Landlord-Tenant Legislation
The 1977 Session of the General Assembly passed two bills affecting the landlord-tenant relationship.
Senate Bill 453, entitled "An Act to Regulate The Handling of Tenant Security Deposits in Residential Dwelling Units", applies to all persons who rent or manage residential dwelling units. This low limits the amount of deposit a landlord may charge a tenant and requires the landlord or his agent to notify the tenant of the name and address of the bank where his deposit is located. Also upon termination of the lease, the landlord must either return the full deposit or deliver to the tenant an itemized list of damages and the balance of the deposit.
The second bill, House Bill 949, entitled "An Act To Define The Responsibility For Maintenance Of Residential Rental Units", requires the landlord to keep the leased premises in a fit and habitable condition. This law applies to all residential rental agreements entered into, extended, or renewed automatically by the parties after October 1, 1977.
Both of these bills contain many more provisions and promise to have a substantial effect upon landlord-tenant low in North Carolina. YOU should consult your attorney for further details.
Contract "Kiting"
There is a highly illegal practice in the real estate business known as contract "kiting" which works in the following way:
The seller and buyer enter into an agreement for the purchase and sale of real estate in which the true sales price is $16,000. Because the buyer has only $500 cash for a down payment and the lender will not loan the $15,500 balance of the purchase price, a second sales agreement is signed containing a false purchase price of $18,000 and a false down payment of $2,500. This false agreement is then submitted to the lender, the property is appraised at the inflated sales price, and the loan is approved.
As a result of this "kiting" or "ballooning" of the purchase price, the buyer is able to fraudulently finance part or all of the down payment at the expense of the lender who suffers a substantial loss of security in the transaction (the larger the down payment, the less likely the borrower will default in his loan payments).
Contract "kiting" is obviously difficult to discover because the seller and buyer are usually parties to the act and therefore conceal it The Board's field representatives however, often spot check loan applications while investigating other facets of a transaction. If evidence of this illegal practice is discovered the Board will not hesitate to use its subpoena power and pursue the matter on its own.
Under no circumstances should a broker or salesman cause or allow false information to be submitted to a lender. Giving false information to a lender or aiding and abetting in such an act can result in the suspension or revocation of your real estate license, and in certain cases may also be a criminal offense
Brokers Must Present All Offers
In the simplest of real estate transactions, a broker will normally help the buyer prepare his offer to purchase and will present this offer to the seller for his acceptance, rejection, or counter-offer. The broker's task becomes more complicated, however, when he receives a second offer while he is in the midst of negotiating a prior offer. If the broker does not consider the second offer to be as desirable as the first offer, is he required to present it to the seller and possibly jeopardize an agreement on the first offer? The answer is an absolute "YES".
A broker who is employed to sell real estate has a duty to present all offers to his principal. If a new offer is not advantageous to the owner, the listing broker should communicate this to the owner when it is presented, but until a final sales agreement has been executed, a broker must present all offers, no matter how late or undesirable.
Also, while on the subject of presentation of offers, you are reminded that offers to purchase should be prepared in quadruplicate. The purchaser (offeror) should receive a copy of his offer after he has signed it; the seller (offeree) should receive a copy after he has signed it; the purchaser should be given a copy signed by the seller; and the broker should retain for his records a copy bearing the signature of both the buyer and seller. Remember, Licensing Board Rules require you to immediately deliver copies of the offer to the parties (in no event later than 5 days from the execution thereof), and you must retain a copy in your files for at least 3 years.