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Ensuring a Smooth Buying and Selling Process – No Lawsuits!

Posted by janepeters on October 4, 2009
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When selling a home disclose, disclose, disclose.

The most lawsuits arising after close of escrow would seem to be directed at agents who do not disclose known issues affecting the condition of the property in question.

Water intrusion leading to mold are high on the list, followed by sewage systems, whether septic tanks or city sewer lines.  Also misstated square footage can lead to legal problems.

Foreclosure sales, i.e. bank-owned properties, are frequently involved in these kinds of suits, as the property often has not been maintained. Unfortunately, neither the bank nor the agent representing them would necessarily have knowledge of such problems. A Buyer needs to be extra diligent in these cases.

What is known, possibly from a previous buyer’s inspection needs to be disclosed.  What an agent may suspect through a visual inspection, needs to be disclosed,  in this case as a suspicion, for further investigation.

And, above all, the buyer must do his or her own due diligence through the Buyer’s Inspection and subsequent inspections recommended by the Inspector. If there is any doubt inspect, inspect, inspect.

With regards to square footage, In Los Angeles as agents we rely on the information received from Public Records, and make no claim to its accuracy.  If exact square footage is an issue for a Buyer then maybe they should hire and Appraiser.

If you find the section about area schools blank or filled with “Check with City”, this is because the agent cannot be responsible should the house in question fall outside a particular school district.

When representing the Seller in a multiple-offer transaction, care needs to be taken to treat each offer equally.  Present them, give an educated opinion of each offer, such as credit-worthiness, reasonableness of the offer, etc. and let the Seller decide.  Do not play offers against each other in order to increase Buyer competition. And absolutely do not let a Buyer’s agent know the terms of a competing offer.

Dual Agency, representing both the Seller and a Buyer, needs to be handled with special care.  The agent’s fiduciary duty is to both parties and he or she must remain neutral.  Some agencies prohibit dual agency.

RESPA, the Real Estate Settlement Procedures Act, is there to protect Borrowers from unfair loan settlement fees.  Agents should be careful when recommending lenders as this is an area where they can be accused of taking referral fees and thus having a financial interest in the transaction.

As agents we owe a fiduciary duty (a relationship of confidence or trust) to our clients, and every effort should be made to maintain that trust.
 

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