As always, of great concern to brokers and real estate agents are the antitrust laws and there application to the real estate industry. With the government enforcement agencies playing the role of "watch dog", and "bonuses" available to potential plaintiffs in an antitrust lawsuit, such as treble damages and attorneys fees, it is increasingly unlikely that an antitrust violation by a real estate brokerage firm or it's agents will go undetected or unchallenged during the four year time period in which a claim may be brought. Collusion or even the appearance of collusion with competitors must be avoided at all cost. Improper statements made to competitors, clients and others in the real estate industry can quickly become the source of an antitrust violation. The following statements raise an inference of collusion and should be avoided:

• "Everyone else charges the same rates as we do."
  
• "Why did you agree to lower your commission? If you continue to do that, the rest of us will have to do something about it."
  
• "Did you hear about the new discount firm just opening? They won't last long if no other firm cooperates with them."
  

Although each of these statements is capable of being explained in non-collusive terms, the inference created can be extremely damaging.

SUMMARY OF PENNSYLVANIA LICENSING REQUIREMENTS

In order to be entitled to a Pennsylvania broker's license as set forth in Pennsylvania Consolidated Statutes §§455.101 et seq. a person must show the following:

1. A good reputation for honesty, trustworthiness, integrity and competence to transact the business of being a broker in a manner as to safeguard the public interest;

2. Have obtained the age of 21;

3. Have graduated from high school or have an equivalent education;

4. Completed 240 hours in real estate instruction;

5. Engaged as a licensed real estate agent for at least three years or possess equivalent educational or experience qualifications; and

6. Have passed the broker's license examination.

In addition, brokers must complete seven hours of continuing education in order to renew their licenses. The statutes do not require that brokers or salespersons maintain errors and omissions insurance.

CURRENT CASE LAW

"That's Not My Job!"

The West Virginia Supreme Court held in reversing a summary judgment that a real estate broker could be sued for "negligent hiring" of a home inspector. The broker contacted the home inspector who was checking for termites and asked him to inspect the furnace as well, and gave him a form to sign certifying that the furnace was in good condition. Although the inspector wasn't qualified to inspect heating systems he did it anyway. The court said that if the broker reasonably could have known that the inspector was incompetent to perform the job, she may be liable for "negligent hiring." This is true even though the broker had no duty to arrange an inspection in the first place.

"Keep On Truck'n!"

In Dauphin County, a home owner who parked his truck cabs on his residential property in a planned residential community was not found to be in violation of the restrictive covenant which prohibited residents from keeping various vehicles on their property where the covenant did not mention trucks or other commercial vehicles. The court reasoned that restrictive covenants must be strictly construed against enforcement, and because the restriction did not mention trucks and only delineated various recreational vehicles, it was unenforceable against the home owner. However, the same home owner also parked his truck tractors on the same residential property and was found to be in violation of the restrictive covenants which prohibited residents from using their properties for other than residential purposes. Parking the truck tractors on the property was found to be commercial in nature.

"Two Fees or Not Two Fees?"

Three recent cases coming out of the Pike County Court of Common Pleas addressed the same issue regarding whether an owner of multiple residential lots may change their proportion of the homeowners association fees owed by combining the lots into a single lot. In all three cases the court held that the homeowner were still required to pay their dues and assessments on each of the original lots. In making a determination, the court looked to the association's bylaws and declaration of covenants and restrictions. None of the association documents provided for such a situation where the individual lots were subsequently combined to form one larger lot. As the owner's duty to pay the association dues and assessments attached to the individual lots at the time of the original purchase, from that point on the duty to pay the fees continued to run with the individual lot. The court noted that there is no hard and fast rule and a case-by-case analysis of the relevant documents would be required. It was suggested that homeowners associations should review, and if necessary, amend their bylaws, declarations and other relevant documents. (These cases are subject to appeal)

Reager & Adler, PC can advise you on the last remaining tax shelter for real estate investment-- the Section 1031 Tax Deferred Exchange. To request your complimentary copy of Section 1031, Tax Deferred Exchanges in a Nutshell please call our office at 717-763-1383.

AMENDMENTS REGARDING CONFESSION OF JUDGMENT FOR MONEY AND REAL PROPERTY

The amendments to the Rules of Civil Procedure regarding Confession of Judgment for money became effective April 1, 1996, for all actions commenced thereafter. The new amendments abolished confession of judgment in connection with consumer credit transactions which are defined as those "credit transactions in which a party to whom credit is offered or extended is a natural person and the money, property or service which are the subject of the transaction are primarily for personal, family or household purposes." In non-consumer transactions notice prior to, or with, the execution upon a confessed judgment is now required. Upon service of the notice, the defendant now has thirty days in which to file a petition to obtain relief or is barred from relief absent "compelling reasons for the delay."

The revisions to the Rules of Civil Procedure for the confession of judgment in ejectment for possession of real property became effective July 1, 1996. The first revision abolishes confession of judgment for the possession of real property in connection with a residential lease executed by a natural person. The second set of revisions provides for notice requirements which are consistent with the notice provisions referenced above in regard to the confession of judgment for money.

Under the former laws regarding confession of judgment there was no limitation as to whom it could be applied and there was a blanket waiver of notices.

CHOOSING REAGER & ADLER, PC

Why should you have Reager & Adler, PC conduct your client's real estate closing? By having an attorney who practices real estate law such as Reager & Adler, PC, prepare the title report, conduct the closing, and issue title insurance, your client has the assurance of having legal representation at closing at no extra cost. Additionally, we are always available for consultation throughout the process.