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Foreclosure Rescue Act
Law Safeguards Homeowners/Users/adamp/Desktop/Stuff for FAR/Magazine Assets/NOV08/images/LawEthics

New foreclosure act provides safeguards to homeowners.

As foreclosure numbers continue to rise, a related foreclosure “rescue industry” has also grown. This foreclosure rescue industry is the focus of a new law which went into effect October 1, 2008. The Foreclosure Rescue Act (section 501.1377, Florida Statutes) is intended to provide a number of safeguards to homeowners who enter into agreements with third parties which are designed to save their homes from foreclosure. The Act defines the terms “foreclosure rescue consultant,” “foreclosure-related rescue services,” foreclosure-rescue transaction” and “equity purchaser” and prohibits a foreclosure rescue consultant from engaging in or initiating foreclosure-related rescue services with a homeowner without first executing a written agreement with the homeowner. Additionally, the Act provides that a homeowner has the right to cancel the written agreement for foreclosure-related rescue services within three business days after signing the agreement and stipulates that the written agreement include a statement substantially similar to the one set forth in the Act outlining the homeowner’s right to cancel. The Act also provides that the foreclosure rescue transaction include a written agreement in a specific format signed by the homeowner and equity purchaser and stipulates that the homeowner has a right to cancel the transaction without penalty if the homeowner notifies the equity purchaser no later than 5 p.m. on the third business day after signing the written agreement.  The equity purchaser is required to give the homeowner, at the time the written agreement is signed, a separate written notice outlining the homeowner’s right to cancel.

For more information on this new law, contact the FAR Legal Hotline at (407) 438-1409, Monday through Friday, 9 a.m. to 5 p.m. Please have your Florida real estate license number available when you call.

Where’s My Money?

Janice’s brother Rick dreamed of living on an island. Janice, a real estate sales associate in North Florida, searched and other Internet sites for Rick’s dream house.

In February, Rick visited the island to view the properties Janice had told him about. He also saw many homes, usually with the listing agent.  He found the perfect place, so he called Janice to write the offer and fax it to the listing office, XYZ Realty.

Rick’s offer was accepted.  Much to Janice’s surprise, the listing broker informed her she would not be receiving a commission on this sale.  After the transaction closed, her broker filed an interboard arbitration request against the listing broker, claiming the selling side of the commission.

She was shocked when her arbitration request was denied by the grievance committees of both her local Association and the island’s Association.  What had gone wrong? Both brokers were Realtors®, the property had closed and the arbitration had been filed within 180 days, when all the facts could have been known.

Why she wasn’t paid: While Janice has a license to sell anywhere in Florida, in order to be entitled to a commission, she had to have an agreement to be paid.  This compensation is offered through an associate’s Multiple Listing Service.

Before writing the offer, Janice should have checked to see whether her broker was a member of the island’s MLS. Then, when she discovered that he was not, she should have checked to see whether his MLS had any reciprocal agreements with the island’s MLS or whether both MLSs were members of MLS Advantage, which also is an offer of compensation. Finally, Janice and her broker should have gotten a written commission agreement with the listing broker before she wrote the offer to purchase. 

Janice learned a lesson the hard way—if you are selling listed properties outside your MLS, be sure that, in advance of writing the offer, you have a written agreement with the listing broker to be paid a commission.