Customary Transaction Procedures In Oklahoma

Customary Transaction Procedures In Oklahoma
In general, States have exclusive jurisdiction over the land within their borders, and a State's laws concerning the kind of interests that can be held and how they are created are not subject to federal law. However, how real estate transactions are conducted (especially residential real estate transactions) are governed by a wide body of federal statutes. State statutes and common law may differ significantly from one state to the next. Certain procedures are required by law and other procedures have evolved through custom. The Oklahoma State Real Estate commission has developed voluntary standard residential contracts that are generally accepted.
	In Oklahoma, real estate brokers may be employed as the owner's representative in order to obtain a buyer for their property or as a buyer's representative to purchase property. Real estate brokers and licensees are licensed and regulated by the Oklahoma Real Estate Commission and other laws. Oklahoma Real Estate Law does not define a Realtor® as an Agent. Rather Real Estate Brokers and their Real Estate Licensee Associates are defined by their relationship to their client. In Oklahoma one can have either a *Transaction* or a *Single-Party* Brokerage arrangement. A Transaction Broker focus on completing the transaction without being an advocate for one side or the other (the party for whom a Transaction Broker is performing services is not vicariously liable for the acts or omissions of the Broker.) On the other hand, a Single-Party Broker is an advocate for their clients and may provide advice to their clients (the party for whom a Single-Party Broker is performing services is vicariously liable for the acts or omissions of the Broker). A real estate brokerage company may not be a Single-Party Broker for both sides of the transaction (both buyer and seller). However, the brokerage company may act as a Transaction Broker for one side of a transaction and a Single-Party Broker for the other. A real estate licensee does not owe you a duty of fiduciary care (the high standard imposed on attorneys and trustees.) Rather the licensee typically answers to a standard of reasonable care (what a reasonably prudent person would do) and has a duty to, among other things, to keep confidential information confidential, disclose information as required by the Oklahoma Residential Property Condition Disclosure Act, and treat all parties with honesty. Brokers and Licensees must undergo extensive training before receiving their license and must attend continuing education seminars for their licenses to be renewed every three years. A Realtor® is a member of the National Association of Realtors and are bound by a code of ethics.
The contract between the broker and seller to sell property is called a Listing Agreement. The contract between a broker and prospective buyer to purchase property is called a Brokerage Agreement. When presenting an offer to purchase Real Estate, the Associates must disclose, in writing, which party they represent and how they are represented; you will be asked to sign a disclosure acknowledging you have received this information. Real Estate commissions are typically paid by the seller at closing (when the property transfers ownership.) In large commercial transactions, buyer may be responsible for buyer's commission and seller responsible for seller's commission. The agreement may be an open agreement whereby the broker earns a commission only if he or she finds a buyer. A listing is exclusive if the broker is the only agent entitled to a commission for finding a buyer. Under an exclusive arrangement a broker may be entitled to a payment even if the seller finds the buyer without the brokers aid. As a buyer, you may be asked to sign an exclusive retainer agreement and may be asked to pay an upfront fee. The retainer fee is usually refunded at closing.
	Oklahoma Real Estate Law treats residential properties (single family or duplex) differently from commercial properties (multifamily, retail, office, industrial, etc.) when it comes to disclosing defects or other problems with the property. Disclosures that are required by the Oklahoma Residential Property Condition Disclosure Act by owner/ occupiers of residential property also limit liability of the seller with regards to those items disclosed. Commercial and investment property disclosures are generally governed by common law -- if the defect is visible, it need not be disclosed. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, if a Phase I environmental audit has not been done on a property, under certain situations the seller may might not be able to claim the “innocent landowner” defense if any environmental hazards or violations are found on the property later. A Realtor® licensee is not under a duty to take any special precautions or do any special inspections, as their area of expertise is not as a property inspector, engineer, etc. All prospective purchasers of property are encouraged to have professional inspectors inspect the property for during a due diligence time typically provided for in a real estate purchase contract.
The Federal Fair Housing Act prohibits discrimination in housing related real estate transactions on account of race, color, religion, sex, or national origin. See 42 U.S.C. §§ 3601-3631. Real estate brokers and their licensees are specifically prohibited from discriminating by the act.
	The agreement to sell between a buyer and seller of real estate is governed by the general principles of contract law. See Contracts. The Oklahoma Statute of Frauds requires that contracts for real property be in writing; oral real estate agreements are not enforceable. The Oklahoma Real Estate Commission has published a standard form real estate purchase contracts for residential transactions. Local Realtor associations have standard form purchase contracts for land, and commercial transactions, which may be used to transfer title to real estate. Customized land and commercial contracts are also commonly used.
A real estate professional may pre-qualify you to determine your appropriate price range and financing. It is not uncommon for commercial listings to require that offers be submitted with a pre-qualification letter from a lender or other form proof of funds. Most contracts contain a contingency that will cancel the contract if the lender denies a load or if the property does not appraise for a high enough value. Business Loans are required for commercial and investment properties. Residential mortgages are usually available for up to four-plex residential properties.
	The use of independent escrow accounts for the deposit of earnest money is required by Oklahoma Law. Escrow accounts may be established by either the real estate company or title and abstract companies.
Settlement is the formal process that accomplishes the transfer of ownership, which is accomplished by an impartial third-party, typically by an Abstract and Title Insurance company. In most cases the purchaser has the choice of settlement agent. The services normally provided for the purchaser include: review of the sales contract, assemble necessary information and documentation, review of title, review loan instructions, prepare and explain and record documents, receive and disburse funds, pay taxes, clear leans, report the transaction to governmental authorities as required by law, and issue title insurance. The *Closing* is the time that the deeds are signed that transfers ownership of the property, funds are received and disbursed. Funds are disbursed among he purchaser, seller, new and old lenders, real estate brokers, surveyors, condominium/home owners associations, utility districts (if applicable), termite inspector, property inspectors, and various taxing authorities. Documents signed at closing include: Note - evidencing the loan and setting forth terms of repayment Mortgage - pledging the property as security for the loan Disclosure of documents and other certifications required by lender Seller will execute a Deed and deliver possession of the property to buyer After the settlement, the settlement agent will record the Deed and Mortgage with the county clerk's office where the property is located. The title examiner checks up to the moment of recording to protect the purchaser and lender against intervening liens.
	Certified funds or wire transfers are required at closing. Disbursements are made when funds have been received by the settlement agent. The Federal Reserve Wire Network (Fed Wire) is typically used for domestic wire transfer payments, and the Clearing House Interbank Payments System (Chips) is typically used for international wire transfer payments. If a transaction is submitted to the Fed Wire before 2:00 PM, central time, it will be funded that day (funds may actually be received by the Settlement Agent that evening). Transactions submitted after 2:00 PM will be funded the next day. Most real estate purchase contracts are written such that possession does not occur until funding occurs.
The title to the property to be sold must be marketable. This requires that the seller have proof of title to all the property he or she is selling and that third parties do not have undisclosed interests in the title. In Oklahoma, part of the process of determining marketability is bringing the property's abstract of title up to date. An abstract is a summary of the public records relating to the title of a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase a clear, marketable and insurable title. The Oklahoma Standard Contract gives the seller of the property responsibility for bringing the abstract of title up to date. Based on the marketability of the title, a title insurance company may also insure the buyer against future losses caused by the title is declared imperfect. A buyer's title insurance policy is customary. A separate lender's title insurance policy is normally required if there is a mortgage on the property, usually purchased for a nominal fee if there is also a buyer's title insurance policy.
	The Oklahoma Standard Contract recognizes two different types of surveys prepared by a licensed professional land surveyor: a *mortgage survey* typically used in residential transactions involving platted land, and is the minimum required by the lender to verify the legal description of the property and discover potential encroachments. Mortgage surveys are typically paid for by the seller. a *PIN Survey* is a more extensive survey, typically used in commercial transactions or any transaction involving unplatted land. PIN Surveys are typically paid for by the buyer and are usually contracted on a time and material basis. Lenders may require a survey to follow ALTA standards, which include investigation of surrounding properties for easements and other items which might limit the buyers bundle of rights.
The most common method of financing real estate transactions is through a mortgage, which involves a transfer of an interest in the land as security for a loan or other obligation. The mortgagor (the purchaser of property) is the party transferring the interest in land. The mortgage, usually a financial institution, is the provider of the loan or other interest given in exchange for the security interest. Normally, a mortgage is paid in installments that include both interest and a payment on the principle amount that was borrowed. The mortgagor and the mortgagee generally have the right to transfer their interest in the mortgage. However, Mortgages typically employ due-on- sale and due-on- encumbrance clauses to prevent the transfer of mortgages.
	The Real Estate Settlement Procedures Act (RESPA) requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers. The US Department of Housing and Urban Development (HUD) has standardized forms used to describe costs associated with real estate transactions that must be used when government guarantees are used by funding organizations. These HUD-1 Settlement Statements have become a defacto standard used in real estate transactions.
Oklahoma follow the lien theory under which the legal title remains with the mortgagor (typically the owner of the property) unless there is foreclosure. Failure to make mortgage payments results in the foreclosure of the mortgage. Foreclosure allows the mortgagee to declare that the entire mortgage debt is due and must be paid immediately. If the mortgage is not the only lien on the property, state law determines priority. Failure to pay the mortgage debt once foreclosure of the land occurs leads to seizure of the security interest and it's sale to pay for any remaining mortgage debt. The foreclosure process depends on state law and the terms of the mortgage. The most common processes are court proceedings (judicial foreclosure) or grants of power to the mortgagee to sell the property (power of sale foreclosure).