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Legal updates from Three Rivers Association Attorney

By Gary Mueller from Gary S. Mueller & Associates, LTD

Phone:  815-725-7300                        e-mail:  This email address is being protected from spambots. You need JavaScript enabled to view it.

Gary Mueller resized cropped CopyRealtor RPAC Sterling no colour 2020 reduced

May 2021

Spring is officially in the air. At the time of writing this, the outside temperature is 71 degrees with temperatures over 80 projected for tomorrow. No forecasted temps below 55 for the next 10 days.  Thus, though it appears to have taken “some time” to get here, we are finally in Spring.

I hope this finds you and your business plan doing well. I cannot stress enough to make sure you remain relevant.  Note how many agents are actively working in your area as you try to determine “why is this buyer/seller working with me”?  Whether a past client, a referral from a current client, or a client “off the street/internet”, what makes you the right agent to work with this customer?  Keep each client fresh.  Keep each file exciting and unique. Though you do this for a living and deal with other agents, vendors, attorneys, lenders, and title companies every day, it is likely your client does not share your experience.  Some clients may be hesitant to ask questions while still others rely on you and your expertise on what may feel like an hourly or minute-by-minute basis.  A real challenge is keeping every file exciting, interesting, and “new”.  Keep up the enthusiasm!  Your clients may simply need a constant advocate/cheerleader to help them through the deal.  They will turn to you first, and if they like what they experience, they and others will turn to you often. 

There is literally a hodge-podge of information to share this month.  Though I typically try to center on a theme or singular message, this month is the exception.  I hope the following provides many points of light/knowledge:

  1. Remain vigilant about the changes to Real Estate License Act (RELA).  There are many proposed changes.  Keep abreast of the status of the proposed changes.
  2. When a Sponsorship has been terminated, the sponsoring broker shall immediately notify the terminated licensee;
  3. Each licensee shall provide the Division with notice of a change in physical office location;
  4. Each broker is required to complete 12 CE hours during the current term of the license.  Failure to comply shall subject the licensee to citation proceedings under new Section 1450.960;
  5. Corporations, LLC’s, Partnerships, and Limited Liability Partnerships shall not be granted a license if a non-participating owner, member, or manager is currently barred from real estate practice because of a suspended or revoked license; and
  6. Inherently misleading team names that imply stand-alone companies as opposed to a team are prohibited. That being said, if the word “team” follows “company”, “realty”, “real estate”, “agency”, “associates”, “brokers”, “properties”, or “property”, the advertising is likely allowed.

Be careful of landlord/tenant ordinances in the various municipalities where you practice.  It appears that many municipal entities are tackling this potential buzz-saw of an issue.  Be careful for your clients to make sure tenants are addressed, when applicable.  Gone are the days of securing a fully executed contract with the idea that the seller will deal with the tenant and, surely, the tenant will be moved out prior to the closing date.  I have had a number of deals fall apart this year because of tenant issues.  Typically, the tenant has voiced his/her/their intention NOT to move out.  Whether the “reason” is COVID-related, is due to the tenant being angry to have to try to move, or is due to the tenant not being in a position to purchase the property directly from the seller, all of these situations serve as an impediment to getting a deal closed.  In any case, the demeanor and actions/inactions of the current tenants blew up the deals I was working on---the buyers had no confidence that the tenant would be out by closing, and the seller remains unsure how to deal with the recalcitrant tenant…….

The final point I want to share concerns rights of first refusal in real estate.  As many of you know, some owners will allow a party to rent a property and then, if the seller receives a bona fide offer, the tenant will be given an opportunity (the first right) to meet or beat the offer and buy the property.  The right of first refusal does not arise until the owner notifies the tenant (in this example) of a desire by a third-party to purchase the property. To be enforceable, the right of first refusal “need not specify the price and terms, as long as it provides a method whereby the price and terms can be ascertained” (Keller v Bartman, 250 Ill App 3d 1030 (4th Dist. 1993)---typically via an offer to purchase signed by a contract purchaser and the owner.  Note, the right of first refusal requires some specifics to be enforceable, thus a right of first refusal that provided the tenant would have a right of first refusal to purchase the property “under mutually agreed upon terms” lacked specificity to be enforceable.  On the contrary, If an agreement indicates that a right of first refusal must match the terms of a bona fide offer from a third party that the owner is wiling or intends to accept, such a provision may be enforceable. If you think about it, requiring that the owner be actually willing or intending to transfer the property to a third party based on the terms of an accepted offer, in theory at least, keeps the owner from artificially inflating the terms of a transfer in order to defeat a right of first refusal.  I mention all of this as each of us may encounter more of these special circumstance as we wade through the current “seller’s market” where inventory is low and interest is high. The current market may spur otherwise contemplative sellers into becoming active in the market---even with rights of first refusal attached to their propert(ies).

Keep up the great work. Keep pushing!  Thank you for allowing our office to work with you.  I continue to wish you and those dear to you health, happiness, and prosperity.

Take care.