The Importance Of Safety In Filling Heating Oil Tanks

By Paul J. Bruder, Esquire

As the weather turns colder and air conditioners give way to furnaces, homeowners call their heating oil providers and say “fill’er up.”

More than 100,000 homeowners in Pennsylvania heat their homes with oil, meaning that their basements are homes to large, typically 150 gallons or more, heating oil tanks.

Despite sometimes high costs, oil heat remains an efficient, clean and safe way to heat a home. However, the dangers and hazards associated with home heating oil often result from problems during the filling of those tanks. Having a grasp of the common risks can be helpful when working with clients selling or buying a home serviced by oil heat.

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Getting Creative

By James L. Goldsmith, Esquire

Agreement Photo

The most dangerous clause in the Standard Agreement for the Sale of Real Estate (ASR) is found in our current Paragraph 32(B), Additional Terms. Here’s where agents can let loose with the most creative use of the pen imaginable! A problem is, that when these works of art fail for any reason, they are likely to penalize the author (agent) and his or her client. Most of you are familiar with the legal maxim “ambiguities are construed against the drafter.”

We, the Hotline attorneys, hear from many of you who understand the potential risk of drafting special clauses and who want us to provide the language. Involvement in a specific transaction is beyond the scope of what the Hotline provides, but I understand why you ask. You really want to help your client even if it involves undertaking a job with which you are not completely comfortable. You think your client may think less of you if you say that this is something you don’t traditionally provide or that feel uncomfortable drafting the language.

Entering into an agreement of sale involves risk. The risk belongs to the buyer and seller. Drafting unique provisions that may be required in a particular transaction has tremendous impact on the buyer and seller. Out of concern for your client, it is best to refer them to a lawyer experienced in the type of transaction in which your client is involved.

Some modifications may be easily made without resorting to lawyers. Unless the modification is one commonly made, discuss the issue with your broker or office manager and have them review any language you propose. Better to have someone else draft it and have it be their problem.

To be sure, the Pennsylvania Supreme Court has ruled that real estate licensees may draft agreements that arise from the efforts of a licensee in a specific transaction without engaging in the unauthorized practice of law. That decision, however, dates back to 1934 and times have changed. Today, it is fairly easy to rely on the standard agreement and the many standard addenda available. It’s rare that a transaction calls for unique or specialized language and if that is the case then it’s likely to be a complicated provision. Rather than tackle a drafting challenge, refer the buyer or seller to their lawyer. Not only will you duck any potential bullet, you won’t have the angst of doing something you are uncomfortable with. Not only that, your pay remains the same and your client is getting the level of service he or she needs.

When a Hotline caller asks me to help draft special clauses I, of course, delve into the situation and the need for unique language. The explanations vary. One recent caller was trying to accommodate a 1031 exchange. I asked how many 1031 exchanges the agent had handled and the answer was “this is my first!” I advised that after 40 years of practicing law I did not feel comfortable handling 1031 exchanges as I’ve referred these transactions to my tax attorney partners in the practice who know what they are talking about. Tell the client that the task falls outside of the scope of what a licensee skilled in the marketing and sale of real property generally undertakes. Refer your client to an attorney. It is my belief, that undertaking such a task may very well fall under the unauthorized practice of law, in addition to subjecting you to license revocation or disciplinary measures.

Another caller was trying to draft a swimming pool inspection clause. This one was easy because it is already in the agreement in Paragraph 12, Home/Property Inspections. If you have any concern write that the swimming pool is one of the items to be inspected pursuant to the elected inspection provision.

Lawyers are criticized for taking a simple concept and turning it into a page-long provision. The reason, however, is that lawyers understand the importance that no ambiguities exist and that every “what if” is addressed so that there are no questions. And we don’t always get it right.

In this business the pen is indeed far mightier than the sword. Wield it carefully.

Copyright © James L. Goldsmith, Esquire, 2018
All Rights Reserved

Fessing Up

Recommendations On How Agents Should Handle Missed Agreement Deadlines

by James L. Goldsmith, Esquire

Of the common mistakes in residential sales, none occurs more frequently than the failure to abide by timelines, specifically those found in the inspection contingencies. If there is a time limit, someone will miss it.

In the Standard Agreement, the burden of observing the timeline is imposed on the buyer. If the seller does not agree to satisfy all terms of buyer’s corrective proposal, or if buyer and seller fail to negotiate a resolution, the buyer’s choice is to accept the property or terminate the agreement. If the buyer fails to make an election timely, subject to the goodwill of the seller, the buyer has lost the benefit of the contingency and is obligated to take the property in its present condition, even if the seller has agreed to satisfy most of the buyer’s demands. Buyer’s failure to meet the timeline means that buyer has purchased the property as is.

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Does An Employer Have To Pay Hourly Employees For Commuting To Work In A Company Vehicle?

By Kathryn Lease Simpson, Esq.

A: Not necessarily. Two provisions of the Fair Labor Standards Act (FLSA), that otherwise appear simple, create confusion. The first, employers do not have to pay their hourly employees for an ordinary commute to and from work. This is true even if an employee reports to different locations. However, the travel between work sites, after the first location, is normally compensable. For employees who regularly report to different job sites, at the beginning of the work day, factors such as the company’s usual business area and the frequency of changes to reporting locations may impact whether the drive is an ordinary commute.

Second, many employees believe if they are driving company vehicles to and from work, or to the initial job site, they are entitled to compensation. This is not necessarily the case. Courts will look to whether driving the vehicle and carrying tools impose more than a “minimal burden” on the employee.

Each situation is unique and the answer to the question turns on several factors. It is therefore important for companies that are considering entering into these types of commuting agreements to consult with counsel.

What’s the Biggest Mistake a Licensed Professional Can Make, When Faced with a State Board Investigation Notice?

By: James Goldsmith. Esq.

James Goldsmith. Esq.

Responding on your own to a licensing investigation or meeting with the board investigator, without legal representation, is one of the biggest mistakes a licensed professional can make when faced with an investigation notice from the state board.

If you receive an investigation notice from the state’s professional licensing board, immediately contact an attorney who is knowledgeable in professional license defense and familiar with state licensing boards and the disciplinary process. Not having an experienced attorney to provide a vigorous defense can adversely impact the outcome of the inquiry and put your professional license in peril.

The laws and regulations surrounding Pennsylvania’s professional licensure are complex and can widely vary from one profession to another. Our attorneys have an in-depth understanding of professional licensing and provide experienced representation. From a wide range of issues, from representation at administrative hearings to complaint investigations and disciplinary actions we guide clients through each step of the process to protect their professional licenses.

How Should an Employer Handle a Repetitive Motion Injury?

By: Victoria Edwards, Esq.

In manufacturing jobs many times employees are required to perform the same motion repeatedly or maintain certain body positions or grips, which can result in repetitive motion injuries. Under the Workers’ Compensation Act, an injury need not be pinpointed to a specific event or definable incident, so long as the injury arises in the course of employment. Pennsylvania Courts have held that an injury may have resulted from the cumulative effect from the work duties. Many cases come down to differentiating between repetitive motion injuries and degenerative conditions associated with aging. When an employee reports a repetitive motion injury, an employer should immediately document and file a report of injury and notify their insurance carrier. An independent medical examination is also essential to provide a potential basis to deny the claim. Additionally, have an employee be prepared to testify regarding steps taken to ensure that the work station was ergonomic and to address other mitigating factors.

Selling Real Estate in an Era of Modern Surveilling

By: James L. Goldsmith, Esq.

You either have firsthand experience or have heard stories of how modern surveillance techniques are entwined in the sale of real estate. Baby cameras, pet monitoring applications, security systems, and other surveillance equipment with varying degrees of technological and recording capabilities are now common features in homes. Some systems have no audio capabilities and are only available to view in real-time, while others may also record and store both audio and video data.

Real estate licensees and their clients must be aware of the nuances of video and audio surveillance laws to protect themselves from potential invasions of privacy, breaches of confidential information in violations of state and federal video and audio surveillance laws.

Video Surveillance

Under Pennsylvania law, a person may not videotape, photograph, or otherwise record a fully or partially nude person in a place where the person would have a reasonable expectation of privacy (hereinafter “REOP”) without the person’s knowledge and consent. This means that one cannot have surveillance equipment in a place where a reasonable person would believe they can get undressed (e.g., a bathroom) without first notifying the person and obtaining their consent. Where a property is being shown to prospective buyers, the seller should disable and/or remove any surveillance equipment in bathrooms or other locations that are subject to this heightened standard of privacy.

The REOP standard does not, however, have clear boundaries. Likely, a prospective buyer would not be able to successfully argue that they have a REOP everywhere in a seller’s home. Could a buyer successfully argue that he or she had a REOP in a bedroom of a home they were touring? Likely not, but life presents situations that can pose difficult questions. Does a nursing mother have a reasonable expectation of privacy as she nurses her child in a chair in the seller’s bedroom? To avoid any question of liability, a seller would be well advised to notify prospective purchasers that video equipment is located throughout the property and that special arrangements can be made to accommodate changing clothes, nursing, etc. Certainly avoid the placement of video equipment in bathrooms.

Regardless of the purpose of the video technology – nanny cam, baby monitor, live-feed-pet-recorder – sellers, buyers, and their real estate agents should keep a few points in mind: 1) use of video surveillance equipment is not per se illegal, so long as it is located in a place without a heightened standard of privacy, like a bathroom; 2) a place with a REOP is analyzed on a case-by-case basis and is subject to interpretation by a court; and 3) if there is any question of whether a person would have a REOP in a certain location where video surveillance equipment is operating, always notify the buyer and buyer’s agent and obtain consent before the showing takes place.

Even where video surveillance technology is restricted to places where no REOP is likely, notification to buyers and their agents may still be advisable. A buyer who discovers the presence of video surveillance in non-REOP areas may be offended regardless of the whether the owner has followed a protocol that is legal. Notice to the effect that the home is equipped (and perhaps being sold with) a video security system for the protection of visitors as well as owners may put prospective buyers at ease.

Another choice is to remove or disable such equipment or obtain written consent from buyers and their agents in scenarios where the equipment is visually recording them in various locations throughout the home. While these suggestions would not seemingly be required in living rooms, hallways, dens and other locations where there is not a REOP, the practice prevents any potential argument that an invasion of privacy took place.

Audio Surveillance

Unlike video surveillance, the laws on audio surveillance are more strict and clearly defined. Under the Pennsylvania Wiretapping and Electronic Surveillance Control Act, which is more stringent than federal law, if a person has an expectation that his or her oral communication is not being recorded, no other person may intercept that communication without consent from all parties involved (subject to some caveats for law enforcement, court order, etc.). This law is definite and not subject to the interpretation of a REOP standard like discussed above for video recordings.

As applied to real estate transactions, buyers and their agents likely have an expectation that their oral communication during a showing is not subject to recording. Therefore, a seller should not be audio recording or otherwise intercepting audio from the buyer or buyer’s agent, or any other parties, during a showing of their property. If a seller has audio devices, a video surveillance system with audio capabilities, or other recording devices in place, he or she may keep the devices in operation, only if he or she first obtains consent from all parties involved in the communication, which should be documented in writing. You can decide for yourself whether maintaining audio surveillance will enhance the prospect of selling the home!

While the laws discussed above must be followed by all parties involved in a real estate transaction, real estate licensees face additional penalties under the Real Estate Licensing and Registration Act, the Rules and Regulations of the State Real Estate Commission and perhaps also for violating the Code of Ethics.

As this is an emerging field, stay alert for new and changing rules and legislation, and don’t forget to smile. You may be on candid camera.

Copyright © James L. Goldsmith, Esquire, 2018
All Rights Reserved

What is CASPA and What do Contractors and Subcontractors Need to Know About Recent Legal Changes?

By: Veronica L. Boyer, Esq.

CASPA is Pennsylvania’s Contractor and Subcontractor Payment Act. It is the private industry version of the Prompt Payment Act, which applies to public projects. CASPA helps ensure that contractors and subcontractors working on commercial construction projects (or projects involving more than 6 residential units) get paid in a timely manner. The Act imposes penalties on owners or contractors who fail to pay their contractors or subcontractors. CASPA requires payment within a specified time period and provides for 1% per month interest (plus contractual interest) and a 1% per month penalty for amounts wrongfully withheld. It also provides for an award of attorneys’ fees and costs to the substantially prevailing party. CASPA was recently amended to prohibit contractual waivers of CASPA claims. This is important because it means that parties with greater bargaining power cannot force others to waive their rights under the Act. CASPA was also amended to permit suspension of work for non-payment as outlined in the Act. The Act can be a powerful tool for contractors and subcontractors to get paid for their work.

A Tip from the West?

by James L. Goldsmith, Esq.

Timely tender of deposit checks is a growing problem that did not exist when offers and deposit checks were hand delivered. Now, deposit checks follow an offer’s acceptance by a handful of days. Further, a typical agreement includes a checkmark in Paragraph 26(G) limiting the seller to retaining paid deposits as the sole remedy in the event of buyer default. Thus, if a buyer backs out of the agreement and no deposit has been paid, the seller is without recourse. Shrewd buyers can use this tactic to hold a property in reserve while they continue shopping, but you don’t have to cite the extreme, however, to know that agreements not supported by healthy deposits make for weaker agreements.

In a competitive market the strongest offer should prevail. A strong offer has a substantial deposit tendered with it. An even better offer is one that comes with a substantial deposit and no checkmark in Paragraph 26(G).

So, why not borrow a practice from the west? By west, I mean Pittsburgh and western Pennsylvania where deposit checks are held in escrow by the buyer’s broker. Let’s explore how this practice can prevent the “unfunded offer.”

A deposit can go into escrow more quickly when it is tendered by the buyer to the buyer agent. Usually, the buyers and their agents will have a face-to-face meeting at the time an offer is drafted, or shortly before. The buyers and their agents know that the offer needs to be supported by a “good” deposit, especially in this sellers’ market. A strong buyer should be prepared to pay a deposit as soon as she is ready to extend the offer and there should be no greater problem getting a deposit check days before the offer is drafted and tendered rather and 1-5 days after the offer is accepted.

There are several slight adjustments to make in your paperwork. First, the agreement of sale will need to be modified at Paragraph 2(C) to show that the deposit is being paid to the broker for buyer rather than the broker for seller. There is a line to accommodate this changed.

Second, it may be necessary to have your buyer sign a one-sentence note for placement in your file. Ordinarily, when any agent receives a deposit, it is to be placed in an escrow account within the next business day unless the seller and buyer have agreed to the agent’s holding it (uncashed) until the agreement is executed. When buyers sign agreements of sale they agree to this (Paragraph 2(C)) and sellers agree that deposit checks can be held until an agreement is accepted when they sign their listing agreement. If a buyer agent collects a check from a buyer more than a day before the buyer signs the agreement of sale, the agent should obtain permission to hold the check from the buyer in writing. This is as simple as borrowing language from Paragraph 2(C) of the agreement of sale where it says “checks tendered as deposits may be held uncashed pending the execution of [this] an agreement of sale.” This will be unnecessary if the buyer is giving the buyer agent a deposit check no more than a day before signing the agreement of sale. To repeat, you only need this simple waiver agreement if the buyer is going to tender a deposit check to you more than a day before the buyer signs a standard agreement of sale.

Lastly, be prepared to prove to the listing agent that you’ve deposited the buyer’s purchase deposit in your broker’s escrow account. A copy of the deposit slip should suffice as should any other reasonable verification that the funds are received, accounted for and in an escrow account.

To those of you accustomed to having listing brokers hold the deposit, don’t fret. What is the advantage of holding a deposit when, by law, it can’t be released until there is settlement, an agreement by the parties or a final order of court? As a practical matter, it doesn’t matter which brokerage holds the deposit. It is more important that the agreement is supported by a deposit that is in an escrow account.

The advantage to having the buyer broker hold the deposit is that the delay from transferring a check from agent to agent is avoidable. While the deposit may not be the most important term of an offer it is a factor that a seller will consider. A competitive offer with a better deposit funded immediately just might win the day.

A Question of Coverage

by James L. Goldsmith, Esq.

Mistakes happen. Consider the case of listing agent Robert. Robert happened to be on vacation when he received an offer at list price. He reviewed the standard form on his cell phone and reported to the sellers that it looked great. The agreement was executed electronically as was the sellers’ estimate of closing costs.

At settlement the sellers and listing agent were surprised that the net proceeds were $9,000 less than estimated. The reason: the agreement of sale called for seller assist that accounted for the $9,000 discrepancy. Robert has filed to take note when reviewing the offer on his cell phone. Nearly two years later when a claim was asserted and I was engaged to defend Robert, he readily admitted his error.

The claim asserted against Robert was a disciplinary complaint (order to show cause) filed by prosecutors with the Commonwealth of Pennsylvania, Bureau of Professional and Occupational Affairs. Robert was ready to sign my engagement letter, though I first suggested that he determine whether his errors and omissions (“E&O”) insurer would cover this. Many E&O carriers will pay defense costs for their insured’s involved in disciplinary matters, though they will not pay any fines levied. In most cases, a deductible will not apply.

Determining whether coverage existed was difficult. Robert was employed by Broker A on the date of his error. Though Robert then discussed the matter with his broker, his broker decided not to report it to the E&O carrier. Robert’s broker reasoned that the sellers were equally culpable for their loss because they failed to read the agreement of sale and because no threat of a suit had been communicated to her or Robert. Why risk having E&O rates increase over a report that does not come to fruition, the broker reasoned.

At the time of his receipt of the order to show cause, Robert was practicing with Broker B. At issue is whether Robert is insured for his defense costs and, if so, whether through the insurer for Broker A or Broker B.

My advice to Robert was to have both Broker A and B report the claim to their E&O insurers. Broker B did so and the quick response from the insurer was that there was no coverage. Robert was not affiliated with Broker B at the time of the occurrence.

Broker A was less compliant. Why report a claim for a past sales agent when it may lead to increased premiums? My advice to Robert was to insist that Broker A submit the claim. Robert’s contract with Broker A stated that Broker A would provide E&O coverage. Robert had kept his end of the deal as a sales affiliate, the broker who benefitted from Robert’s service should likewise fulfill her obligations. Broker A eventually relented and submitted the claim. Because the occurrence at issue happened while Robert was with Broker A, her coverage was the applicable policy and the claim should be covered.

Robert’s identifying the right E&O carrier was not the solution to Robert’s dilemma, unfortunately. All policies require claims and potential claims to be reported promptly and you will recall that Broker A upon learning of the matter had decided not to report it to her insurer! Years later when a case was initiated and after relenting to Robert’s demand that she report it, the E&O insurer wanted to know why the broker had not notified it of the problem. Whether Robert or his broker had knowledge of a potential claim. While the sellers did not threaten to file suit nor advise Robert that they would be filing a disciplinary matter, Robert certainly knew that his error might subject him to liability. And no, he didn’t make the report because as you read above, his broker did not want to do so.

Whether Robert will have coverage under Broker’s A insurance is, as of this writing, not determined. If Robert is denied coverage, does he have a claim against his broker for failing to report it to the E&O insurer at or near the time of the occurrence? There are too many issues to state with certainty, including Robert’s failure to insist that his broker report the occurrence. Regardless, it is a situation that pits an agent against his former broker.

The lessons to draw from this situation are several. When a mistake is detected, report it. Your premium is not increased because you have reported a potential claim. When a claim is subsequently filed, you can then determine whether you will have it covered through your E&O policy. [Note: I always suggest that an insured broker/agent submit a claim to their E&O insurer! It is risky not to do so because even the smallest claims can cost more to defend than imaginable and damages have a way of aggregating as time passes.]

Another important issue is determining what your coverage includes. Ask questions of your insurance agent. If a claim is asserted against a former sales agent, but does not include the broker as a defendant or respondent, does the former sales agent have coverage through the broker’s policy? Agents, ask questions of your brokers. When transferring to a new broker, find out who the E&O carrier is and ask questions about coverage for incidents that occurred previous to your employment. Learn the differences between a claims-based and an occurrence-based policy.

Lastly, and this is especially so if you determine that coverage exists, don’t fret. As I told Robert, his mistake was hardly a condemnation of his skills and competency. It happened. He has undoubtedly made worse mistakes that could have far graver consequences (e.g., looking at a text message while driving). It happened, it is not a “deathbed issue” (one that will be Robert’s last thought on that fateful day) or anything more than a financial burden. Make the right decisions with regard to E&O coverage and sleep peacefully.