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Marketing and Sales Issues

Warning About Internet Copyrighted Pictures

Pictures found on the internet are not necessarily free for agents to use.  Many are copyrighted and if agents use a copyrighted picture, they may be required to pay a fee for its usage.  Many of these pictures are of homes and neighborhoods that agents might wish to use in their marketing of properties, but be careful to verify whether the picture is copyrighted.

The main source of these pictures on the internet is Getty Images or Getty Rights Managed images.  They are not the only source of copyrighted pictures on the internet, but they have a very large database of these copyrighted pictures.  They are vigilant in checking to see who is using their copyrighted photos.  Very often, agents use these photos innocently and without knowledge that they are copyrighted, but that is not an excuse that will allow the agent to escape paying a fee for their usage.

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Risks Associated with the Sale of Investor Properties

A recent development in this market is the purchase and resale of properties by investors.  Investors, by the droves, are purchasing properties at foreclosure sales or pursuant to short sales, improving those properties and reselling them for a profit.  While this is a very positive development for the market in that these investors are maximizing profits, there are risks associated with these resales.

Investors, who sell properties, are required under the Civil Code to prepare a Transfer Disclosure Statement (“TDS”).  Unfortunately, many of the investors have little personal knowledge of the condition of the property.  Some investors have never seen the property and many have seen them only once or twice.  Most have never lived in the property and lack any knowledge about the condition.

When a seller completes a TDS, the questions start with, “Are you aware of…” 

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FINALLY A CASE THAT CAN BE USED TO DEFEAT MLS MISREPRESENATATION CASES

Civil Code Section 1088 has plagued listing agents for many years. Section1088 provides in pertinent part: “If an agent ... places a listing or other information in the multiple listing service, that agent ... shall be responsible for the truth of all representations and statements made by the agent ... of which that agent ... had knowledge or reasonably should have had knowledge to anyone injured by their falseness or inaccuracy.”

Listing agents have been repeatedly sued under Section 1088 for making innocuous statements in the MLS that plaintiff’s attorneys claim are false. In many of these cases the “false” statement relates to the number of bedrooms specified in the MLS. In these situations, plaintiffs' attorneys claim that if one of the rooms is unpermitted and/or violates building code, it means it is not a "bedroom" which makes the listing agent liable pursuant to Section 1088 for misrepresenting the number of bedrooms.

In a new case, Saffie v. Schmeling (2014) 224 Cal.App.4th 563, the court put some limits on how innocent comments by listing agents are used against them. In Saffie, the listing agent stated in the MLS: “This parcel is in an earthquake study zone, but had a Fault Hazard Investigation completed and has been declared buildable by the investigating licensed Geologist. Report available for serous buyers.” The plaintiff sued the listing agent arguing that the listing agent failed to disclose that the report was dated 1982 and that the report was misleading as the property could no longer be commercially developed due to the 1994 Northridge Earthquake. The court held that the listing agent was not liable because the MLS did not say anything that was untrue, More on point, the fact the buyer inferred that the report was still applicable is not actionable.

Saffie should give some protection to listing agents, who declare that a home is three bedrooms, as long as all bedrooms have the physical attributes of a bedroom. Listing agents should not be held liable pursuant to Civil Code Section 1088, if the agent’s statements are truthful. Under Saffie, an agent stating there are three bedrooms (even if one or more are not permitted) is on its face truthful and not actionable, provided there was no intent to mislead the buyer into believing those bedrooms are permitted.

The scope of Saffie is somewhat limited and it is important that agents realize they should provide disclosures of everything of which they have knowledge which may impact the value and/or desirability of the property. That said, this new decision does put some limits on how unscrupulous attorneys attempt to twist good faith statements into claims for unwarranted damages.

Agents are Cautioned When Copying Listings in the Multiple Listing Service

It is a common practice for agents who obtain a listing to review the listing history.  Many agents, when uploading a property to the Multiple Listing Service (“MLS”), will copy over a prior listing from a former listing agent.  Agents are cautioned that when copying a former listing from the MLS that they should review the information carefully to ensure that it is accurate.  Civil Code §1088 provides that agents can be held liable for any errors or omissions on the MLS.  It is almost a strict liability statute.  Therefore, agents are held responsible for the information that they place on the MLS.

Top 10 Issues for Flyers & Advertisements

1.    Remember that everything you say can form the basis for a claim against you.  With this in mind make sure you balance your marketing needs with your risk avoidance needs.

2.    All square footage referenced should include a disclaimer that states such reference is unverified.  In addition, identify the source of the information.  Square footage should be rounded to the nearest one hundred feet.

3.    Do not use absolutes such as “best” and “greatest”.  It is okay to use adjectives that are not absolutes such as “beautiful” and “great.”

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Question and Answer Regarding Revocation of a Counter-Offer

Question:  I am a listing agent in the sale of real property.  The seller seeks to revoke a counter-offer issued before the expiration has expired.  The buyer has not signed the counter-offer.  The counter-offer reduced the contingency periods.  The buyer is objecting to the revocation claiming that the conditions are not “material.”  Does the seller have a right to revoke the counter-offer before the buyer signs it?

Answer:  Yes.  The counter-offer contains material terms and the parties do not have a meeting of the minds.  Therefore, a contract has not been formed and the seller may revoke the counter-offer.  However, the counter-offer must be revoked before the buyer signs and returns it.  A counter-offer may legally be revoked verbally, but that is not advisable.  It is recommended that the seller revoke the counter-offer in writing and the listing agent contact the selling agent by telephone immediately upon submission of the revocation.