“To whom much is given, much is required.” This principal applies to REALTORS® who, under Article 26 of the Arizona Constitution, may “draft any and all instruments, including contracts, incident to the sale, exchange, trade, or leasing of property.” See Article 26 §1, Arizona Constitution. Because of this authority, REALTORS® bear the responsibility of explaining to their clients what the real estate transaction documents actually mean. Morley v. J. Pagel Realty & Ins., 27 Ariz. App. 62, 66, 550 P.2d 1104 (1976). Put another way, to meet their standard of care, REALTORS® must have the real estate drafting skills and real estate knowledge of an attorney. Read More
Vacation Rentals Update:
Congress Passes New Law Regulating
Short Term Rentals
Our state legislature and Governor have spoken, and short-term rentals are here to stay. Since the inception of online platforms like VRBO and Airbnb nearly a decade ago, short term rentals have steadily grown in popularity, in terms of demand and availability. The opportunity to rent a home or condo for a short duration provides new income opportunity to owners, and new lodging options for travelers and local residents alike. But not everyone is thrilled about short-term rentals in their neighborhoods. Stories abound about wild bachelor parties, wedding venues, and other large groups. Read More
LAYING DOWN THE LAW
Christopher J. Charles, Esq. and David F. Kotter
Are Nonrecourse Loans Feasible?
At first blush, asking a lender for nonrecourse financing seems like someone asking for your first-born child – weird and awkward. But in today’s economic and real estate climate, under the right conditions, nonrecourse loans can make sense.
Practically speaking, most commercial loans are essentially “full recourse,” which means that because many lenders insist on personal guaranties, the guarantors are personally liable for the loan balance – meaning if the borrower defaults, the lender can sue the guarantor (and the borrower in some cases) for the unpaid balance, plus interest, and attorneys’ fees. And the lender can pursue collection against the guarantor’s non-exempt assets, which typically includes bank accounts, wages, stocks, bonds, automobiles, and of course, real estate. Read More
“Where there are no oxen, the manger is clean, but an abundant harvest comes through the strength of the ox.” Proverbs 14:4. Put another way, if you don’t do any work, you might have a clean stable, but you won’t have any crops. Applying this principal to business, if you are involved with enough real estate deals in this litigious culture, sooner or later, you are bound to run into a dispute. Common real estate disputes include failure to close, lack of proper disclosure, title issues, and other issues concerning the property’s condition. Resolving disputes through the courts is often costly and inefficient. Read More
Pigs get fat and hogs get slaughtered. That is why hard-money lenders should avoid seeking hyper aggressive interest rates. Although conventional mortgage interest rates remain historically low, interest rates on private loans, or “hard money” loans range anywhere from 5% to multiples of the principal amount. But if lenders overreach, they may end up forfeiting all interest. Indeed, the defenses of usury and unconscionability are alive and well. Read More
Most secured creditors have multiple options if the debtor defaults on payment. That is precisely why they require borrowers to pledge security (such as real estate) for the performance of the repayment of the debt – so that if the borrower defaults, the creditor is not limited to the borrower’s promise to repay the debt – in addition, the creditor can seek reimbursement from the sale of the secured asset.
Years ago, Justice Oliver Wendell Holmes, Jr. asked: “What is the justification for depriving a man of his rights, a pure evil as far as it goes, in consequence of the lapse of time?” Several reasons exist:  our laws aim to resolve just claims within a reasonable time;  if a claimant sits on her rights for too long, relevant evidence to disprove the claim may be lost or destroyed by the passage of time; and  litigation of a long-dormant claim by result in more cruelty than justice