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 Dear George: I entered into a Commercial Real Estate Listing Agreement – Exclusive Right To Lease, TAR form 1302, with an agent. Now that we've leased the property, the contract states that its time for me to pay the agent. My question is with the way the agent is calculating his fee. Under Paragraph 5, Broker's Fee, it reads: "4% of all Gross Rents paid by credit-worthy Tenant for term not less than 3 years and not more than 10 years ... ." The agent states that gross rents should include the expense reimbursements for taxes, insurance, and common area maintenance (CAM). Although the term gross rents is not specifically defined anywhere in the contract, the agent states that his interpretation is standard in the industry. Should gross rents include the amount described in the agreement as rental rate only, or should it include the money reimbursed by the tenant for taxes, insurance, and CAM?
Answer: TAR form 1302 specifies in Paragraph 5 that the percentage detailed is of the base rents not the gross rents, unless the broker or you crossed out the printed item and substituted gross rents in its place. It further specifies the same percentage (4%) is applied to expense reimbursements if that checkbox is marked, plus any other items inserted in the blank space following the checkbox if that is also marked. Failing a provision to the contrary, the amount owed to the broker is 4% of the base rents plus 4% of any and all expense reimbursements, including without limitation CAM.
Dear George: When I sold my home two years ago, I loaned the buyers the $20,000. They were supposed to pay me interest for two years and then a balloon payment of $20,000 due this month. Six months ago, they stopped making the interest payments, and I've since learned that the home will go into foreclosure in March if they do not find a buyer. What rights do I have as the second lienholder?
Answer: Hire an attorney as soon as possible. Usually, when a lender holding a first lien forecloses on a property, any second lienholders are cut off from asserting their claims. You must contact the first lienholder, pay the delinquency, and foreclose on the second lien. Your attorney should be able to handle this for you.
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Dear George: My husband and I have had our home on the market for eight months. In that time, two buyers have made acceptable offers, paid $500 earnest money, and gone past the closing date without finalizing a contract. Do we and our agent have any legal recourse against the last buyer who did not close? Is the earnest money ours?
Answer: Paragraph 15 of the One To Four Family Residential Contract (Resale) states the following: "15. DEFAULT: If Buyer fails to comply with this contract, Buyer will be in default, and Seller may (a) enforce specific performance, seek such other relief as may be provided by law, or both, or (b) terminate this contract and receive the earnest money as liquidated damages, thereby releasing both parties from this contract."
The easiest recourse is to refuse to let the buyers have their earnest money back by not signing the Release of Earnest Money form, then sue them in a justice of the peace court if the amount is under $5,000. Of course, if all you want is the earnest money, just sign the Release of Earnest Money form (after the buyers have already signed it) and have your agent deliver the form to the title company. Another way to stop this in the future is to ask for more earnest money. Buyers tend to be more committed when there is a larger amount of earnest money at risk.
Dear George: My neighbor's sewer line crosse onto my property. Neither I nor the neighbor knew this until the line burst three weeks ago, and sewage flowed into my back yard. My neighbor contacted county and private plumbers about the problem, and they told me that I need to move my storage building—at my expense. The plumbers think that when I anchored the building, I punctured the line. However, the storage building has been there for three years, and the line burst three weeks ago. Doesn't my neighbor just need to run a sewer line on his property?
Answer: Is there a recorded utility easement on your property? Check your survey if you have one, or call the utility company that operates the sewer line. If there is a recorded easement, the utility company can theoretically remove your storage building unless you obtained permission to install the building from the utility operator. If there is no recorded easement, the utility company is still responsible for repairing the sewer line break, but must have your permission to enter onto your property and make the required repairs. As for when you installed the anchors to your storage building, is it possible that you may have nicked the sewer line and it finally ruptured recently?
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