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Short Sale Auctions, SB-407 Water Conserving Fixtures Update – Blaine Morris’ 2014 President of Marin Association of Realtors 02/17/14 Monday Memo

Good morning MAR members!

Happy President’s Day…which in Marin means Happy Ski Week!  Everybody sure seemed to be going somewhere last Thursday night, as I was trying to get to a dinner meeting in downtown San Rafael (well after rush hour) and it was absolute gridlock with people trying to get on 101 North…so I hope those of you on your way to a family ski vacation are having a fantastic time!

For those of us still here this week, another week in Marin, another week of low inventory.  Buyers are out there, as we all know.  Increased inventory will be good for everyone, so let’s get our sellers off the fence!

My weekly SB-407 water conserving retrofit update is below, lots of new info, and some qualified good news.  This week, I’ve put it down at the end of the memo so people don’t think that’s all I talk about every week…


Oh my goodness, lots of feedback on auctions.  Several weeks ago, I shared that CAR is going to “SPONSOR” legislation to require an auction company to indemnify or “hold harmless” the listing broker in a transaction against liability that results from the auction company’s actions in a short sale transaction.

As I said, this was the big story that everyone at last month’s CAR meeting was talking about.

Here is the genesis of this issue:  it is becoming an increasing practice that as part of a short sale approval, some banks/servicers are requiring that before an approval is granted, the property needs to be put out on an auction site to “verify” the price.  There is one servicer in particular who is doing this a lot.  As part of this process, the original listing broker is asked (required?) to abrogate the listing agreement to the auction company…then the auction company runs with the auction and essentially the listing.

But the original listing broker still has agency with the seller, and also has an agency disclosure with the buyer.  What happens if, as part of all of this, mistakes are made by the auction company during the transaction?  I know of one of these auction companies that is legitimately licensed with the State of California as a licensed broker, and I’m sure there are more.  If something goes wrong, who is then liable?  Whose E&O pays?  This is the root of the above “SPONSOR” position on legislation to get indemnification of the original listing broker by the auction company.

But wait, there’s more.  What does all of this say about a broker’s legitimate listing contract with a seller?  Does the bank have the authority to demand that a listing broker abrogate its legitimate contract with a seller to proceed with this deal?  It becomes a larger question about the overall legitimacy of our listing contract.  CAR is looking into this as well, and I must say it’s a hot potato issue.

CAR is looking for specific anecdotes…war stories.  Here is what they are looking for:

“We are looking for any anecdotes where a licensee may have been sued due to the negligence of an auction company. We are also looking for stories, where to avoid legal action, a licensee has taken financial responsibility for the error of an auction company. And finally, we are looking for any instances where licensees have been informed by their E & O carrier that if an auction company were to make an error and the REALTOR® was held responsible for it, that the event wouldn’t be covered under the policy. It would also be helpful to know which E & O carrier was involved.”

Can any of you help with this?  If you have any of these stories personally, or if you know of someone else who does, please contact me here [mailto link].  It’s important that we communicate what is happening on the ground here in Marin to our statewide association.


I recently directed MAR staff to survey the various Marin municipalities about each town’s plan for implementation of SB-407.  The question is whether our building departments are planning to follow the California Building Officials (“CALBO”) recommendation that permits for repairs and maintenance of homes are EXEMPT from the retrofit requirements.  After surveying most of our towns, it does seem that they are going to follow that recommendation.  Here is a link to CALBO’s position (see second page):

In addition, another concern is whether unclosed permits from prior years will require a retrofit when they are closed after the fact…sometimes years later…often as part of a real estate transaction.  To my great relief, those that we have spoken with have said “no”, old unclosed permits should not trigger a retrofit requirement since the permit was pulled prior to the new code.

Each town kept pointing to a meeting this week among the building officials, the Code Advisory Board meeting.  Their plan is to coordinate a uniform policy county-wide.  There are some minor differences around the edges, but let’s await the results of this group’s meeting to confirm that those differences are smoothed out

The current RETDS does have some brief language mentioning this new code, but I’ve received a number of comments that this language is inadequate.  CAR is working on it, and MAR is monitoring the situation closely with our General Council to make sure that we can advise our clients correctly.

As I keep saying, stay tuned.

I wish you a safe and prosperous week ahead!