NEW from REMERGE Transaction Coordinators!

The REMERGE DOCUMENTS REVIEW SERIES

The REMERGE Document Review Series is a refresher course for new and returning agents and loan officers who are entering the arena of real estate listings and sales.  This 3 part series is a detailed review of the real estate contracts and supporting forms and how to fill them out correctly to reflect the intent of your client.

The REMERGE Documents Review Series is a 7 hour course comprised of 3 sections:

1. Listing Documents
Hand out material: Complete Listing Transaction Package

2. Sale Documents
Hand out material: Complete Sales Transaction Package           

It is the Agent’s duty to explain and get signatures on all contract documents. REMERGE Document Review Series explains each document of the listing and the sale transaction.  We also cover how to present contract and mandatory documents to Buyers and Sellers in simple terms.

3. Disclosure Documents
Hand out material: Updated REMERGE SDP (Seller’s Disclosure Package)

Even though REMERGE takes care of all disclosure for you, it is still important that Agents know the content of mandatory disclosures, what to look for in an Agent Visual Inspection and what to write on page 3 TDS.

To receive The REMERGE Documents Review Series curriculum, information for scheduling and cost, please e-mail your request to shelly@remerge.com

C.A.R. REVISES, RENAMES AND ADDS NEW DISCLOSURES for 2006

More than half of the disclosures that have been in use saw a modest to major revision during the April 2006 release of Winforms. Remember that the purpose in revising, renaming and adding new disclosures is to better protect the agent in the transaction. Updated disclosures address the past year’s lawsuits where current disclosures were used but the agent lost . Modifying the disclosures and contracts are C.A.R. lawyer’s attempts to at least narrow the loop hole of Agent liability.

If you access Winforms on-line or download the desktop version and keep up with upgrades, you will always have the freshest forms.  However, if you are buying individual or packets of forms from your local board, check the dates on the bottom left to ensure that you are not buying old forms. Subtle modifications to contracts are made for a reason. The version of the disclosures can make a difference in court.

REMERGE always updates disclosure packages as soon as new forms are available on Winforms, even though older 2005 versions are, according to C.A.R., still acceptable.

DON’T MESS WITH UNCLE SAM or AUUUNULD!

SELLER’S AFFIDAVIT ON NON-FOREIGN STATUS
AND/OR CALIFORNIA WITHOLDING EXEMPTION
FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT (FIRPTA)
AND CALIFORNIA WITHOLDING LAW
(Use separate form for each Transferor)
(CAR form AS, Revised 4/06)

“Internal Revenue Code (“IRC”) Section 1445 provides that a transferee (Buyer) of a U.S. real property interest must withhold tax if the transferor (Seller) is a “foreign person”. California Revenue and Taxation Code section 18662 provides that a transferee of a California property interest must withhold tax unless an exemption applies.”

The Buyer is required to collect the sales taxes from the Seller’s proceeds if the Seller is a foreign person (federal) or out of state (CA) owner. The Buyer can and should put a demand in escrow to withhold the tax due from the Seller’s proceeds of the transfer. Completing the FIRPTA exempts the Seller from paying sales taxes in escrow.

The 2006 version of the FIRPTA includes the Buyer’s signature to prove receipt of this form. Above the signature is the threat of criminal liability for misuse of the Sellers’ tax identification number (TIN).

WHAT IF …

If the Seller should have paid sales taxes in escrow but didn’t and he submitted a FIRPTA to the Buyer, the Seller’s can be traced by his Tax Identification Number. If the Seller should have paid sales taxes in escrow but didn’t and did not submit a FIRPTA to the Buyer, the Buyer is the next in line to pay the sales tax. Someone has to pay taxes due. Do you want to be the Agent on the Buyer’s side of this transaction?

FIRPTA IS AN AFFIDAVIT NOT A DISCLOSURE

It is your fiduciary duty, as the Agent of the Buyer and/or Seller to make sure that neither party has a financial liability hovering over the transaction after it has closed. Of all the real estate forms, the FIRPTA is the #1 form that is not filled out properly or left blank when it is treated as a disclosure.

|The Seller needs your help with the FIRPTA because, frankly, it is written in a confusing manner and Sellers don’t understand it. Also, in these days after 9/11 and illegal immigration issues, some Sellers will provide the basic information on the FIRPTA, but purposefully do not write in their social security numbers. Without the social security number, the FIRPTA is useless. When you explain the importance of the FIRPTA, you will not have a problem getting it completed properly.

DOESN’T ESCROW AUTOMATICALLY COMPLY WITH THE FIRPTA?

I thought so too!  Then I made a few calls to various escrow companies. I was surprised to find that there is no obligation on escrow’s part to enforce compliance on FIRPTA. So, some escrows do and some escrows don’t do some kind of FIRPTA. If an escrow does do a FIRPTA, some will give the Buyer the Seller’s Taxpayer Identification Number and some won’t. There is no institutional procedure or policy on how escrow treats the FIRPTA. So, don’t count on escrow to do the FIRPTA for you and your clients.

2006 LISTING PACKAGE INCLUDES THE FIRPTA

1. AD: Disclosure Regarding Real Estate Agency Relationships – 2 pages

2. RLA: Residential Listing Agreement – 3 pages

3. SA-11:  Seller’s Advisory – 2 pages

4. AS: Seller’s Affidavit of Non-Foreign Status and/or California Withholding Exemption - FIRPTA           

5. Any Addenda to the Listing or Purchase Agreement:  e.g. Affiliated Business Arrangements, disclaimers, etc.

When you are on the Seller’s side, include the FIRPTA with your listing documents. If the Seller refuses to complete the FIRPTA, you have done your duty in explaining and presenting this form to him. Make a note on your REMERGE Agent Log!

When you are on the Buyer’s side, REMERGE will collect the FIRPTA from the Seller’s Agent and ensure that the Buyer receives a copy for his file.

QUESTIONS, COMMENTS, SUGGESTIONS TO THE EDITOR?

The REMERGE Gazette welcomes your comments and suggestions for future articles. E-mail to shelly@remerge.com