Real Estate Attorney? (Austin, Howe: foreclose, buyer, subdivision)
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You misunderstand my reasoning. If I represent a buyer, I am their attorney. I have no duty to the seller. I am not trying to look out for the seller's interest. I'm not trying to make sure that the seller gets as good of a deal as my client. It's nowhere near comparable.
If the TREC contract is so great, why did TAR come up with its own form? (And incidentally, which do you use?)
Why do the TREC forms change frequently? They aren't perfect. Yes, they serve a purpose - mainly to make everyone feel good that the other person isn't trying to get a "better" deal. But to tell a buyer that the forms are the equivalent of a contract that has been prepared by the buyer's attorney is just inaccurate.
There are numerous "problems" with the TREC form which could be the subject of an entire thread on their own. But just to point out one: if there is a restrictive covenant that the buyer can't live with, the buyer has no right to terminate as long as the covenant is common to the subdivision. Ridiculous. Yeah, you probably have a separate option period and termination right, but often times the option period is short, and what if there is a delay with the title work? If someone could explain to me why common deed restrictions should not be subject to the title review period, I'd love to hear it. (Apologies to the OP for hijacking.)
You've hit the nail on the head many times in this thread. First of all, the homebuying process is absolutely fraught with deception. How many years did buyers purchase homes thinking "their" agent represented them rather than the seller?
How about those title companies? Restrictive covenants are excluded from title coverages as are changes to restrictive covenants. In fact, there is no obligation for the seller or title company to even provide the buyer with a copy of the restrictive covenants. At best, the buyer typically only receives a vague reference to them in a title commitment. A "resale certificate" is frankly a scam promulgated by the management companies that promote them as a service for HOA properties. The management companies bear little liability for false or omitted information. The buyer is left holding the bag.
How about notice of an involuntary HOA? A significant percentage of homes are sold where the Buyer had no knowledge of an HOA or even was assured that there was NO HOA. Does that statement at the bottom of every listing proclaiming "All information furnished is from sources deemed reliable, but no warranty or representation is made by company or its agents as to its accuracy. Buyers and Buyer’s Agents are encouraged to verify all information before purchase".
The other myth about "notice" and "bargained-for" with respect to restrictive covenants is the false assumption that you get to keep what you purchased. To the contrary, particularly in any HOA subdivision your home may be subjected to ever more restrictions without your consent and without any grandfathering. You do not have the ability to convey what you purchased, or alternatively what you purchased was not what you were led to believe that you would own. Many of these declarant-controlled HOAs, for example, are saddling properties with transfer fees and additional obligations that no owner would willingly agree to. Even in non-declarant subdivisions with HOAs, the "unseen" may be the deal-killer. A frequently experienced problem in many of these HOAs is that they become personal fiefdoms for Board members and members' use and enjoyment of their own property is severely curtailed from what they purchased.
How about the "priority of payment" scam where the HOA re-characterizes your assessment payments primarily for the benefit of the vendors of the HOA. Is a Realtor going to put you on notice of that? No way. It's rather difficult to sell homes in a subdivision when buyers become aware of the extortion racket engaged in by the management company.
How about the marketing gimmick of labeling items as "common interest" or "common property". The buyer is often led to believe that they have a "common interest" or that they have an ownership interest in some subdivision amenity. This is absolutely false and is used to fool buyers into paying artificially inflated prices for real estate. The amenity is not "yours", it belongs to the HOA. The only "interest" you have is a common liability. However, "common interest" sells better than "common liability". Perhaps the attorney will do a more accurate job of DESCRIBING the property rather than HYPING the property.
Think a restrictive covenant gives you the right to vote? Well, a Bylaw can take it away. Moreover, the bylaws can often be changed by just the Board members in these places. As Austin-Willy pointed out, a Realtor cannot practice law and only gets paid when the place is sold. The Realtor is NOT going to point these things out.
Each profession has their roles - mostly mutually exclusive. The Realtor will help identify the property meeting the Buyer's criteria. The Realtor will also help the seller market the property with the appropriate spin. The Seller's Realtor never represents the Buyer and the Buyer must be aware that the Realtor they are working with might not actually be representing the Buyer either. Buyers must establish whether the Realtor they are working with has an agency relationship with the Buyer or the Seller.
The attorney hired by the Buyer, on the other hand, can only represent the Buyer and is the only one licensed to represent the Buyer with respect to interpreting the sales contract and any restrictions burdening the real estate. An attorney should you understand the fallacies of relying upon the restrictive covenants, the liabilities associated with the real estate, and the myths often used to hype or market some of the real estate.
I'm not trying to imply that all real estate agents are unscrupulous or that all real estate attorneys are competent angels. A buyer should be able to rely on a good real estate agent to help identify properties that meet the buyer's criteria as well as put them on notice of some of the "unseen" issues. A buyer should consider, however, the interest of the various "stakeholders" in the transaction being contemplated. Although you are not required to use an attorney, you might consider whether your interests are really aligned with those of the owner, the title company, and real estate agents and brokers. Oh and be more than a little cautious if the attorney is getting a cut of the title policy premium. In my opinion you should avoid such a transaction like the plague.
Last edited by IC_deLight; 05-31-2008 at 03:50 PM..
Willy, I've answered your question already, but you haven't really answered mine. And I've worked for and with attorneys long enough and been trained well enough by them in the past to recognize that when I see it.
You clearly think that the contract and the entire set-up of actually having agents and not attorneys handle basic residential real estate deals is flawed. So I'm asking you, describe for me what you would have done, not in the current set-up, but in your ideal world. I suspect strongly that it would involve only attorneys writing offers, because you're an attorney, but I'm willing to give you the benefit of the doubt if you're willing and able to describe your ideal.
Very thoughtful post and well written without any personal attacks. Good job.
Yes every profession has it's crooks and bottom feeders. It's a shame each industry can find a foolproof way to eliminate the unscrupulous. Many times the money and power issues override any clients best interest.
Overall at least there are licensing, codes of ethics and penalties that attempt to keep many occupations clean.
Quote:
a Realtor cannot practice law and only gets paid when the place is sold. The Realtor is NOT going to point these things out.
This I disagree with. Many smart agents explain to their buyers how and when they get paid. I always tell my clients from day one, when we are explaining agency that I am not a lawyer and cannot give legal advice. Good agents have nothing to hide.
Yes, we are required, by law, to explain agency in Texas upon first meeting with a client. In our office, we're also required to give the handout prepared by TREC that explains it in pretty clear language, and to get another copy signed that acknowledges that we gave them the information. Our broker is so serious about that that we won't get paid unless we have a signed copy in the file at closing. This is also where I FIRST say that I'm not an attorney and can't give legal advice. It's part of the procedure.
Yes, there are less than competent and less than ethical practitioners in every field (including the law, by the way - a law degree and license is no guarantee of competence or ethics, either). They are, sadly, with us always, and have been for a very long time (thus caveat emptor which has been the rule of thumb for so long that it's in a language that's been long dead). But the reaction of throwing the baby out with the bathwater has never been proven to be a particularly good or well-thought-out one, in my experience.
HorseLady, if you're going to go with the answer that a buyer does, in fact, get to object to the subdivision restrictions, then you don't understand the contract, which is not a terrible criticism. As you have admitted, agents are not qualified to interpret contracts. Which only highlights the risks that buyers face when they believe an agent's insistence that the forms are appropriate for their transaction.
If we are all looking out for the client's interest, I would think agents would be quick to tell a buyer that there may be significant flaws with the contract once these flaws are brought to their attention, or at least that other people who are trained to understand contracts believe that there are flaws.
With respect to your question, if you read my first post on this thread you should have an idea of what I would recommend. Agents and attorneys have different qualifications, expertise, and motivations / incentives, and therefore different roles, ideally. You keep trying to characterize me as having a grudge against agents or wanting them to be excluded from transactions, but that is just your imagination. It simply is ethical, IMO, to be up front about the financial incentives and potential conflicts of interest that are present in agency representation.
This I disagree with. Many smart agents explain to their buyers how and when they get paid. I always tell my clients from day one, when we are explaining agency that I am not a lawyer and cannot give legal advice. Good agents have nothing to hide.
You misunderstood the post you quoted (out of context). The entire quote was:
"Think a restrictive covenant gives you the right to vote? Well, a Bylaw can take it away. Moreover, the bylaws can often be changed by just the Board members in these places. As Austin-Willy pointed out, a Realtor cannot practice law and only gets paid when the place is sold. The Realtor is NOT going to point these things out."
The "things" the agent is not going to point out are the risks with the restrictive covenants.
or at least that other people who are trained to understand contracts believe that there are flaws.
How many lawyers are on the broker lawyer committee that creates the contracts? I would assume they've worked years to make our contracts the best they can. With all your displeasure on our contracts have you ever tried to be involved in making improvements to the promulgated forms?
I wonder if you had 10 lawyers who were trained to understand contracts if you'd have at least 7 that had various opinions and interpretations. I would think any contract an attorney creates, another attorney would consider flawed. IMO such things keep you guys in business.
I agree with Rakin (based on my own experience working with attorneys). After all, if attorneys all agreed on what makes a great contract, there wouldn't be any need for more than one attorney (and your criticism of the real estate contract promulgated by TREC and written by their attorneys would be invalid because it would, by definition, having been written by attorneys, be a great one). And, yes, then you'd (and the entire court system, come to that) be out of business, because all would agree on what the law says. That you have a profession proves that that's not the case.
The contracts we use are given to us by the states legal system. We do the best with them that we can, if the contract is flawed it seems like you guys would work to make them better.
You're both making the case that a buyer should be represented by an attorney, whether you know it or not.
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