Sales

Private Transfer Fee (Seller’s Real Property Disclosure Form)

An Updated All Inclusive & Belt Way Disclosure

The New, Improved All Inclusive Disclosure

Nevada Condominium Hotel Disclosure

Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada

questions …  email me darren@dwelshlaw.com

Nevada Case Confirms Tail Periods Are Valid.

Easton Business Opportunities, Inc. v. Town Executive Suites-Eastern Marketplace, LLC

Image

What is a tail period?  In an exclusive right-to-sell brokerage agreement the tail period is a certain amount of time after the final termination of the listing period.  During this “tail” or extension period if the property is sold to anyone with whom the listing broker has had negotiations or to whom the property was shown prior to the final termination, a commission is owed.  The duty to pay a commission ends typically if the seller enters into a valid brokerage listing Agreement with another licensed real estate broker after the final termination of listing agreement.

The dispute in Easton Business Opportunities was a commission claimed under an exclusive right-to-sell brokerage agreement.  The purchaser viewed the property during the listing period and purchased the property directly from the seller during the tail period.  The Seller refused to pay the commission.

TRIAL – BROKER LOSES

The case went to trial in the Eighth Judicial District Court of Nevada, County of Clark.  The District Court ruled in favor of the seller and against the broker.  The District Court declared that the broker failed to give the seller a list of the people to whom the broker had shown the property at the end of the listing period.  Therefore no commission was owed.

APPEAL – BROKER WINS

On the May 6, 2010 in Easton Business Opportunities, Inc. v. Town Executive Suites-Eastern Marketplace, LLC the Nevada Supreme Court reversed and held in favor of the broker and against the seller.  The Nevada Supreme Court said, “ we are loath to impose such an obligation.”  So there is not an obligation for a broker to give a ‘list’ to a seller in Nevada at the term of the listing agreement of potential purchasers.  The Nevada Supreme Court placed liability on the seller for the commission if the seller sold during the extension period to a buyer to whom the broker had shown the property or negotiated with-in other words, it allocated the risk of being wrong about the buyer being commission-free to the seller.

The Nevada Supreme Court said, “we disagree with the district court’s reading of the brokerage agreement as a matter of law …  The agreement, as written, supports the opposite result and should have been upheld.”

The oral arguments can heard by clicking here.

Questions? darren@dwelshlaw.com

Introducing the new and improved NRS 113, mixed with the Nelson Case, topped some Webb v. Shull.

There is a new ruling (March 2012) on disclosure laws and the penalty associated with non-disclosure.  A seller in Nevada is required to disclose a “condition that materially affects the value or use of residential property in an adverse manner.”  This is known as a material defect.  We know from the Nelson Case in Nevada that a material defect is only one that the Seller is “aware;” if the Seller does not realize, perceive, or have knowledge of that defect or condition, then there is not a defect.

Now, in Webb v. Shull we have a ruling discussing the mental state of the Seller as to non-disclosure.  Does the Seller have to intentionally not disclosure?  Or can they merely be mistaken?  The Supreme Court in Webb instructs that holding a Seller liable for treble damages, “does not expressly or implicitly require a heighted level of mental culpability.”  In other words, the standard is low to find liability.  If the seller is aware of a defect, they must disclose or face treble damages, even if they did not “intend” to not disclose.

How does the Buyer’s Remedy Waiver Of Nrs 113.150 Rights form interact with this with all of this?  Remember from my 9.30.2012 reporting Nevada Disclosure In Residential Sales, effective October 1, 2011 the Seller’s Real Property Disclosure Form, also known as the S.R.P.D. can no longer be waived. This form must be provided in just about every residential transaction in Nevada. There are some exceptions.

Nevada law says you cannot waive your right to receive an SRPD.  It does not say you cannot waive rights as to an As Is purchase.  Thus the waiver of rights form, Buyer’s Remedy Waiver Of Nrs 113.150 Rights, which is provided in addition to the SRPD, means you are buying the property As Is, however, the Seller must ALSO disclose what they, as the Seller, know is wrong with the property.  The Seller must still disclose known  “defects.”  It’s fair if you think about it, the basic point is….“As a Seller this is what I understand is wrong with the property, and as to what I, as the Seller, do not know what is wrong, you as the Buyer, are taking the property As Is.”

This is a series of Disclosure Entries see also:

Nevada Disclosure In Residential Sales

Private Transfer Fee (Seller’s Real Property Disclosure Form)

An Updated All Inclusive & Belt Way Disclosure

The New, Improved All Inclusive Disclosure

Nevada Condominium Hotel Disclosure

Nevada S.R.P.D. New Clarification of Real Estate Disclosure Laws in Nevada

Any questions, you can call me Darren Welsh 702 245 1787. darren@dwelshlaw.com

Next Page »