Forms


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

 

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Open Road   I received a text on May 31, 2013; if accelerator clauses are legal, a good idea? etc.  That’s funny, I had the same question posed to me, only not by text, years ago.  Here is what I said in 2004, as in 9 years ago.  Remember 2004?

Accelerator Clauses

   Accelerator clauses are appearing in buyers’ offers.  “Buyer will pay $___ over any other offer better than theirs.  Seller must provide Buyers copy of better offer.”  Selling agents are declaring that this should ‘guarantee’ a buyer to be in first position.  Listing agents are interested in accepting these clauses to ensure the highest price in a bidding war.  There are forms and clauses being exchanged.

The issue is the meaning of the clause and what terms are being accepted.  The lower offer may have different financing, closing costs, escrow dates, lease backs, repair request, etc. Thus when the clause is triggered….it renders, potentially, another purchase agreement in first position. But is that in a seller’s best interest? What other terms differ between the former highest bid and now the Accelerator Clause triggered bid?

In a recent scenario a listing agent entertained 4 offers, all different prices, close dates, finances, closing costs and different styles of buyer.  The buyers varied from investor group, independent flipper, and first time buyer. If the Seller accepts the accelerator clause of one of the buyers, what does it mean?  Does a buyer now have to change their terms of financing to meet another offer?  As to financing, this will not necessarily work. Does the Buyer have to close earlier or later?  There is little meeting of the minds as to most aspects of the sale, all very important aspects, other than the purchase price.

By accepting the ‘accelerator clause’ the Seller may loses their ability to choose what they feel is the ‘best offer.’  From a seller’s perspective, did they get enough? What if a seller does not accept the Clause and counters All Parties for a highest and best to be ‘reconfirmed,’ by the Seller.  From a buyer’s perspective you have agreed to a higher price, was the other offer even feasible? Assuming it is valid, was it a possible offer? Was the other buyer not concerned about the price due to an appraisal contingency?  Does the Clause Buyer have that protection?.  The now accepted offer triggered by the Clause may or may not be subject to appraisal.

The accelerator clause does not solve much.  It is attractive because it gives hope. The Accelerator Clause is a cousin to the lease option in the family of bad ideas.  In all markets, it is not just price.

  Darren Welsh, 2004

So, that was my opinion in 2004.  Not much has changed.  Except, as fair warning, the Nevada Real Estate disagrees with Accelerator Clauses for different reasons.  In the 2012 Third Edition Nevada Law And Reference Guide, p. 86 (§A(4)(c)) the NRED hints Accelerator Clauses may not be fair dealing.

“Acceleration” Clauses (not what you think!) – The Division has stated it is a violation of fair dealing to insert what it identifies as an “acceleration” clause. This is not the “acceleration clause” found in general contract or financing law. According to the Division, an acceleration clause is a clause in which the offeror promises to pay a certain set amount above the highest offered sale price and usually provides for a maximum or cap amount. The Division’s example is, “I will pay $2,000 over the highest offer up to $300,000.” This type of clause automatically gives one offeror a stated advantage over other offerors and may not allow fair dealing for the other offerors.”

“Though the previous two activities (disclosing offer terms and inserting an acceleration clause) are not a direct violation of any law or regulation, and there is some controversy regarding this, nevertheless, the Real Estate Commission has found these practices to be highly suspect.”

O.K.…per NRED, they are are not an outright violation, but apparently frowned upon as it gives one buyer a “stated advantage.” Clear as mud. I am not sure where the NRED is going with that, considering the fact that merely offering a higher sales price is a stated advantage.  Nonetheless yet another reason the clauses are problematic.

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

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

Private Transfer Fee (Sellers Real Property Disclosure Form)

***UPDATE*** on March 15, 2012, the Federal Govt. /Washington, DC – The Federal Housing Finance Agency (FHFA) has sent a final rule to the Federal Register on private transfer fees. The final rule limits Fannie Mae, Freddie Mac and the Federal Home Loan Banks from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants and in certain related securities. Transfer fees are contractual arrangements where an owner pays a fixed amount or a percentage of the sales price at the time of transferring the property. ###

 

Private Transfer Fee (Sellers Real Property Disclosure Form)

Question #15 on the Nevada Seller’s Real Property Disclosure Form(SRPD)- “This property is subject to a Private Transfer Fee Obligation?”

What is a Private Transfer Fee?  It is an encumbrance on the property, which shows up like a mortgage deed.  It is a recurring fee paid back to the Seller, every time a sale occurs, in exchange for clear title.  The Seller maintains a financial interest in the property for decades after it’s been sold, not with a mortgage or a loan but with a private transfer fee.

As of May 2011, in Nevada they are not legal.  Per Nevada Assembly Bill 271

http://www.leg.state.nv.us/Session/76th2011/Bills/AB/AB271_EN.pdf

Nevada joined with more than half of the rest of the Country in banning private transfer fees on real estate– AB 271 makes all new private transfer fee obligations “void and unenforceable.”

If you have an “existing Private Transfer Fee” it remain legal, but the beneficiaries of currently recorded private transfer fee covenants are subjected to new recording and notice requirements to preserve their interest, including civil penalties for creation of new private transfer fee obligations or failure to comply with the recording requirements.

Question 15 of the Nevada Sellers Real Property Disclosure Statement (SRPD) asks if, “This property is subject to a Private Transfer Fee Obligation?”

Thus per the new SRPD, sellers of properties in Nevada with existing private transfer fee obligations must disclose this encumbrance.

This is a series of Disclosure Entries see also:

Nevada Disclosure In Residential Sales

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.

   …… Changes to the Nevada residential real property disclosure.  Effective October 1, 2011 the Seller’s Real Property Disclosure Form, also known as the S.R.P.D. can longer be waived. This form must be provided in just about every residential transaction in Nevada.  There are some exceptions, see below.

    …… The statute controlling this form (NRS 113) was modified within Senate Bill 314 in the July 2011 Nevada Legislative Session removing the section that allowed a seller and buyer to mutually agree that the SRPD would not be provided. Such a waiver had to be signed before a notary by a buyer.  The Law can be found here NRS 113

  …… This will affect many sales such as probate, short sales, and bank owned (REO). Exceptions are foreclosure (when the trustee sale occurs, not a bank selling after they have already foreclosed) between co-owners and new home. All sellers in Nevada must now provide this form. Some sellers have not lived in, or even seen these properties, but the statute is clear, it must still be filled out. If a Seller does not provide the form, a buyer may cancel, without penalty.

…… This should not affect the August 7, 2007 entry on disclosure – New Clarification of Real Estate Disclosure Laws in Nevada.  Remember in that case (the Nelson Case), the Nevada Supreme Court ruled on the scenario where a defect, now repaired, was not disclosed on the Nevada SRPD – “Once the [damage] was repaired … it no longer constituted a condition
that materially lessened the value or use of the [home. Accordingly, [the Seller] did not have a duty to disclose the …. damage.” This rule would still apply.

This is a series of Disclosure Entries see also:

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.

January 17 2011 Mt Charleston

January 17 2011 Mt Charleston

EFFECTIVE June 13, 2011.  This law was repealed.  The subject of this blog was that the Nevada Energy Commissioner established a program for evaluating energy consumption in residential property in Nevada which required a seller to provide a copy of this evaluation to a purchaser of his or her property. (NRS 113.115, 701.250).  That law has been appealed by AB 432.  Which can be read here.  http://www.leg.state.nv.us/Session/76th2011/Bills/AB/AB432_EN.pdf

THIS FORM IS NO LONGER REQUIRED. 

This is a follow up to my December 28, 2010 submission Seller’s Energy Consumption Evaluation Form.

As you know effective January 1, 2011, there is a new form from the Nevada Renewable Energy and Energy Efficiency Authority which is known as the Seller’s Energy Consumption Evaluation Form which is commonly known as the  “SEEF,”  Pursuant to Nevada Revised Statute (“NRS”) 113.115.

There is now a new form that allows the Waiver of the SEEF form.  In lieu of having to use the entire SEEF form, and use the waiver section of Page 4 of the SEEF, you can now have the Seller and Buyer sign this Waiver of the SEEF.

The waiver form is also effective January 1, 2011, although it came out a bit later.

The Waiver of the SEEF form is located by clicking HERE.

The SEEF form is located HERE.
An explanation of the SEEF form is on the SEEF form.
Instructions to fill out the SEEF form are located HERE.
Any questions?  Darren Welsh, Esq. 702 733 9310 ofc, 702 245 1787 cell.

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