House to House: Surveys Strongly Recommended when Purchasing Real Estate By Gary Isom, Executive Director of the Arkansas Real Estate Commission By far one of the biggest mistakes buyers make when purchasing real estate is choosing not to have a new survey completed. Several complaints have been filed through the years with the Real Estate Commission about property lines, driveways, access to property and other issues of confusion as to whether a certain strip of property was or wasn’t included in their purchase of land. Of course, for the Real Estate Commission to have jurisdiction over the issue, the complaint has to be filed against a person licensed by this agency, usually a Realtor®. All too often in these situations, a buyer will decide that he doesn’t need to obtain a survey of the property. Sometimes the buyer will ask for a copy of the latest survey done on the property, usually done for a current or previous owner when that individual purchased the property. This is not advisable, however, as the property may have been affected by various events since the latest survey. Other times, a buyer may see no reason to assume the property lines are anywhere other than where they appear to be and choose to save money by not ordering a survey. It’s understandable why a buyer may decide this. After all, if the property is in a subdivision, shouldn’t property lines have been clearly sorted during the development phase? And what of fences? It’s perfectly logical to assume that a fence at the edge of a property was positioned on the property line, or that a driveway that is shared with the next door neighbor has a property line running down the middle. Another presumably safe assumption would be that a fairly new storage building was built within the property lines. When purchasing real estate, however, assumptions, logical or otherwise, are never safe. The only way to determine for sure what you are buying is to have a survey completed. In any of the situations listed above, the buyer will almost always be left holding the bag. Simply put, it’s difficult to hold anyone else at fault when the buyer learns after closing that there’s a problem with some element of the physical location of the property, rights of access to the property or usage of the property. The real estate licensee cannot vouch for all the geographical aspects of the property. Sometimes, even the seller may be confused. The Real Estate Commission once had a complaint where the seller actually believed a portion of property nonadjacent to her property belonged to her. She had tended the area as though it was hers. Unfortunately, the person who bought the property from that seller would later learn that the seller was wrong and did not own the additional strip. Another buyer who filed a complaint against their real estate agent was satisfied at the time of purchase to have the seller just “mark the corners”. That didn’t work out well either. Even though there are a myriad of professionals working to bring a real estate transaction to pass, the only professional truly capable of establishing property lines, rights and access is a surveyor. A title insurance company will prepare a title insurance policy to cover the property described in the legal description; however, while that policy may include recorded disputes over property boundaries, the title insurance company doesn’t define where the property lines run. An appraisal report may include some information taken from the legal description about property boundaries but will not likely include information about access to the property or rights of usage. Neither can a home inspection be counted on to address the layout of the land. The property insurer is focused on the improvements to the property, not where the lines run. And unless the lender requires the buyer to obtain a survey, they do not establish where the property lines run. So what exactly is a survey? Surveys show property lines, right-of-way easements, utility easements and they detect encroachments upon adjacent properties. These are all issues that often become central to a property owner’s dissatisfaction and discontent with their new purchase. Surveys may also help a buyer determine before closing the transaction whether the property can be used for what they intend. For example, if the buyer plans to put a double wide mobile home on the property, a survey will reveal setbacks and utility easements that could prohibit placement of the mobile home on the lot. The bottom line is that buyers of real estate should consider two facts when deciding whether to obtain a survey. First, only a survey will determine with any degree of certainty what is being purchased. Second, if the buyer decides not to obtain a survey, they need to be prepared to “own” that decision and its consequences because no other party other than a surveyor will likely be held responsible for those things that only a survey will reveal.

House to House: AREC Protecting Arkansans By Andrea Alford, Deputy Executive Director of the AREC The first five words of the Arkansas Real Estate Commission’s mission statement are: “to protect the public interest.” We see that as the ultimate focus of all that we do. In fact, one of our core values is a commitment to serving the citizens of the state of Arkansas by advancing a secure real estate marketplace. In short, protecting the public is taken very seriously at AREC. For the most part, our current statutory and regulatory authority is sufficient to see that mission through. However, it is often said that the only thing that never changes is that everything changes, and occasionally we find ourselves in need of new laws or regulations to help us as we endeavor to serve the citizens of Arkansas. The 89th General Assembly provided us with the opportunity to seek some of those new laws. Four bills were filed that were initiated by AREC, and all four were passed with little difficulty. The first bill passed was SB208, which became Act 112. This Act allows the staff of the Commission to issue citations with fines for technical violations of the Arkansas Real Estate License Law and Commission Regulations. Essentially, this allows the staff of the Commission to take an action that is less severe to the real estate licensee than a formal disciplinary action. What this means for the consumer is that when a licensee commits a technical licensing violation such as failing to renew his license or failing to comply with education requirements, we can issue a simple citation rather than pursuing formal disciplinary action. Having this ability allows us to free up precious resources that can now be invested in pursuing the public’s protection through focusing on more serious matters than disciplining a licensee for not completing his continuing education. The next bill passed was SB212, now Act 158. This legislation adds the Arkansas Real Estate Commission to a list of claimant agencies for the purpose of pursuing former real estate licensees who owe money to the Recovery Fund. The Commission is responsible for administering the Recovery Fund, which was established to pay damage claims to members of the public who have suffered monetary loss specifically attributable to real estate brokers and/or salespersons who have been found, in disciplinary hearings before the Commission, to have violated the Real Estate License Law or Regulations. With this statute, if a former licensee owes the state for money paid out of the Recovery Fund and has a state income tax refund coming, AREC will now be in a position to attach that refund in order to recover the monies owed to the Recovery Fund. This protects the consumer first by allowing the Commission to collect monies that are owed to the state and second by guarding the Recovery Fund, which exists largely for the protection of the public. The third bill passed was SB897, now Act 710. This legislation provides an update to the Timeshare Act, first passed in 1983. Out-of-date terminology was updated with current market offerings in the resort industry. Additionally, monetary protections and registration fees were updated to better represent pricing and market values in the current resort sector. This ensures greater consumer protection and a more equitable and proportionate revenue stream for AREC as a cash-funded agency supported by those our agency regulates. The final bill passed was SB293, now Act 281. This bill assigns the governance of real estate education in Arkansas to the Arkansas Real Estate Commission. This will allow AREC to dedicate more staff and financial resources to real estate education and provide real estate brokers and salespersons greater input on real estate education. Act 281 also provides a mechanism to improve and offer quality broker pre-licensing education. The market for real estate education in Arkansas has long been unable to sustain quality broker education for those wanting to pursue and hold a broker license. This act clears the way to move in that direction. For the consumer, the logic is simple: a more well-educated licensee means a more secure real estate marketplace and, in turn, a more well-protected consumer. AREC is grateful to the following legislators for their support in sponsoring or cosponsoring the above legislation: Senator Jake Files, Representative Mark Biviano, Senator David Johnson and Representative Robert Dale. We are also grateful to the Arkansas Realtors® Association for their support of not only this legislation but all of AREC’s ongoing efforts to ensure the protection of the real estate consumer in the state of Arkansas. House to House is distributed weekly by the Arkansas REALTORS® Association. For more information on homeownership in Arkansas, readers may visit www.ArkansasRealtors.com.

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FEBRUARY 26, 2015

FEATURED STORY
Federal Changes Coming to Closing Process
Starting in August, new forms from the Consumer Financial Protection Bureau will
replace the HUD-1 and Good Faith Estimate and change the way you close sales.
Now’s the time to become familiar with the new forms and rules so your closings
aren’t delayed. Watch this week’s edition of “The Voice for Real Estate” to
learn more.
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NAR: WORKING FOR YOU

Is Your Market Affordable?
Share this map to show customers which way your market’s housing affordability
is trending.
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Audio: RESPA Compliance Tips
Protect your business: Listen for guidance on how to properly structure marketing agreements.
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Protect Homes from Cold
Share this infographic to help owners protect their home from the dangerously deep
freeze.
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INDUSTRY NEWS

Apartment Boom Likely to Stretch into 2016
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ListHub Cuts Off Trulia
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After Baby Boomers, What’s Next for Housing?
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Bet on These Home Improvements in 2015
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Move Inc. Ready to Take on Zillow-Trulia
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SALES & MARKETING

How Much Can Buyers Afford?
How can buyers ensure their mortgage doesn’t overwhelm their budget?
By calculating their current and future lifestyle goals. Share free
tips from NAR’s REALTOR(R) Content Resource for determining how much
mortgage buyers can afford.
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Audio: How to Prosper in 42 Days
Uncover a system to improve your bottom line and your life in this audio
recording from the 2014 REALTORS(R) Conference & Expo. This system
covers how to build a strong network, add memorable value to each
community you serve, build stronger relationships, and more.
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Where Everybody Knows Her Name
Lisa Molinari is only a year into the real estate business. But she’s
spent her life learning everything there is to know about her town. See the results.
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7 Mistakes You Make With Closing Gifts
You want to make a lasting impression on your client at the end of a
transaction. But it could be the wrong kind if you’re not paying
attention.
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MORE…
Maximize Garage Storage for Under $50
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WORKING WITH BUYERS

A Note of Caution About HOAs
Most horror stories about homeowners associations are rooted in the
owners’ misunderstanding of what they’re buying into.
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LEGAL ISSUES

Broker’s Free Speech Argument Rejected
A Nebraska federal court has upheld Nebraska’s attempt to enjoin a
California broker from listing Nebraska properties without a Nebraska
license. It ruled the state’s regulations didn’t violate the First
Amendment since the broker was offering brokerage services, not simply
advertising the properties.
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EDUCATIONAL OPPORTUNITIES

One Day Left: Submit Speaking Proposal
You have just one more day to submit a proposal to speak at the 2015
REALTORS(R) Conference & Expo Nov. 13-16 in San Diego. Do it now.
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TECHNOLOGY

10 Gadgets We’re Buzzing About
Check out some of the latest technology that could affect real estate
in a big way.
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6 Easy Steps to Skyrocket Your Website
Building and maintaining a business website has never been easier or
cheaper. That means you’re out of excuses for not having a
high-performing hub for your online presence. Here’s how.
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LAND

Conference: Southwest Residents Save
Do you qualify for the special southwest resident discount for the
2015 National Land Conference in Tucson, Ariz., March 23-25?
Residents of Arizona, California, New Mexico, Nevada, and Utah are
eligible. Get details now.
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LEGISLATIVE & REGULATORY

Listen Now: RESPA Marketing Webinar
Don’t miss valuable tips to keep your business safe from legal risk.
Check out this audio recording of NAR’s webinar covering how to stay
within the law on marketing and services and other agreements under the
Real Estate Settlement Procedures Act.
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FAA Proposes Commercial Drone Rule
The Federal Aviation Administration has begun the rule-making process
to address the commercial use of unmanned aerial vehicles, otherwise
known as drones. Get details on what it’s proposing.
http://enews.realtor.org/a/tBU74lWB8hVyFB8-lTIAAB8DdG4/legis2

Give FEMA Feedback at Flood Hearings
Want to offer input on new flood rules? The Federal Emergency Management
Agency has scheduled four sessions in March throughout the country to
get feedback on the White House’s executive order governing new
construction or development in and affecting floodplains funded by the
federal government. Get details.
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COMMERCIAL

What to Look for in a Property Manager
Property management companies make it easy for professional landlords
and investors alike to own and manage rental properties. But it’s
important to choose the right one.
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ADVERTISEMENTS

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why FCA US (formerly Chrysler Group, LLC), the official automobile manufacturer
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MARK YOUR CALENDAR

March 10-13, 2015: MIPIM International Commercial Meeting
Take a big NAR-negotiated discount in registration fees for this Cannes, France,
commercial conference.
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March 22-25: 2015 National Land Conference
Head to Tucson, Ariz., to network and hear the latest land news from the best in
the land business.
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May 11-16, 2015: REALTORS(R) Legislative Meetings & Trade Expo
Start planning your days with the website for this must-attend meeting in
Washington, D.C.
http://enews.realtor.org/a/tBU74lWB8hVyFB8-lTIAAB8DdG4/calendar2

Nov. 13-16, 2015: REALTORS(R) Conference & Expo
Make sure you save the dates for the big event in San Diego.
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