Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - January 19, 2010 HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. "This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said. In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time. The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.
1.) Mortgage Banking/Finance - General Finance From www.irs.gov: The credit is available for eligible home purchases after April 8, 2008. You must enter into a binding contract to buy the home before May 1, 2010 and close before July 1, 2010, in order to obtain the credit. For new construction, the building contract must be before May 1, 2010 and the buyer must take occupancy of the home prior to July 1, 2010. READ MORE ABOUT IT: 2.) Disclosure - Megan's Law QUESTION: Does an elected officer of a condominium association or its board of directors have an obligation to disclose that a sexual predator lives in the association once they have knowledge of it? ANSWER: For real estate licensees, the duty to disclose of disclosure in such matters is found in Wis. Stat. § 452.24: “(1) If, in connection with the sale, exchange, purchase or rental of real property, a licensee receives a request from a person to whom the licensee is providing brokerage services in connection with the sale, exchange, purchase or rental for information related to whether a particular person is required to register as a sex offender under s. 301.45 or any other information about the sex offender registry under s. 301.45, the licensee has a duty to disclose such information, if the licensee has actual knowledge of the information. For an owner of real estate, the duty to disclose in found in Wis. Stat. § 706.20: “(1) Except as provided in sub. (2), an owner of an interest in real property has no duty to disclose to any person in connection with the sale, exchange, purchase or rental of the real property any information related to the fact that a particular person is required to register as a sex offender under s. 301.45 or any information about the sex offender registry under s. 301.45. Wisconsin law does not place any additional disclose duties on officers or directors of condominium associations. 3.) Offer to Purchase - Closing Issues QUESTION: Is the transfer tax typically a seller’s fee in a sale, or is there actually a law that requires sellers to pay the transfer tax? ANSWER: Wis. Stat. § 77.22 states: "Imposition of real estate transfer fee. (1) There is imposed on the grantor of real estate a real estate transfer fee at the rate of 30 cents for each $100 of value or fraction thereof on every conveyance not exempted or excluded under this subchapter...." While the statute puts the burden of payment on the seller, it is not uncommon for parties to a transaction to negotiate this fee and, at times, agree that the buyer be responsible for payment. 4.) Offer to Purchase - Earnest Money QUESTION: The broker received an offer on one her REO listings. The REO seller insists that earnest money be submitted with the offer. The offer was “accepted” by the seller verbally and the broker deposited the earnest money check. The buyers are tired of waiting for the actual written acceptance (the binding acceptance deadline has passed) so now they want the earnest money back. Can the broker return the earnest money since there was no written acceptance? The earnest money was paid by a close relative of the buyers. Who does broker make the check payable to? ANSWER: Per Wis. Adm. Code § RL 18.09(1)(a), earnest money can be returned upon the rejection, expiration or withdrawal prior to binding acceptance of an offer to purchase. The check is made payable to the payor of the earnest money. If the broker is aware that there is disagreement between the buyer and seller as to the return of the funds, the notice of disbursement in § RL 18.09(2) would apply: § RL 18.09 Disbursement of trust funds (1) PROPER DISBURSEMENT. A broker who disburses trust funds from his or her real estate trust account under the following circumstances shall not be deemed to have violated s. 452.14(3)(i), Stats.: (2) NOTIFICATION OF DISBURSEMENT. Prior to making a disbursement of trust funds under sub. (1)(a) where the broker has knowledge that not all parties agree that the rejection or withdrawal occurred prior to binding acceptance, and prior to making a disbursement under sub. (1) (e), (f) and (g) where the broker has knowledge that either party disagrees with the disbursement, the broker shall attempt to notify all parties in writing of the intent to disburse. The notice shall be delivered by certified mail to the parties’ last known addresses and shall state to whom and when the disbursement will be made. The disbursement may not occur until 30 days after the date on which the notice is sent.
Debbi Conrad |