ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Court Gives Realtors Flexibility in Contract Disclosures

Updated on January 30, 2016

Realtors Can Modify Contracts If They Follow the Law

Realtors can modify the wording of disclosure statements they give their clients if the statements meet all legal requirements of the Real Estate Settlement Procedures Act (RESPA), a federal court ruled recently.

RESPA is a federal law designed to prevent kickbacks in the real estate industry that interfere with competition and inflate the cost of transactions.

The law forbids most referrals between realtors, lenders and other service providers. It also requires realtors to give disclosure of their business interests in a deal and to notify clients of all costs they must pay.

The client in the case in Alabama federal court accused a realtor of failing to give proper disclosure about a referral to a title company affiliated with the real estate brokerage.

A salesperson at the brokerage, JRHBW Realty, Inc., showed the buyer a home listed for sale. The salesperson gave the buyer a packet of information that included a buyer's representation agreement and an Affiliated Business Arrangement Disclosure Statement.

The buyer purchased the home and title insurance from a title company affiliated with the brokerage.

The buyer’s later lawsuit said the realtor’s referral to the title insurance company was the same as a kickback because it benefitted both the title company and the brokerage.

He also said the salesperson’s disclosure form did not use the exact RESPA wording, which meant it could not protect the brokerage from liability.

The federal court dismissed the lawsuit, saying the title company benefitted from the referral but did not pay a direct kickback to the salesperson or brokerage. The court also said that although the brokerage used its own wording for its disclosure statement, it met RESPA requirements. They included explaining the relationship with the title insurance company, identifying all potential costs and saying the buyer did not need to use a specific title insurance company.

As a result, the court said JRHBW Realty was protected from liability under RESPA’s safe harbor provisions.

The case was White v. JRHBW Realty, Inc. , No. 2:14-CV-01436-RDP, (N.D. Ala. Sept. 16, 2015).

Court Gives Realtors Contract Flexibility

Court says realtors have the option of changing the wording of contract disclosures as long as they follow the law.
Court says realtors have the option of changing the wording of contract disclosures as long as they follow the law.

Comments

    0 of 8192 characters used
    Post Comment

    • Tom Ramstack profile imageAUTHOR

      Tom Ramstack 

      2 years ago from Washington, D.C.

      My understanding was that it was a classic case of splitting hairs on contract terminology. Everyone has dealt with someone like that.

    • MarleneB profile image

      Marlene Bertrand 

      2 years ago from USA

      I wonder why the buyer felt he was so harmed that he had to bring a lawsuit. It is good news to hear that Realtors can change the wording of the contract so long as it satisfies all the rules.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)