"Doesn't a real estate agent have a legal responsibility to protect their clients interest, even if a sales contract cancels?"
Per the Agency Disclosure you signed (CAR Form AD), an Agent has Fiduciary duties to a client (A fiduciary duty is the highest standard of care possible). These can be boiled down to Loyalty, Obedience, Diligence, Disclosure, Accountability, and Confidentiality.
If an Agent does not act in a fiduciary capacity, THEN legal exposure can follow. If you believe this has occurred I would suggest you seek legal representation, but would first advocate you speak to the Agent's Broker first.
You can check the status of a DRE Licensee and locate their Broker (and past violations) here:
Seek a Real Estate Lawyer for legal advice.
â€œWe were 2 weeks into escrow and our FHA loan did not approve due to permit issues. â€œ
The term â€œPermit issuesâ€ is a little vague and hard to respond to, as these can be non-material and/or easily corrected to complete additions without City approval. More details would be constructive.
The sellers and both agents including the Broker overseeing both agents flew into a rage because I would not sign off on the contingencies.
â€œThe seller has refused to sign the escrow cancellation for 2 weeks now and my own agent wont talk to me. The property is already re listed as pending with a new buyer.The Broker is taking no action and I am left on my own with over $ 7,000.00 in loses.â€
1) How did you collect $7K in losses?
2) Para 26C(1) (Dispute Resolution-Exclusions) of the CAR RPA (4/10) allows the Buyer to go DIRECTLY to Small Claims Court, which typically in CA has a jurisdictional max of $7,500. [See Para 17B(2) for earlier version of the CAR RPA].
3) Para 14F of the CAR RPA (4/10) states, "14F. Effect Of Cancellation On Deposits: If Buyer or Seller gives written notice of cancellation â€¦.A Buyer or Seller may be subject to a civil penalty of up to $1,000 for refusal to sign such instructions if no GOOD FAITH dispute exists as to who is entitled to the deposited funds (Civil Code Â§1057.3)."
[capitalization added by poster]
Basically, the Seller has â€œ30 days following a written demand for the return of funds deposited in escrow by the other partyâ€ Civil Code Â§1057.3: http://law.onecle.com/california/civil/1057.3.html
â€œAre there no laws to protect against this sort of thing?â€
There is a whole body of contract law that protects against your situation, to include the CAR RPA both paries signed!
Best Regards, Steve
A legal Responsibility?
That is a legal question best answered by a real estate attorney.
I will say an ethical and fiduciary responsibility, yes
As you can clearly tell Dual Agency is no way to go.
It appears from what you wrote that the broker may have taken the sellers side and may have directed the agent who represented you to do nothing. I don't know. I would say I would highly doubt you would have this much difficulty if you had your own agent and brokerage representing you.
I believe a real estate attorney would love this and so would the Department of Real Estate.
I also believe that if you went the route of small claims you would get your money back just the same.
However, Keep in mind I have not seen all the facts and I am not an attorney and you definitely need legal advice.
Harold Sharpe - Broker
So Cal Homes Realty
California Department of Real Estate License # 01312992
I'm sorry to hear of this problem...especially in my own city. I think at this point you need to have a conversation with the local Board, the Orange County Association Of Realtors and see if you can get some direction. (949) 586-6800. Then you might need to speak to a real estate attorney and get him to step in. There are several remedies you have, and an attorney can advise you of your legal rights.
It's so sad that your agent did not take his/her fiduciary duties seriously....from what you say....but most agents are very loyal and competent......I'm sure you will find something better.
If you have any other questions...please shoot me a private email and I'd be happy to try and answer them for you.
After reading two of your questions and your additions in both...I'd agree that it is worth a consultation with a real estate attorney. At this point (from your point of view), there is no one looking out for you or your deposit. We are on the outside looking in and cannot offer legal advice to your situation. Get someone on your team (a real estate attorney) as soon as possible.
My question is...what happened after your agent knew about the FHA issue? I'm curious what was said and what he/she offered to you as options.
I hope your next update includes that you have spoken with a real estate attorney.
Good luck on resolving this!
Best of Luck,
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END Transactions in our Brokerage. There is NO benefit to the Seller or Buyer and only benefits the Agent. Also, NEVER use your RE Agent / Broker as your Lender or vice versa. Also, be careful when using Real Estate Broker-owned Escrow and Title Companies - they can be loads of trouble.
888-391-5245 Direct Cell
Clearly an agent has responsibility and better yet his broker especially when there is significant conflict of interest.
You definitely file a complaint with the DRE as well as get an attorney.
The fees will likely get reimbursed as you have a strong case.
Oh my goodness! First, I'm so sorry you are going through this...home buying is stressful enough without this added drama. You did the right thing in not signing off on the contingencies before you had loan approval. I agree with the advice you've been given to talk with an attorney. At this point, you need to extricate yourself from this deal and get back your money before really dealing with another real estate agent. The good news is you are indeed protected in many ways.
Good luck and please don't let this experience sour you on finding the right home for you and your family. Hopefully next time, you are able to find an agent that really looks after your best interests--there are many of us out there! Sounds like you're definitely due some good news...
Did escrow disclose to you that there would be a $1,000 cancellation fee? Did you ever agree in writing to a cancellation fee? Call the attorney Steve Zipperman as recommended, and ask about filing a lis pendens.
Otherwise, sit in the Brokers office until you get satisfaction. Also, it doesn't sound like this property even qualifies for an FHA loan, why did your agent allow you to make an FHA offer on a property without permits.
Ask the Broker why his/her agent didn't warn you about what happens when an FHA appraiser comes to the property and calls out these repairs, and the loan won't go through. That Broker is your representative as well as the seller's so sit on them til they make you happy!
You have quite a bit going on here and it sounds like some "strong arm tactics" are in play with the dual-agency broker who also owns the escrow company.
Re: Small Claims, as I stated in my answer below:
"2) Para 26C(1) (Dispute Resolution-Exclusions) of the CAR RPA (4/10) allows the Buyer to go DIRECTLY to Small Claims Court, which typically in CA has a jurisdictional max of $7,500. [See Para 17B(2) for earlier version of the CAR RPA]."
Re: The escrow companyâ€™s ability to charge a cancellation fee:
The State of CA's Department of Insurance Bulletin No. NS-35E (dates back to 1965-66) allows the Escrow company to charge a fee. See: http://docs.Steven-Anthony.com/NS-35E_EscrowCancellationFee.pdf
Personally, and I suppose depending if you signed the first cancellation already, I would send an email instructing your agent to resend the cancellation and under 2D indicate that 100% of Buyerâ€™s deposit be returned to place the $1,000 cancellation fee in dispute. By the way, you might want to bring up where such fee was disclosed to you before engaging their services and to show where you signed your acceptance to such a fee.
I would strongly suggest an initial consultation with a RE Lawyer. After the meeting you can decide on what to do. Hiring the Lawyer to first write a letter to the appropriate parties may act as a strong enough "shot across the bow" to get them to act responsibly. If not, I would next consider initiating a Small Claims action. Lastly (due to the extended timeline before resolution might be determined) have the RE Lawyer file suit. I'm sure the DRE would also be interested in hearing from you: http://www.dre.ca.gov/cons_complaint.html
One thing is for sure â€“ you need to start looking out for your own interests because, in my opinion, it sure appears your Agent may not be.
Please take some time and some heart that the contract has protections for you and if you prevail there are penalties and damages for a seller who improperly hold your depost. Unfortunately your agent can not help in a contract dispute (the reason is that you and the seller now have legal rights that may not be explicitly detailed in the contract requiring the services of a legal professional. An agent performing dipute resolution is perfoming the services of an attorney...so we are told...)
Nov. 9, 2010 escrow opens. On Nov. 24 the FHA underwriter asks to see the TDS. My agent calls my LO to inform him that there may be a problem because she wrote in her sec. IV agents disclosure that she was aware that I had called the city and found that the kitchen remodel including removal of a load bearing wall had the initial permits issued, but final inspection never performed and permits expired. She also wrote in the TDS that I had already obtained a termite inspection and a roof inspection. My 17 day contingency period was up on Nov. 26 (day after Thanksgiving) The following Monday 11/29 seller starts pushing for me to sign off on the contingencies, even though they know my loan approval is highly unlikely. On Nov. 30 the underwriter asks for the termite and roof reports and for the appraiser to investigate the permit issue. Since these issues cant possibly be remedied by the Dec. 9 closing date we have to cancel the loan app. and pursue another lender who hopefully wont ask for the TDS. Did I mention that the sellers agent and by agent are both under the same Broker? Now the the broker gets involved, and says they will only ask for an extension to the short sale approval if I sign all the contingencies except for the loan contingency. Since there are conditions with the house and now interest rates have gone up 3/4% in 1 week I have conditions regarding the house and the interest rate that I want modified in the contract. The broker agrees but then balks when I ask for it to be put in writing. By now it is 12/3 and my own agent sends me an e mail informing me that I am already in breach of contract and demanding that I sign the contingencies within 2 hours or the contract is canceled. 2 hours come and go and I get an email from the broker owned escrow company with instructions canceling the escrow and charging me $ 1,000.00 cancellation fee. I have $ 5000.00 on deposit and have paid $ 1200.00 for appraisal and inspections. Now it looks like I have to pay thousands more in good money after bad, to try and get my deposit back. I signed the arbitration clause in the sales agreement, so I don't even know if I have the option of filing in small claims court...
We were 2 weeks into escrow and our FHA loan did not approve due to permit issues. The sellers and both agents including the Broker overseeing both agents flew into a rage because I would not sign off on the contingencies. The seller has refused to sign the escrow cancellation for 2 weeks now and my own agent wont talk to me. The property is already re listed as pending with a new buyer. The Broker is taking no action and I am left on my own with over $ 7,000.00 in loses. Are there no laws to protect against this sort of thing?
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I am not completely familiar with the details of your particular transaction nor am I able to review the documents related to it. These are my general thoughts and are no way intended to create an agency relationship or to substitute for advice from a legal professional.
I would contact the escrow company that was handling your transaction and find out exactly what the status is of your deposit just to double check that it had not been released to the seller.
I would also inform the escrow company that you believe that the property in question is now being sold to someone else and try to verify that another escrow has or has not been opened on this property while your escrow is still open.
Explain this entire situation to the escrow company handling your transaction and see what they suggest you do to get your deposit back. (Contact the escrow company's legal department if necessary.)
After you get an answer on these two items above and find out the escrow company's opinion of this matter, I would contact a real estate attorney. Be prepared to supply a copy of your California Residential Purchase Agreement and Joint Escrow Instructions (FORM RPA-CA) signed by both the buyer and seller along with any other contract addenda.
I suspect you will either have to go to mediation with the seller or to small claims court based upon who has jurisdiction over this dispute. (A $7,000 deposit may be too much for your local small claims court to deal with.)
I hope my answer helps and best of luck to you.
Please let us know how this situation works out.
Thanks for your question,
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As seen in the Orange County Register: http://www.ocregister.com/articles/received-278704-funds-fri
First of all, I am not an Attorney, but I am a Licensed Real Estate Broker in the State of California.
My first question is: what do you mean "permit issues"? Do you mean that the property lacked permits or what? Did you perform your investigative rights and did you remove, specifically that contingency? Second, please confirm whether you were in a "Dual Agency" transaction whereas the Broker had a fiduciary responsibility to both Buyer & Seller? Notwithstanding the particular's of your transaction, it is well known that if the Buyer hasnt removed ALL contingencies, the buyer has minimum, if no risk. In regard to release of deposit, it might be appropriate to review 14F of the CA-RPA (Purchase Agreement). Good luck!
At this point your focus should be on the broker he/she is ultimately the one who needs to answer for the actions or lack of actions. An attorney could be the way to go but I would imagine you are tired of shelling out money on this. I suggest you start by filing a complaint against the broker with the Department of Real Estate at: http://www.dre.ca.gov/cons_complaint.html
I also suggest you put pressure on the escrow company to do their part in getting this resolved with the broker.
Good luck and sorry, this sounds like a nightmare.
If your purchase was contingent on you getting full FHA approval, and you did not, then funds should be refunded back to you minus a small administration escrow charges.
If your loan did not approve then you should be able to obtain your money back especially since you did not sign off on continginces. Sounds like you need a new agent since yours will not talk to you. I can be reached at 949-201-6887. My office is in Mission Viejo, CA.
As far as the Realtor having a responsibility to protect you I am not sure what they have violated since you say the FHA loan was denied and that you won't sign some contingencies. It sounds like you and the FHA are driving the bus and not the agents. What are we missing?
Sorry to hear this and it sounds strange. FHA has certain guidelines that are known to lenders. Normally if FHA financing cannot be obtained, there are other routes to take. Consumers are well protected in the state of California.
If your purchase documents had a loan contingency, you are protected. I would now recommend you speak to a lawyer about your options.