Florida Realtor April 2014 : Page 10

Law & Ethics Q & A continued time periods—whichever event occurs first. Therefore, in this specific instance, since the buyer failed to cancel the contract at least seven days prior to closing, the attempted cancellation three days before closing will not be considered timely. The contract states that if neither party timely cancels the con-tract, the financing contin-gency is deemed waived by the buyer. A buyer made an offer using the Florida Realtors/Florida bar ASIS-2 Contract. he said that a $5,000 escrow deposit would be made three days after the effective date, but he left the escrow agent information blank. The seller accepted this offer but never filled out the escrow informa-tion. The buyer failed to make the deposit within the time-frame in the contract, and the seller is furious. The seller wants to cancel the contract and move on with a differ-ent buyer. This buyer is upset and is willing to still make the deposit; he just didn’t know to whom and where to send it. Who is right? it is recommended never to leave any blanks on a con-tract unless there is default or contingency language for that blank (e.g., “if left blank, then 15 days”). The buyer’s agent should have written, on the initial offer, the address and name of the escrow agent. The buyer’s agent could have checked with the listing agent to see if there was a prefer-ence. Leaving the escrow agent information blank could be a violation of Rule 61J2-14.008(2)(b), florida Admin-istrative Code. This provision reads, “when a deposit is to EThICS Stick to What You Know Refer foreign buyers to an attorney for tax advice. ealtor® Ralph has recently at-tained a high level of success with his international marketing efforts. He focused on Canada and has closed several deals for Canadian buyers. One of his recent buyers now wants to sell the home he purchased as an investment property and buy a bigger one that is clos-er to water. During the first transaction, the Canadi-an buyer (who is not an American citizen) asked Ralph if there were any legal or tax issues he needed to be concerned about. Ralph replied, “No, none at all. Do not wor-ry about it. I do dozens of these kinds of sales, and no one has ever had a problem.” Now, Ralph presents a cash offer to the seller, and the seller immediately accepts it as it is: 10 percent over asking price. This deal is expected to allow the Canadian customer to buy an even bigger property immediately. As the closing documents are prepared, however, the seller receives a message from the title company inform-ing him that his sale is subject to the For-eign Investment in Real Property Tax Act (FIRPTA). The seller remembers some-thing about that in the original purchase contract but also remembers Ralph’s ad-R vice that this was not an issue. Now, the seller is informed that he will need to hold back a portion of the proceeds to comply with FIRPTA at closing. This enrages him as he had relied on Ralph’s advice in the original transaction. The seller consummates the transac-tion, but is delayed in buying the next property and feels completely inconve-nienced. He speaks to a friend, who sug-gests he file an ethics complaint against Ralph, citing Article 13 of the Realtor Code of Ethics. The complaint is sent in, and the Grievance Committee reviews the com-plaint and the content of Article 13: “Realtors® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.” Why it may be a violation: The Grievance Committee forwards the complaint for a hearing, and the hearing panel will most likely find Ralph in violation as he pro-vided an opinion on the impact of the law in a transaction. He should have directed the Canadian buyer (now seller) to an at-torney for this advice. 10 FLORIDA REALTOR April 2014

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