Commercial Webinar Series
1 hour presentation
Top 5 Commercial Broker Legal Issues
presented by
Rick Albers
Questions will be answered at the end.
For technical questions, call 800-263-6317.
Commercial Webinar Series
Top 5
Commercial Broker Legal Issues
Presented by
Rick Albers
Kuperman Orr & Albers, P.C.
2500 Bee Cave Road
Building 2, Suite 150
Austin, Texas 78746
ralbers@koalaw.com
September 24, 2015
Topics
1. Misrepresentation & Failure to
Disclose
2. Environmental Issues
3. Unauthorized Practice of Law
4. Americans with Disabilities Act
5. Agency Concerns
Misrepresentation & Failure to Disclose
• Misrepresentation:
• Misstatement of a material fact or
feature of the property
• Failure to disclose:
• Not revealing a known defect of the
property
Misrepresentation & Failure to Disclose
• Known Defect
– a significant defect, including a latent
structural defect, known to the license
holder that would be a significant factor to a
reasonable and prudent buyer in making a
decision to purchase real property
(TRELA 1101.652(b)(3)&(4))
Misrepresentation & Failure to Disclose
• Common misrepresented features:
– Foundation or structural problems
– Property boundaries
– Roof condition
– Termite problems
– Quality of tenants
Misrepresentation & Failure to Disclose
• Common failures to disclose:
– Hazardous materials / environmental
problems
– Flooding issues
– Improvements not properly permitted
– Easements
– Other title problems
Misrepresentation & Failure to Disclose
• Best Practice:
– Attribute the information to the source
• "According to the seller, the roof is four
years old and does not leak.”
– Phrase the comment as:
• your opinion and not as a fact, or
• as someone else’s opinion.
Misrepresentation & Failure to Disclose
• Actions to take:
– Encourage the Seller to use a Seller
Disclosure Form.
– Avoid making predictions
• “this pond will not be classified as a wetland”
• “this well will never run dry”
• “the value of this property will appreciate over
the next 5 years”
Misrepresentation & Failure to Disclose
• Actions to take:
– Add a disclaimer to the information you
provide
• The materials contained herein are based
on information and sources deemed to be
reliable, but no representation or
warranty, express or implied, is being
made by Broker.
Environmental Issues
•
•
•
•
Asbestos
Soil or groundwater contamination
Lead-based paint
Actions to take:
– Recommend that the Buyer engage a
professional to evaluate
– Use Lead-based paint disclosure form
Unauthorized Practice of Law
• TRELA says you engage in the unauthorized
practice of law if you:
– draft an instrument not on an approved
form that transfers or otherwise affects an
interest in real property; or
– advise a person regarding the validity or
legal sufficiency of an instrument or the
validity of title to real property.
Unauthorized Practice of Law
• Authorized actions:
• Modifying the Contract at the direction of
your client
• Unauthorized actions:
• Modifying the Contract because you think
it is best to do so
Unauthorized Practice of Law
• Special Provisions problems
“Seller agrees to extend the financing
contingency if Buyer’s lender is waiting for
delivery of 3rd party reports or appraisal.”
Unauthorized Practice of Law
• Special Provisions problems
“The Earnest Money will be non-refundable
after 30 days.”
Americans with Disabilities Act
• Applies to places of “Public Accommodation”
• Most commercial properties are places of
Public Accommodation
• The property must be equipped with ramps,
curb breaks, and other considerations to allow
a disabled person to access the building.
Americans with Disabilities Act
• Changes must be made that are “readily
achievable with reasonable effort and
expense" to serve clients with disabilities.
• Your brokerage office might be a place of
public accommodation.
• Private persons may sue to enforce the
ADA.
Agency Concerns
•
•
•
•
•
Unwanted representation
Fiduciary duty
Intermediary
Commission agreements
Handling other people’s money
Unwanted Representation
• If a client thinks you represent them, then
you probably do.
• Written agreement not required.
• All duties apply.
• Solution:
−Say: “I do not represent you.”
−Put in writing: “I do not represent you.”
Fiduciary Duty
• The agency relationship creates a fiduciary
duty.
• Must hold your clients interest above that of
your own.
Exception: Commercial Broker’s Lien
• Duty is to act in the principal’s interest, but:
• owe a duty of honesty and fairness to all parties
• must disclose known defects
Intermediary
Saying you are an intermediary does not
make you an intermediary.
• Both sides must be clients.
• Both sides must authorize intermediary in
writing.
• Written agreement must state source of
compensation.
• Notice must be included.
Commission Agreements
Must include:
• Commission amount or formula to calculate
the commission
• Legally sufficient property description
• Termination date
• Signed by the party obligated to pay the
commission
Handling Other People’s Money
• “Designated Trust Account”
Trust account required
Use “trust” in the account name
Handling Other People’s Money
• Only Brokers can maintain trust accounts
• Salespersons must immediately deliver
trust money to sponsoring broker
• Deposit not later than the close of business
of the second working day after receipt
Questions ?
• NOW –
Type your questions now.
• LATER –
TAR Legal Hotline 512-480-8200
Rick Albers
ralbers@koalaw.com
Conclusion
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