The 18th annual Environmental Film Festival in the Nation’s Capital, March 16 through 28, will present 155 documentary, feature, animated, archival, experimental and children’s films selected to provide fresh perspectives on environmental issues facing our planet. The vital connections between food and the environment are a major theme of the 2010 Festival, which features cinematic work from 30 countries and 66 Washington, D.C., United States and world premieres. Fifty-six filmmakers and 94 special guests will discuss their work at the Festival.

I made a list of films I will try to see. If you are planning to go to any screenings, definitely consider the first one in my list which showcases a local effort to build a carbon-neutral home.

The Green House: Design It. Build It. Live It. (Visit the film’s page at the EFF website)
This documentary chronicles the building of the first carbon-neutral house and the designing of the first green show house in the Washington, D.C. area. The building, furnishing and showcasing of The Green House created a community of developers, builders, designers and community organizers. All came together to create this special home that once you experience, you will want to change the way you live.

Also, Split Estate and Last Call for Planet Earth discuss issues relevant to property and living. Here is the rest of my list:

Split Estate (Visit the film’s page at the EFF website)
Imagine discovering that you don’t own the mineral rights under your land, and that an energy company plans to drill for natural gas two hundred feet from your front door.

Last Call For Planet Earth (Visit the film’s page at the EFF website)
Twelve leading architects and urban planners from around the world share their vision on architecture that respects nature.

Carbon Nation (Visit the film’s page at the EFF website)
The film shares personal stories of conviction, of dollars and sense and, ultimately, of vision and leadership to tackle the defining issue of our time. One thing is certain: everyone will have a part to play in the creation of renewable, clean, sustainable energy – from citizen activists to board rooms, from city halls to state houses and from Congress to the White House.

Bag It (Visit the film’s page at the EFF website)
An average guy makes a resolution to stop using plastic bags at the grocery store. Little does he know that this simple decision will change his life completely.

Several years ago I was helping a client who wanted to buy a home to move into with his girlfriend. We saw a home on a Saturday, which did not fit his criteria, yet for some reason he wanted to make an offer on it. Naturally, he wanted his girlfriend to also see the home and approve of it. But his girlfriend was out of town for the weekend, coming back on Sunday at 1pm.

We decided to prepare an offer and when his girlfriend got back in town, she would see the home and if she liked it we would deliver the offer to the listing agent. Except the timing wasn’t working out for us. The listing agent had 7 other contracts which the owner would review at noon on Sunday. There was no time for my client’s girlfriend to come from the airport to view the home before at least 2 or 3 pm. And this is where my ethical dilemma begun.

The client wanted to write an offer contingent on his girlfriend approving the house. Given that there were 7 other contracts, his contingent offer was guaranteed to be rejected. The market was such that people were waiving home inspections, a third party approval contingency would have definitely been a no go. So he thought of the next best thing, which was to make an offer with no contingency, and if his girlfriend didn’t like the house, he would get out of the contract based on the POA document review.

As a side note, I should mention that he was so well qualified that the chances the sellers would pick another offer over his were minimal. Furthermore, I knew the person well enough to know that the chances of him buying this home and his girlfriend liking this home were as near to zero as they could be.

I tried to talk him out of making an offer, considering that they had rejected a very similar home in the past, but he still wanted to make an offer, in case his girlfriend liked it. At this time, in my mind I am starting to think, if we deliver this offer, the seller will accept it, a few hours later the girlfriend will arrive,she will not like the place, and a few days later, after we have received the POA documents, we will tell the sellers that he is not satisfied with them and walk away.

That is not why the POA and condo document review period is in the law. Its purpose is so the buyer has the time to review the rules and financial situation of the homeowners’ or condominium association and have the option to walk away if there is a legitimate issue. In this case the document review period would have been used as an excuse, it would not have been the reason.

In the meantime the sellers would have probably been relieved that their house was sold and they could move to the new house they were buying, only to find out that their contract fell through, their home would have to go back on the market and the sale would be delayed for at least a week or two, which in all likelihood would be creating problems with their settlement on the new home they had purchased.

As a real estate licensee I have a duty of care and obedience to my client, but I also have a duty to treat all parties to the transaction honestly. If I were to treat the sellers honestly I would have to tell them that, even though the contract does not indicate so, there is an unspoken contingency on third party approval. Yet that would most likely be violating my duty of obedience to my client (although the courts would ultimately decide this if it came to that).

At the time we were writing the contract all these conflicts and scenarios came to mind, and I was about to tell my client that I can not help him with this transaction, given that I have an ethical objection to what we are doing. Yet, the immediate next thought that came to mind was whether I would have any liability for terminating my relationship with the client just as we are about to write an offer (again the courts would have to decide this).

Luckily, the stars aligned and I managed to convince the listing agent to delay the presentation of contracts to his clients so my client’s girlfriend could take a look at it.

As expected, on Sunday afternoon the client’s girlfriend arrived, went to the house and after taking a 2 minute look through it, she said she didn’t like it.

Was all this legal, illegal? Ethical, unethical?

]]> http://www.calltheo.com/it-is-legal-but-is-it-ethical/feed/ 0 http://www.calltheo.com/appreciating-real-estate-laws/ http://www.calltheo.com/appreciating-real-estate-laws/#comments Fri, 19 Feb 2010 04:04:54 +0000 Theo http://www.propertylicious.com/?p=632

In addition to news, market updates, and advice for buyers and sellers, I want to share in this blog some of my personal experiences with real estate related matters (and I use the word “related” quite broadly here), that have shaped my views about the real estate industry and my attitude towards my business.

So, today, I will start by sharing something that has been on my mind since the beginning of the year.

When I first started working in real estate I became involved with an organization called FIABCI (The International Real Estate Federation). It is an influential Paris based association of real estate professionals interested in, or involved with international real estate. Through my FIABCI involvement an opportunity arose to market a development of resort homes in Mount Pelion in Greece. At the time, the market had slowed down substantially in the DC area so it was a great opportunity for me to explore this other aspect of the real estate business. As a result I went to Greece for several months to become familiar with the resort and the legal framework for real estate there.

While doing some business planning for the upcoming year, I found my self thinking about my past experiences and I couldn’t help but feel a strong appreciation for the business and legal framework the real estate industry has in the United States.

Compared to most European countries and, I speculate, most other countries in the world, the U.S. has a great framework in place which helps protect the consumer, reduce the cost of the transaction, enable transparency and liquidity, and overall make a real estate transaction simpler and much more user-friendly.

I will mention some of the most important differences, but please keep in mind that, even though this probably applies to most countries and most U.S. states, I am using as the basis for my comparison Greece and the DC metro area (which in itself is comprised of three separate jurisdictions – DC, MD, VA – each with its own set of laws, rules and regulations).

Fair Housing

• U.S.: One may not discriminate in the sale or lease of a home. (I will get into specifics in a separate post)
• Greece: No Fair Housing or similar laws. Many people are discriminated against and have difficulty finding housing.

Agency Laws

• U.S.: Buyers and sellers have the right to be fully and exclusively represented by an agent who is obligated by law to act on the client’s best interest.
• Greece: Agents are in it for themselves. They don’t represent anybody, and as such they will bend the truth to get you to buy a house. A buyer/seller has little recourse against an agent in case of fraud or misrepresentation.

Transfer Tax:

• U.S.: Thirty-five states plus D.C. impose a real estate transfer tax. Tax rates range from a low of 0.01 percent in Colorado to a high of 2.2 percent in D.C. In about 2/3 of the states imposing the tax, the rate is below 0.5 percent of the value of the transfer.
• Greece: With the exemption of first time buyers, transfer tax is on average 10-11% of the sale price. This increases the cost of a sale significantly, and results to most people reporting false sales prices (not showing the true sales price on the contract), which in turn results to a less transparent market.

Multiple Listing Service:

• U.S.: Most major markets and many secondary markets have a Multiple Listing Service (MLS). As a result, a buyer can work with one agent only and will have access to all properties for sale in the area. Similarly, sellers list their homes with one agent, and the homes automatically become available to all other agents in the area who can bring in buyers.
• Greece: There is no Multiple Listing Service and no co-operation at all between real estate brokers. As a result, sellers, in order to get the largest exposure for their properties, will have to sign listing agreements with multiple companies (often 10 or more). These agreements are non-exclusive and as such, the agents don’t have any incentive to market the property, since the property could be sold at any time by another company. Instead, the agents hope that they will have a buyer they can match with a property listing they have. On the other hand, buyers must work with many real estate agents, as each agent will have different listings to show, and more importantly, the agent does not care about what the buyer really wants, but rather hopes that the buyer will like one of the listings the agent shows them. Not only is this very inefficient, but it serves nobody well.

Real estate in our country, even though far from perfect, is light years ahead of other countries. We didn’t get here overnight. NAR’s history (National Association of Realtors) is quite interesting and tracks the evolution of the real estate industry in the U.S., which is truly a victory for the consumer.

As we are all consumers in one way or another, despite the current financial issues we are facing, we should all appreciate how far we have come and where we are now. Having experienced first-hand how real estate works elsewhere, I have tremendous appreciation for the real estate industry in the United States, and feel privileged to be involved in it.