Dec. 26, 2005
Dear George: Do I have to provide earnest money with my offer for it to be
a contract?
Answer: No. However, a seller may be more inclined to accept an offer with earnest money over an indentical offer without it.
Dear George: I am selling U.S. properties for Canadian and Mexican property owners. What is the federal law that requires 10% to be held at the closing of the sale? I was just told about it.
Answer: The requirement that a transferee (a buyer or a buyer's designated agent) pay a "withholding tax" to the IRS is a federal requirement under the Foreign Investment Real Property Tax Act (FIRPTA). See a brief summary on the IRS Web site (PDF). Also, check out IRS publications 515 and 519. We suggest you hire a tax attorney, CPA, or other tax professional to provide specific advice regarding your filing requirements, deadlines, amounts, etc. Our experience is that most title companies and many commercial real estate brokerage firms are familiar with FIRPTA requirements.
Dear George: I put my condo up for sale and called an old friend who is a licensed real estate broker. She told me her fee is 6.5%. I've never heard of anyone paying more than 6%, but she said that 6.5% is standard. Is she squeezing me?
Answer: Your friend should have said, "6.5% is standard in our company." There are serious negative consequences when a real estate agent says that a "standard" commission rate exists; it does not. Fines resulting from such statements are also serious, and such statements are not only illegal from an antitrust viewpoint, they are counter-productive to what a real estate company should be doing: delivering what the consumer wants and needs at a price and upon terms the consumer is willing and able to pay.
E-mail a question to ask George & Chuck or fax it to 713-978-6684. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.
