A question came up during our Real Estate class asking, “What is the difference between a nominee and an assignee?” A buyer usually has the right to nominate a nominee to purchase the property. This has no impact on the seller. Common nominees include estate planning revocable trusts, real estate investment trusts, LLCs or corporations. A nominee is ordinarily a related entity to the buyer named in the purchase and sale agreement.
An assignment occurs when the buyer assigns their interest in the purchase and sale agreement to someone else. An assignee is an entirely different person or entity. As a seller, with an assignee, be aware that it may be someone else at the closing. What does that mean? The assignee will “step into the shoes” of the buyer, attend the closing and be bound by the terms of the purchase and sale agreement. The purchase and sale agreement may not permit an assignment without permission of the seller.
Using a nominee can be helpful with estate planning. Buyers who may want to name a nominee should include “or my nominee.” Without this language, a buyer may be forced (depending on the circumstance) to close in your name.
If you have any questions about selling your home or buying a home, contact Stiles Law by calling (781) 319-1900.
We received another question from a viewer: “I have a client whose property I am about to list. They tell me they have deeded beach rights. Should I disclose this in my listing?”
If it adds value to the property you absolutely want to add this to your listing and marketing materials. That said, we as a real estate professional are hearing this piece of information from our client. We trust what they are telling us, but also should make sure to verify.
Deeded rights are specific rights and you will want to make sure that you describe them accurately. You should look at the owner’s deed and make sure that the beach rights are actually mentioned in the deed. Sometimes it is through a homeowner’s association and sometimes it is noted onto their deed.
Just because the owner has thought they have beach rights and have used the beach without any issues, does not actually mean they have deeded rights. We advise real estate professionals and sellers to make sure this is confirmed before you list the property and state that you have those rights.
In conclusion, trust but verify! Go to the Registry of Deeds to verify the beach rights exist and then make those disclosures. You do not want to be accused of “misrepresentation of a material fact.”
If you have any questions about Beach Rights contact us by calling (781) 319-1900.
Here’s a story about a conversation I had with a referral partner of ours. She was showing a property. After leaving, she received a phone call from the Seller who is her client. He asked her, “Why didn’t you tell them about the fireplace? Why were you so bearish on the pool? The pool is great!” The listing agent sat back and thought: how could the Seller possibly know about these conversations? “Were you taping us?”
In MA it is illegal to record the audio of people who do not know that you are recording them. So what should you do?
Sellers: We recommend against recording anyone at your open house, especially without disclosing the fact that you are recording to them. You may be committing a crime. Technically, video taping may be acceptable but it is probably bad faith. You are trying to gain a competitive advantage by recording prospective Buyers. Sellers should disclose that the property is subject to recording.
Professionals: if you are aware of recording, you need to disclose that fact. It should be disclosed on the MLS. It should also be disclosed to each person that is walking into the house. We recommend asking the Seller if they are recording. If so, you should tell them that you will have to disclose this to all prospective Buyers. Further, if a Seller is able to view a potential Buyer and use their appearance in deciding whether to sell to that particular buyer, there may be a potential fair housing violation.
Buyers: you should assume that any house you may be walking through has recording devices. Simply walk through without emotion, without conversation and discuss once you leave the house.
Anyone with familiarity with today’s market undoubtedly knows that we are in a period of low inventory. This week, we’re going to look at three strategies that allow Buyers and Agents to help thaw an otherwise frozen market.
One Day Exclusive Listing Offers:
Ordinarily, a Buyer’s Agent will search the MLS looking for homes that meet their Buyer’s requirements within a given area. Due to low inventory, very often there are few homes to show a Buyer. In this situation, an Agent should consider what’s known as a “one day exclusive listing agreement.” Very simply, the Agent will send a letter, often as simple as a post card from your local office supply store, stating that they are an agent with a Buyer who is interested in homes in the area. The Agent will represent list the recipient’s home for a single day to allow for an offer from their Buyer to be submitted. Even if the Buyer does not make an offer, very often the Seller will ask the Agent to list their house because their mindset has shifted. The Buyer is able to see more houses, the Seller is spurred to list their house, and the Agent either Sells a house or gets a listing: this is a truly a win, win, win situation.
Negotiate a Home Sale Contingency:
Many Buyers are sitting on the sidelines waiting for inventory to increase. The problem is that many of these Buyers are also would-be Sellers. To increase inventory, Buyers who also need to sell should consider including a home sale contingency with their offer to mitigate the risk of not being able to sell their home. That said, not all home sale contingencies are created equal. There are generally four types which expire at different points of the sale process:
1) The Seller becoming party to a signed offer
2) The Seller becoming a party to a signed purchase and sale agreement
3) The Seller’s Buyer receiving their mortgage commitment
4) The Seller closing on their sale and receiving proceeds
An Agent guiding their Buyer should define precisely which type of home sale contingency they are seeking. The spectrum of possible contingencies shifts the risk from the Buyer to the Seller. In a Seller’s market, it’s unlikely that a Seller will agree to number four. Number one generally leaves the Buyer too exposed: the Buyer’s buyer may terminate after conducting a home inspection. Generally, number two or three is a fair option that Buyers and Sellers can accept. Be aware that a Seller may send a counter offer with a “Kickout Clause.” Generally speaking, a kickout clause allows the Seller to continue listing the house for sale, during which time the Seller receives a bona fide offer that is higher than the Buyer’s offer, the Buyer is given a defined period to either waive the home sale contingency or exercise their rights under the contingency to terminate the Agreement. For more information on kickout clauses, read our article, The Offer Part 2 – Contingencies for Sellers to Consider.
Negotiate a Suitable Housing Contingency:
Many Sellers are sitting on the sidelines waiting for inventory to increase so that they can find their next house. Some homeowners simply prefer to sell before they buy. Buying before selling comes with the risk of not being able to find a home to purchase before having to sell. As with sale contingencies, not all suitable housing contingencies are created equal. A suitable housing contingency generally expires at one of four points: when the Seller signs an offer, signs a purchase and sale agreement, receives a mortgage commitment, or closes on their purchase. Usually, Buyers will accept numbers two or three, as they fairly spread the risk between the Buyer and Seller. The benefit of spreading the risk is that Buyers that would otherwise wait for inventory to increase before listing will be willing to list and sell their homes, increasing inventory generally.
Above all, Buyers and Sellers who are motivated to move need to accept some degree of risk. Thinking creatively will help to increase inventory in this period of high demand. While not a panacea, the three strategies that we’ve listed will help to thaw today’s frozen market.