Trust This. The Trouble with 40-year Listing Agreements

Trust This Newsletter

๐Ÿ‘‹ Hi, Joe here again. Wading through ๐Ÿฅต steamy mornings, โ˜” rainy afternoons, and ๐Ÿ’ง soggy evenings rem

โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ โ€Œ
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Trust This.

By Joseph E. Seagle, Esq. โ— Jul 08, 2022

Smart Brevityยฎ count: 2.5 mins...644 words

๐Ÿ‘‹ Hi, Joe here again. Wading through ๐Ÿฅต steamy mornings, โ˜” rainy afternoons, and ๐Ÿ’ง soggy evenings reminds me of why so many friends and colleagues escape to their ๐Ÿ”๏ธ mountain homes up north this time of year.

1. Big thing: 40 year listing agreements

Old book

A South Florida real estate brokerage pays homeowners sums between $500 and $1,500. The homeowners sign a listing agreement, giving the brokerage the right to list the property for sale for the next 40 years.

Why it matters: The real estate brokerage is suing new owners of the properties that were subjected to these agreements if the former owner breached the agreement.

What we're seeing: We first saw these agreements in title searches starting a couple of years ago.

  • The recorded documents refer to an unrecorded agreement between the brokerage and the current owner.

  • The recorded document states that it is a covenant that runs with the land for 40 years, much like a declaration of an easement or restrictive covenant.

  • It doesnโ€™t specifically state that the brokerage is entitled to any particular sum of money.

  • The agreements may be listed as an exception to coverage under the title policy, meaning the title insurance provides no protection to the buyer for the unrecorded agreement or its recorded โ€œmemorandum of homeowner benefit.โ€

So what happens if the owner gives away the property instead of selling it? Is a commission still due? Are they required to always list your property for sale? What if they die? Are the heirs required to list it with the brokerage?

The bottom line: If you see a โ€œMemorandum of Homeowner Benefitโ€ listed as a requirement to be cleared (Schedule B-1) or as an exception to coverage (Schedule B-2) on a title commitment for a property youโ€™re buying or selling, ask a lot of questions before closing. It could cost you later if you donโ€™t.

Go deeper

2. Bidding wars - renter style

A dollar for your sadness

Bidding wars for rentals are heating up while multiple offers from buyers are declining.

Why it matters: Itโ€™s another sign that demand for rentals still exceeds the supply. While listings of new homes for sale are rising each week, there arenโ€™t enough rentals to go around.

By the numbers: The average rent for a 1-bedroom apartment in Orlando, is $1,699. This is a 21% increase compared to the previous year. Over half (55%) of Orlando housing units are rentals. Go deeper @ Zumper

Our thought bubble: If now is not a great time to sell, it may be a great time to lease out the property to a tenant instead. Many of our investor customers who typically buy-fix-and-flip are turning to buy-fix-and-rent instead. Those who are looking to stop renting and buy their own home are stuck, worried: Buy while prices are falling and rates are increasing? Or wait for the bottom, continuing to rent with the risk that their rents will increase at the next renewal?

Read more @ NPR

3. What you missed

  1. Does anybody still want to buy a vacation home? Redfin

  2. If they do, itโ€™s often located in a flood zone. National Mortgage News

  3. Remote work could slash office valuations by $500 billion by the end of the decade. Orlando Business Journal

  4. Price appreciation slows as downshift is expected. DS News

  5. The job market is still red-hot, though, as people continue to quit more than being laid off. CNBC

  6. Dying Boomers wonโ€™t affect the housing supply as much as we would think. National Mortgage Professional

4. Parting shot

American flag flying at sunset

Itโ€™s the end of a holiday week of vacation for some readers. May your sunsets be memorable.

With all the rain this week, this song is on repeat in my brain.

We hope you found this helpful โ€” any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

Be on the lookout for our next issue! ๐Ÿ‘‹

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