Our Association requires ALL offers be submitted to lenders

This is insane in our opinion! As a member of the Northeast Florida Association of Realtors, I'm outraged at what our association has just put into our short sale addendum.  I'll save some of my comments and views until I settle down some, but this is what our short sale addendum will read starting Monday.

Out of the Northeast Florida Association of Realtors NEFAR Short Sale Addendum

"Unless otherwise directed in writing by SELLER's encumbrance holder(s), SELLER has an obligation to present to encumbrance holder(s) any accepted back-up offers or any subsequent better offers. THIS PARAGRAPH MAY NOT BE DELETED OR MODIFIED"

That is ALL it says.  This item can basically legally obligate a seller to submit a VERBAL offer greater than a current one the day before closing a transaction!  This is SO messed up in many different ways, I want to hear your thoughts, and see if you have ever heard of anything like this or have anything like this in your addendum.


****4/13 UPDATE - I expressed my concerns to our board attorney.  Here is his response.

Here is the response I got from our board attorney, again, he does all of our closings and has for years.  I'm not sure he wants me sharing this response, so I'll take out the names he used here.

"____________, Chief Counsel for NAR, takes the position that it is probably mortgage fraud if the seller does not inform their short sale lender of subsequent offers unless the lender has stated in writing that they do not want to receive subsequent offers. Our new short sale rider incorporates that language.


I know short sales are difficult and we are all struggling with them. The change in the short sale addendum was not brought about by a lender’s short sale arms-length affidavit but rather by the opinion of ___________.  __________ has expressed her opinion to hundreds of lawyers who represent local and state associations of Realtors. Of course, not everyone agrees with her but a vast majority do. It’s a sticky area as you know. Thank you very much."

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I was thinking about that using the old form

Open your NAR Magazine and you'll find Laurie Janik Legal Affairs has been touting this for months and months. I attended one of the sessions of our "NEW" contract classes and our Board Attorney tells us he has known her for years. BTW, there were 178 people in this class that gave CE credit, the next class he is speaking to on the 23rd has over 180 person registered.  Our Contract Task Force decided to elicit her opinion. This information was freely shared in our class. There was much discussion in our class.   From my reading about NAR's General Councel of record,she belives that real estate agents are on the verge of practicing law and fraud and need a clear answer of what to do.  My answer is simple. Look at your listing agreement, if it is like ours, and use it wisely. That takes care of the problem for me, my customer and the prospective buyer for my customers property and their agent.    Actually, Mike would have to go to the Contract Task Force Meeting. They here are the ones who decided what to put in and take out prior it going to the Board for a vote.

Still . . . NEFAR is only an association, not the DBPR!! . . . and to follow a NAR speaker and legislate your associates falls into a dictatorship.  Without a 100% buy in (you ask for 100% to pay dues), this stinks of unionism!

I agree with the person who suggested this comes from "sour grapes"...agents whose offers weren't accepted while perhaps they believed a lesser offer was accepted, but only because it allowed the broker to double-end.  Perhaps there is concern that not all offers are being presented to the seller.  When you have multiple offers, have the seller sign acceptance of the one they choose, and reject (in writing) all other offers.  This way, you have no other "accepted" or backup offers.  Place the property in "pending" status or take it off the market, and if you do receive a back-up offer, advise the agent submitting it that any backup offer will be presented to the seller IF the current buyer withdraws their offer.  We all know that the highest offer is not necessarily the best offer, so just because you get higher offer doesn't mean it's better than the one you already have to the lender for consideration.


I'm not sure what what precipated this verbiage going into the new short sale addendum. I do know that our Listing forms have the options for the seller  a) not to accept verbal agreements b)for the seller not to look at any other offers once an offer becomes a contract and something else. I can't remember.


As for creating my own addendum, my understanding is per Florida Law, I cannot. If I do, I therefore am practicing Law.


@ Mike, I am sure it can be changed, but not quickly. If you start a petition I'm happy to have some others get on board. There was lots of grumbling going on in the class I attended. No one was happy about that.

This was just addressed in our board of directors meeting in Amelia Island.  We do not share NEFAR's opinion regarding the submission of any/all offers to short sale lenders.  We have a box in our listing agreement that allows us to submit all offers to seller even after the ratification of a contract and a box that addresses verbal offers.  Most sellers opt to not allow verbal offers and to not bring offers after an offer is submitted.  There you go.  Sellers' wishes and any questionable future liability is off of us.  In our meeting we did not see any need to change this as it is not typically advantageous to the seller.  I don't know too many buyers who would wait for a short sale knowing that it could take months to get approval and at any time they could be out-bid by another buyer.  As far as NEFAR goes, I try not to show these short sale listings unless the buyer adamantly wants to see them and they understand what is at stake.  

Here is the problem....many contracts have provisions that relate to the buyer's rights and options relative to back up offers.....also, this provision can put a listing agent in harm's way.  I have seen this happen MANY times....listing agent tells lender of a back up offer that is a higher price (but as we know not necessarily the BEST offer).  Agent submits the back up offer...initial (existing offer) is rejected. Second, higher offer drops off. No buyers.

Now, here is where it gets potentially WORSE. Homeowner is now in a WORSE position because there are no offers.  This is due to the agent submitting the back up offer. Look to LA and OC in California. There are 4,000 - 5,000 lawsuits against agents under this scenario.  

Unless a property is  REO, the listing agent has not duty to the bank. Their duty is to the seller and in fulfilling the "contractual" duty (to the bank) now imposed by this provision, the listing agent is arguably violating his or her duty to their client - as noted above.  This provision is placing a duty (relative to the bank) upon the listing agent that they do not already have!  This can and will create a conflict of interest!!!

The provision is placing listing agent in harm's way and it is unduly interfering with the contractual rights of a buyer ....

Paddy Deighan J.D. Ph.D


So why are you using the association forms? Association as well as FAR and FAR Bar forms are suggested forms and there is no law that requires me to use them especially if they contain illegal paragraphs like this one.

Our job is to get the highest and best offer for the sellers and their lenders as quickly as possible.  I am surprised that a board would go so far as to dictate how a seller/sellers Realtor is to handle offers.  As a practice, it is in everyones best interest to arrive at the highest and best and start working toward approval.  Sliding other offers in will just send the public into lawsuits and avoidance of short sales all together.  We are to treat all parties fairly and honestly and knocking out a buyer prepared to close a transaction is not fair or honest.  We could all sit around and wait for a better offer, but nothing would close and eventually, the losses would become tremendous. 



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