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Your Questions Answered: Legal Hotline, Team Registration, Changing Lenders

By:
Nov 5, 2018

By Matthew L Troiani, Esq.

Q: What is the NVAR Legal Hotline? When do I use it? If I contact the hotline and admit to a possible ethics or legal issue, will NVAR file an ethics complaint against me or report me to DPOR?

A: NVAR’s Legal Hotline is an exclusive benefit that allows NVAR members access to full-time attorneys answering their real estate-related questions. The hotline is available to brokers, salespersons and affiliates and is intended to supplement, not replace, a broker’s guidance, policies and supervision.

The hotline provides legal information, not legal advice or representation, so that members can make informed decisions. The hotline is an excellent resource for preventing legal, regulatory, contractual, ethical and compliance problems before they arise – in addition to assisting members with issues that have already occurred. Remember: professionals seek information before acting.

Submissions on the hotline are generally treated as confidential unless disclosure is permitted or required by law or court order. NVAR staff attorneys have a responsibility under the NAR Code of Ethics and Arbitration Manual for ensuring due process in ethics complaint proceedings. Violations of the Code of Ethics are determined by Realtors® on the Grievance and Professional Standards Committees – not staff. NVAR staff does not use information from hotline inquiries to initiate complaints with NVAR or with DPOR. NVAR may use summaries of hotline inquiries for educational purposes, but NVAR removes any reference or identification of the caller in educational materials or publications.

Q: Can a buyer with a financing contingency use a different lender than the lender on the prequalification/ pre-approval letter without losing the benefit of the financing contingency?

A: The lender on the pre-qualification or preapproval letter that is frequently submitted along with an offer is not a part of the contract, and the buyer is not required to use that lender for financing. The pre-qualification or pre-approval letter is not legally required. The letter may be useful to a seller in determining whether a prospective buyer will be able to complete the purchase and go to settlement, but the lender does not become a part of the contract.

The Financing Application and Alternative Financing paragraphs of the NVAR Residential Sales Contract specifically state that the buyer may substitute a lender without losing the benefit of the financing contingency so long as no other term of the Specified Financing is changed. The terms of the Specified Financing include the amount of the loan, the type of loan (conventional, FHA, VA, USDA, etc.), the number of years for repayment of the loan, and the maximum interest rate. The Specified Financing does not include a specific lender.

Q: I am on a team or considering forming a team. Where can I find information on team registration?

A: New team legislation takes effect on Jan. 1, 2019 and includes the definition of a team and new requirements. Please see this article of the September/October RE+View for additional team clarification.

If you are a member of a team as defined by the law, consult with an attorney and/or a tax professional to determine what type of business entity is right for you and your team members. If you decide to form a limited liability company, partnership or corporation, you can register the entity with the Virginia State Corporation Commission (SCC). scc.virginia.gov/clk/begin.aspx 

Once the business entity is formed, you can then register with the Virginia Department of Professional and Occupational Regulation (DPOR) as a business entity. www.dpor.virginia.gov/Boards/Real-Estate/Forms/Firms/


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Categories:
  • Realtor® Professionalism
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