Tip 13-2011: Agents Beware -- Local Real Estate Scam

There is a real estate scam making its way through various local real estate agencies.  A foreign buyer (“Masakazu Ichiro” or some other variation of that name) wants to buy a higher priced property for cash (usually sight unseen).  He contacts a local Realtor for a list of suitable properties and will then eventually contract to buy one of the properties.

The scam then continues as he does not want to wire the deposit money to the Realtor’s account, but instead wants to use a third party to hold the deposit.  The alleged buyer then asks for a recommendation of an attorney to handle the closing and also be the third party holder of the deposit.  Finally, the buyer wants wiring instructions so he can wire the deposit to the third party’s (attorneys) escrow account.

Do not fall for this scam!  Do not waste your time dealing with this “person”. The alleged buyer only wants information regarding the escrow account.  He does not intend to buy a house, he’s just trying to steal the law firm’s identity, which according to the bank he can then use to create bogus checks.  Once again, if it seems to good to be true (a high end cash buyer who does not need to see the property), it is.  Be careful out there!

Please contact us if you have questions or need legal advice.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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Tip 12-2011: HOA's & Dosclosure Packets

The current VAR Contract provides that the HOA Disclosure Packet needs to be delivered to the Purchasers prior to the settlement.  Virginia Code Section §55.509.04 states that the Purchaser has three days after receipt of the actual disclosure packet to review the documents.  Within the three days, the Purchaser can decide if they want to terminate the contract due to the information contained in the HOA Packet.  No reason needs to be given and no questions can be asked, the Purchaser can simply terminate the contract.

As a result of this giant “get out of jail free card”, it is advisable for the listing Realtor and/or Seller to provide the HOA Packet very early after contract ratification.  Do not wait until after the Purchasers obtain their loan commitment.  At the least, provide the HOA packet immediately after any inspection contingency is satisfied. (Even if the transaction is a Short Sale, do not wait until Short Sale lender ratification – provide the packet early.)

Not only provide the HOA documents early, but be sure it is a complete packet provided from the HOA with current financial information.  It is not enough to simply send the covenants and restrictions.  The required packet should contain the items listed in VA Code §55.509.5, including a statement of all assessments and any other mandatory fees or charges currently imposed by the Association.

Please contact us if you have questions or need legal advice.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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Tip 11-2011: Short Sales and Listing Price

The listing price, as agreed to between the realtor and the seller, reflects what they believe is the current market value.  This listing price in our current climate should not be too high or there is no activity.  This can especially be harmful for short sales when a foreclosure is pending.

With a short sale, the listing price is extremely important.  The listing price needs to be part of an overall short sale strategy.  One important factor is how delinquent the seller is with their loan payments.  Another factor is whether a foreclosure is pending.  Finally, the short sale lender may not want the initial listing price to be too low.

One thing to remember is that a contract at a “full price” offer does not necessarily mean a successful short sale.  Unfortunately, the short sale lender will obtain their own opinion as to the value of the property.  This opinion will be in the form of either an appraisal or a BPO (broker price opinion).

If the lender’s BPO is significantly higher than the contract price, then the short sale will probably not be approved.  Should an unrealistic BPO cause such a problem, there are methods of challenging the value, but it is an uphill battle.

There are some short sale lenders, which if given enough advance notice, will predetermine what listing price they will approve.  FHA and some lenders which claim they allow a HAFA (Home Affordable Foreclosure Alternative) Short Sale may pre-approve a listing price.

Please contact us if you have questions or need legal advice.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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Tip 10-2011: Home Owner's Association (Copy of HUD-1)

There is no uniform procedure for how a Home Owner’s Association (HOA) is to be given information about a new homeowner.  Each HOA has its own way to receive the name of the new purchaser.  The HOA Disclosure Packet will usually contain an address and contact information about the HOA and the documents required.  This is usually given directly to the Purchaser.

There is a recent trend where the HOAs’ require a copy of the Purchaser’s HUD-1 to change the information in their system.  If the HUD-1 is a requirement of the HOA, be sure to inform the settlement attorney.  It is also important that the Purchaser’s Settlement Attorney have the HOA’s address and/or email contact information. (Normally, the listing realtor obtains the HOA information, including addresses and contact information, and gives it to the selling realtor.)

It is recommended; however, that the complete HUD-1 not be provided to the HOA as it contains financial information which the HOA does not need.  At the very most, only provide Page 1 of the HUD which contains the names and addresses of the Seller and Purchaser along with the Settlement Date.  Other financial information on Page 1 of the HUD maybe helpful to the HOA, such as purchase price, proration’s, etc., but may not be required.  The best advice is however not to send the HUD-1, but instead provide the HOA with a copy of signed Deed, which contains the minimum information necessary for the HOA.

Please contact us if you have questions or need legal advice.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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