1(a) When a client comes or enters into an agency contract with a licensee, the agency agreement will definitely constitute the powers that the principal is permitting the agent. However, the agent cannot exercise any authorities away from those given under the agreement. In Bob’s case, Specific Agency is created, and it gives the representative a limited power to only one specific business highlighted in the agreement (Fields & Fields, 2018). This agency involves the licensee about Bob’s mother needs (Cameron, 2011). He should ensure that he fulfills his mother’s requirements to avoid her mother (principal) from removing him as her agent.
(b) The condominium unit needed new flooring, so after purchasing the unit, Bob asked Cushioned Comfort to come over and provide a quote. The salesperson, Mark, measured the unit and showed Bob some samples. Bob chose a carpet type, and Mark wrote up a contract between Cushion Comfort and Bob. Mark and Bob signed the contract, and Bob was given a copy of it, as well as one of Mark’s business cards showing he is a salesperson for Cushion Comfort. Bob was in the process of throwing out the old carpet when he got a call from the owner of Cushion Comfort. The owner told Bob that Cushion Comfort was not able to meet the terms set out by Mark and that since Mark did not have permission to enter into a contract for that amount, Cushion Comfort is not bound to the contract. Is there a valid and binding contract? Discuss the relevant law as to whether or not Mark can bind Cushion Comfort to a contract.
For the contract to be valid, certain elements must be considered. In this case, Mark and Bob had a legal purpose to get into the contract. Both parties were competent they were of the right age and sound mind in time of the agreement (Donahue at el 2016). However, agreement by offer and acceptance was not followed to the latter. The owner of the cushion comfort was not involved in the process, and his sales person had no permission of getting into the contract. Therefore, this contract will not be binding since the owner was not contented and involved. If Bob needs the carpets, he can legally get into a new contract with the owner of the cushioned comfort (Ricchetti & Murphy 2010).
(c) Before purchasing the property, advice was sought by Bob from Willie Wunder, Real Estate agent, to ensure that his mother would not be saddled with any issues such as a “leaky condo.” Wunder stated to Bob that he reviewed the necessary documents of the condominium complex and did not notice anything unusual. In actuality, Wunder only partially read the documents and had trouble understanding a majority of what he read. Six weeks into her possession of the condominium, Bob’s mother receives a registered letter requesting payment of the $10,000 special assessment to repair the water damaged common area caused by a faulty building envelope. Upon further review, Bob discovered that the condominium documents had discussed the $10,000 special assessment. Bob is very upset and would like to know the following:
Under agency law, what duty or duties did Wunder owe Bob? What are the potential consequences for Wunder’s actions?
Under the agency law, real estate agents must meet their end of the jobs. However, Wondur did not meet the agreed results to Bob. He was supposed to be loyal and keep the interests of Bob ahead of any other; he also owed Bob a disclosure despite him not understanding all the content in the agreement (Cameron 1993). Real estate’s agent should offer reasonable care to the buyers and advise them accordingly Wunder owed this to Bob. Since Wunder actions cost Bob 10000$, there were consequences for his actions. His reputation as an agent could have been tarnished in the social media platforms to make sure that he does not repeat the same mistake until he is thoroughly knowledgeable about his job description (Martindale at al 1931). Bob should have opted to sue this agent and let him pay the extra cost that they owe since it was his mistake.
(d) Bob’s mother sold her home to Mr. Walker, a kindly gentleman, and avid gardener, who said he noticed her fabulous fruit trees on his Sunday stroll and decided to knock on her door to see if she would sell her property to him. Bob’s mother thought the price seemed reasonable and signed the contract, without concern for her hearing and seeing difficulties given her extreme age. Bob has since found out that Mr. Walker was a real estate sales licensee, who bought a row of houses that Sunday with the intent of building a condominium complex on the property. No fruit trees will remain standing. And, after commissioning an independent appraisal, Bob now discovers that the price paid was less than two-thirds of the market value at the time of sale. Is the contract valid? Explain why or why not, and what option(s) may be available to Bob’s mother.
Bob’s mother signed the contract under pretense. The contract is not valid because bobs mother was an old woman who could barely see and the other party pretended to be another person during the time of signing the contract (Freidman & Scheiber 1981). The option that Bob has is to prove fraud. Contract fraud involves the seller (bobs mother) being misled by the buyer (licensee) because the licensee wants a different result from the contract (Galaty et al., 2001). The American Bar Association states that fraud exists when any statement from the contract is substantially different from the truth and in our case this is what happened.
(e) When Bob’s mother is no longer able to live on her own, Bob decides to rent the unit, which is allowed by the bylaws of the complex. What are the requirements that Bob would need to meet in a rental agreement? Explain how a residential tenancy differs from a commercial tenancy. If Bob subsequently decided he wanted the tenant to vacate the unit, explain briefly the various reasons Bob could use to terminate this tenancy agreement.
Bob should include the name of the tenant, terms of the tenancy, rent, deposit and fee repair and maintenance and restrictions to any illegal activity in the rental agreement. A residential tenancy is a contract between the landlord and the tenant to use the property for an existing agreement. The property is to be used for residence and not for profit no commercial services should be conducted in a residence house such as sales of goods or any other activity that generates profit (Adams 2004). Rent for occupation is paid at the end of every month as agreed. On the other hand, a commercial tenancy is an agreement between the landlord and a business tenant for use in commercial activities such as sales of goods, services and manufacturing to generate profit. The premise is a business house and cannot be used for living. Rent is done per square footage the tenant occupies and in other cases; there is an added percentage from the gross received by the tenant.
Bob can give the tenant a lot of reasons as to why he needs them to vacate the unit. One of the reasons that bob can give is that he wants to sell the property to a different person thus requiring them to vacate. He can also tell them that he wants to renovate the house and lease it to a commercial tenant if it was residential and vice versa. He will be required to give notice to the tenant after he has explained his reason for the lease termination.
2(a). You are selling your home, which has a large mortgage with favorable rates. You want to know whether a new purchaser can assume this mortgage.
(i) Mortgage assumption is the transfer of the mortgage loan to the buyer name, and the seller is no longer liable for the loan. A purchaser can assume loan if he can lock a lower interest rate. This can save him money if the rate is lower than the current rate. As the seller, there will be no liability if the price of the house is higher than the mortgage and also since the name on loan is no longer his (Forts & Ramcy, 2015).
(ii) Novation agreement can also be a good idea whereby the purchaser, seller and the institute that offered the loan come into an agreement and removes the seller from the equation of the loan and transfer the loan obligation to the purchaser. This can happen if the purchaser is willing to extend this loan. Their liabilities are limited since you are no longer involved in the loan mortgage.
(b) You can sell your property, and now your financial advisor suggests that you should invest your new windfall in mortgages. He lists the various types of mortgages available. Discuss at least three different types of mortgages, relating their advantages and disadvantages to a mortgagee from a legal standpoint, in particular concerning the security involved.
There are different types of mortgage a person can consider when buying a home. Fixed rate mortgage is one of them. This is the type where the interest rates do not change throughout. The advantage of this mortgage is that you will have peace of mind since you already aware of what you are to pay. The disadvantage is the interest rate can be much higher than what is in the market at times. The other type is the adjustment mortgage where the interest rate will change at times (Muchlinskiat at al., 2008). You only know when they change but not with how much. The advantage is that you enjoy the benefit of lower interests at times while the disadvantage is that you can have a high interest and be unable to pay it n time. The third type of the mortgage is the government insured home loans; this means that if the borrower fails to pay the mortgage, the government will ensure the lender pay for the lose (Pyhrr, Seiler & Wofford, 2011). The advantage is that the loan type gives you an option to put forth down payment with a small rate of the house price. The disadvantage is that you have to incur the extra cost of paying for the insurance.
1. a) First Case
Trevor William Maxwell Inglis
According to the Council’s discipline committee, Trevor was found to have committed professional misconduct through participating in the deceptive transaction by fabricating an offer and claiming that the offer was on client’s property. He also made a false statement to the committee in his response to the issues he is facing. In my opinion, Trevor committed conduct unbecoming a license himself as well intending to retaliate against his fellow listing agent.
2nd Case
This second case is about the Consent Order Proposal submitted Hao Yan. In this case, Yan committed professional misconduct that also led to the suspension of his license for two weeks.
Finally, the last case involves Anthony Roland Boos who is the Managing Broker of Cascade Realty Ltd. He was found to have committed an offense and was reprimanded. He was to pay a penalty fee due to the misconduct.
b) In all these three cases, there were breaches of the Real Estate Agents Act and Sale of Land Act through altering with some important information that misleads the buyer thus attracted penalties for non-compliance.
c) Vicarious liability is a circumstance where an individual is held accountable for conducts or omissions of another individual in an employment location context, an employer can be liable for conducts or may be omissions of the employees, given that it can be verified that they indeed happened during their employment contract (Adam, 2013). In reference to the above-reviewed cases, this can be related to Anthony Roland issue where both of them in all the three cases were held responsible for the damages caused in each case.
Answers to the questions
(b) You can sell your property, and now your financial advisor suggests that you should invest your new windfall in mortgages. He lists the various types of mortgages available. Discuss at least three different types of mortgages, relating their advantages and disadvantages to a mortgagee from a legal standpoint, in particular concerning the security involved.
Net lease advantages to the tenant are they have control over cost, and the rent charges are lower and more property control. However, the tenant might is not able to plan early, and the operating costs might be higher at times. I would advise a tenant to use net lease since there is a lot of controls and the rent is lower.
References
Adams, K. A. (2013). A manual of style for contract drafting. Chicago: ABA, Section of Business Law, 94(5), 62-64.
Cameron, J. G. (2011). Michigan real property law: Principles and commentary. Ann Arbor, Mich: Institute of Continuing Legal Education , 36(29), 8.
Donahue, D. J., Quinn, P. D., Grandilli, D. C., & Donahue, D. J. (2016). Real estate practice in Ontario. Journal of Canadian Studies, 52(2), 538–569.
Eissen, V. (2011). The Oxford Handbook of International Investment Law. International Journal of Legal Information, 39(1), 93–96.
Fields, C. K., & Fields, K. C. (2018). Contemporary real estate law. Survey Review, 50(359), 107–121
Friedman, L. M., & Scheiber, H. N. (2012). American law and the constitutional order: Historical perspectives. Cambridge, Mass: Media History Monographs, 20(2), 1–31.
Sion, A. (2018). A real estate contract: At what point and to what extent does it become binding? PM World Journal, 7(8), 1–11.
Pyhrr, Stephen A., Michael J. Seiler, and Larry E. Wofford. 2011. “Review Articles: A Supplemental Account of the History of the American Real Estate Society.” Journal of Real Estate Literature 19 (2): 235–81.
Pyhrr, S. A., Seiler, M. J., & Wofford, L. E. (2011). Influencing Real Estate Thought and Decision Making Through Research and Education: The Past, Present, and Future of ARES. Journal of Real Estate Research, 33(2), 127–178.
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