In the Exclusive Right to Sell Listing Agreement (form 101), the seller is supposed to make a representation about the seller’s ownership of the property. There are 3 choices: (1) ownership of the property for at least one year, (2) ownership of the property for less than one year, and (3) property not yet owned. I’m confused about which box to check when I take a listing on a new home. Is it how long the builder has owned the property, or is it how long the new house has been built? Or would I check the “Not yet owned” box since the new house hasn’t been owned by any buyer yet? And what about the situation where a builder lists with me but the real estate is still owned by the developer, who will transfer it to the builder just before the builder transfers it to the buyer?
ANSWER: The reason why the listing agreement requires the seller to make a representation about ownership of the seller’s home is because the seller will be required to make such a representation the Offer to Purchase and Contract. The reason it is addressed in the Offer to Purchase is primarily due to the existence of so-called “seasoning” requirements which have imposed by some lenders in an effort to combat loan fraud schemes that rely on property “flipping” (where someone takes title to a property and then quickly “flips” it to someone else at a greatly-inflated price). Seasoning requirements require a seller, with some exceptions, to have held title to the property in the seller’s name for a specified minimum period of time as a condition of the lender making a loan to the buyer.
Thus, what is important to know in determining which box to check in the “Ownership” section of the listing agreement is how long title to the real estate has been recorded in the builder’s name, not how long it’s been since the house has been built, and not that the house is new and therefore “not owned” by any buyer yet. If recorded title to the property has been in the seller’s name for a year or more, check the first box; if less than a year, check the second box. It’s that simple.