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My seller has an upside down house. She said to her agent that she has cash to close. So the agent didn't advertise it as a short sale.
Fast forward 2 months. We bought the house and the closing is in 2 weeks. But now the seller says she doesn't have money to close (we think she's lying) and applied for mitigation through her lender last week. The listing agent was kept in the dark and was notified by my attorney of this situation yesterday.
Even though the listing agent is working for the seller, I have no intention to harm this agent. She has done several things for me such as providing the floor plan, notifying me that the original contract fell apart during my house hunt trip.
Suppose I'm really pissed off by this situation and want to report this misrepresentation to the broker in charge. Can the agent get into trouble? Somebody is in fault because of misrepresentation. Obviously it's the seller but is the agent also liable?
The reason why I want to know this is because I'm thinking of using the agent to persuade her client to close per contract.
Of course, the first line of attack on the seller is through my attorney (closing agent).
The seller doesn't have her own attorney. Since my attorney represents me not the seller, I thought using the seller's agent could be more effective.
I don't want the listing agent to get into any trouble. She has been truthful to me from day one. Okay, if the agent is not liable, then at least she has the same incentive as others to force the contract on the seller. I'm sure the agent is on our side for that matter.
If the seller lied to the agent, can the agent enforce anything upon the seller? How are you (real estate agents) protected?
Suppose you spent X number of dollars advertising and Y number of hours. If the contract falls apart because of the seller's misrepresentation, how will you get compensated? Will you still earn the commission because you have done your job? I think you should.
If so, this can be an effective method to convince the seller to abide by the contract. What do you think?
Yes. The listing agent and the selling agent for that matter can be found liable for misrepresentations. That's why we carry errors and ommissions insurance. And...you as the seller or buyer can be held liable for what your agents say/do (if you sign a contract with them and they are your 'agent'). That's why it is very important for everyone to make sure of the facts. The agent, while the seller may have changed direction in midstream, would have been better to have verified the funds to close. As should have your agent or attorney. The agent represented as fact that the seller had the funds to come to the table. Now you are being told it's false. You purchased the house based on the information you were given by the agent. You may very well have been harmed.
It's one of the reasons that you see a lot of transaction brokers now. They are less liable for what their customer does. And in turn the customer is less liable for what the Realtor® does.
Edit: by the way, I'm not an attorney and I'm not giving legal advice. It's important to remember there can be liability on all sides of a transaction where you are an agent or you are represented.
My listing contract states that my seller's hold me harmless and will DEFEND me in case I pass along their misrepresentation. The seller is responsible for my legal fees in my listing agreement if they misrepresent something to me.
I also have in my contract that if the seller misrepresents facts and contract is terminated they pay my fee.
What happens here depends on the personality of the real estate agent.
Yes. The listing agent and the selling agent for that matter can be found liable for misrepresentations. That's why we carry errors and ommissions insurance. And...you as the seller or buyer can be held liable for what your agents say/do (if you sign a contract with them and they are your 'agent'). That's why it is very important for everyone to make sure of the facts. The agent, while the seller may have changed direction in midstream, would have been better to have verified the funds to close. As should have your agent or attorney. The agent represented as fact that the seller had the funds to come to the table. Now you are being told it's false. You purchased the house based on the information you were given by the agent. You may very well have been harmed.
Thank you for reminding everyone that anyone can be sued and there is no certainty of the outcome.
Having said this, the only real protection would have occured if contract required the seller to puts funds to close in an escrow account. This veriification of funding stuff can create a false sense of security.
One bad day in the stock market and all of a sudden, there is a shortage of funds to close.
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