Last month I gave you an update on the requirement
of an affidavit of disclosure in connection
with all sales of land, other than subdivided
land, in any unincorporated area. An alert reader,
Jim Nierenberg of Long Realty, called to let
me know that apparently some individuals in
the real estate community believe that the affidavit
requirement doesn't apply to land that has a
dwelling on it. It also seems that some people
believe the requirement applies only to land
that can be legally divided into smaller parcels.
I don't believe that either of those interpretations
is correct.
I can't figure out the origin of the belief
that the affidavit requirement doesn't apply
to land that has a dwelling on it. Nothing in
the statute imposing the requirement indicates
any such exception. If I sell a 10,000 acre
ranch, and the ranch happens to have a ranch
house on it, I am still selling land that is
not "subdivided," regardless of the
presence of the house.
The notion that the affidavit requirement applies
only if the land can be legally be divided into
smaller parcels is a little bit easier to understand.
If the parcel can't be divided into smaller
parcels, then it is "subdivided land,"
and therefore excepted from the requirement,
right? Or maybe since the requirement applies
only to a seller of "five or fewer parcels
of land," if you are selling a single parcel
of land that cannot legally be divided into
smaller parcels, then you don't have a sale
of "five or fewer parcels" within
the meaning of the statute, right? Well, wrong,
actually (at least in my opinion). The exception
for "subdivided land" doesn't refer
to whether or not the parcel being sold can
or cannot be divided into smaller parcels. As
for the "five or fewer parcels" requirement,
one parcel is fewer than five, so I think the
statute applies to a sale of even a single parcel
that is not presently "subdivided,"
regardless of whether it can be divided into
smaller parcels.
The key to applying the statute is the meaning
of the phrase "other than subdivided land."
I think that phrase refers to land that is part
of a recorded subdivision, i.e. subdivision
lots, meaning that only a sale of subdivision
lots is excepted from the application of the
statute. If you are selling any land that is
outside the city limits and is not part of a
recorded subdivision, I think the statute applies,
meaning the seller must provide an affidavit
of disclosure meeting the statutory guidelines.
If anyone has any information to the contrary,
I would like to know about it.
REAL ESTATE BROKERS AND SALESPERSONS
MUST BE
COMPETENT OR DISCLOSE LACK OF COMPETENCE IN
THE
PARTICULAR TYPE OF TRANSACTION BEING UNDERTAKEN
Jim Nierenberg also pointed out
a new regulation about the duties of real estate
brokers and salespersons which may not be getting
sufficient attention. The regulation requires
that a salesperson or broker shall not undertake
to provide professional services concerning
a type of property or service that is outside
the salesperson's or broker's field of competence
without engaging the assistance of a person
who is competent to provide those services,
unless the salesperson's or broker's lack of
expertise is first disclosed to the client in
writing and the client subsequently employs
the salesperson or broker.
To cite a clear example, take a real estate
salesperson who is familiar only with sales
of houses in subdivisions. If that salesperson
wants to handle a sale of acreage for a planned
subdivision, the salesperson must either (1)
engage the assistance of someone who has familiarity
with such a transaction, or (2) tell the property
owner, before the property owner hires the salesperson,
that the salesperson has no familiarity with
such a transaction.
The above example is, as I mentioned, meant
to be a case where the regulation clearly would
apply. There can obviously be situations where
determining whether the particular transaction
is within the salesperson's "field of competence"
is a much closer call. Even transactions involving
different types of commercial property, for
instance, may have sufficiently unique requirements
and pitfalls to be considered different "field[s]
of competence."
The point is, of course, that licensed real
estate professionals have differing areas of
competence, and that simply having a real estate
license does not automatically make the licensee
competent in all types of transactions. The
safest course of action is for a person hiring
a licensee to ask about the licensee's qualifications,
and for a broker or salesperson to enlist the
aid of a qualified licensee, any time there
is any uncertainty as to whether a particular
transaction is within the broker or salesperson's
"field of competence."
