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Real Estate Malpractice

Fairfax Injury Lawyer Brien Roche Addresses Real Estate Malpractice

Brien Roche

Real Estate Malpractice-Role Of The Agent

Real estate malpractice i.e., malpractice by a real estate agent is a form of professional malpractice. The claims bear some relationship to a legal malpractice or medical malpractice case in that typically the plaintiff would need to prove what the standard of care is.  The standard of care may be governed by the real estate regulations, state code or simply what another expert in the field of real estate says is the standard of care.

The relationship between a real estate agent and a seller typically is governed by a Listing Agreement.  As such that Listing Agreement is in large measure going to define what the duties are or the standard of care is.  If for some reason there is no Listing Agreement then the standard of care may be established by professional testimony.

As to a buyer there may be a Buyer/Broker Agreement between the real estate agent and the buyer which again determines what the duties are of the real estate agent.

Some common areas where real estate agents get themselves into trouble in terms of dealing with buyers and sellers are:

  • failing to properly describe the property that is being listed for sale.  For instance if the seller informs the agent that the property has certain characteristics and those characteristics then are not set forth in the sales information available to the public then there may be some liability on the part of the agent;
  • if the agent fails to properly convey all offers and demands for settlement then there may be liability on the part of the agent;
  • if the agent incorrectly explains certain contract provisions to the buyer or seller, there may be potential liability in that regard.  The sellers or buyers however are expected to read the contract documents and to understand them and if they don’t understand them then it is expected that they would ask questions of the agent.  The agent is not an attorney and therefore cannot necessarily interpret the contract.  Most real estate contracts however are prepared by the local Board of Realtors and as such they are form documents.
  • sometimes zoning issues can arise as part of a real estate transaction.  Again the real estate agent is not expected to be a zoning attorney but it is important that the real estate agent not mislead either buyer or seller as to certain obligations that may apply to streams or bodies of water that are nearby, set-back issues or right to build issues.  The Listing Agreement and/or Sales Contract typically would cover these matters and clearly put the burden of investigation on the buyer or seller as to those issues.

As is true with legal malpractice cases, frequently in a real estate malpractice case the core issue becomes not so much whether or not the agent was guilty of some act of negligence but what exactly did that negligence cause?  For instance if an agent is accused of having failed to make some disclosure about the property that the agent knew of then the issue becomes what exactly did that cause?  It obviously didn’t cause the underlying damage.  It may however have caused the buyer to buy a property that the buyer otherwise would not have bought.  In the alternative it may have caused the buyer to incur certain expenses that the buyer had not otherwise anticipated.  Those issues of causation can be tricky issues and frequently become the focal point of a claim against a real estate agent.

Within a real estate malpractice case there may in some instances be a defense of contributory negligence or breach of contract by the plaintiff who is bringing the claim.  That breach of contract or negligence may consist of the fact that the plaintiff failed to properly read the contract documents or failed to obtain their own professional assistance either in the form of a lawyer, architect or otherwise.

Real Estate Malpractice-Property Conveyances

In the early 1990s the mortgage industry undertook to form an entity known as the Mortgage Electronic Registration System (MERS) which  eventually came to hold thousands of mortgages.  The idea was that this central electronic clearing house would allow companies to transfer thousands of mortgages electronically thereby speeding up the process by which loans could be bought and sold and further simplifying the process by which mortgages could become the security for mortgage backed securities.  The time consuming  process of having to record assignments of mortgages at local courthouses was slowing down the process by which mortgages could be signed and by which they could be bundled into securities.

As this process developed, it became unclear as to who actually was the holder of the promissory note or mortgage and/or deed of trust that on paper represented the security for the original lender.  Mortgage bankers over time decided that for purposes of simplifying their record keeping MERS would become listed as the nominee for the mortgage holder.  When the loans changed hands the new owner or servicing company would register the transaction electronically in the MERS system without having to record the transaction at the local courthouse.  That left MERS in a situation where it was the owner of record of  many mortgages and when these mortgages went into foreclosure it  then had to initiate the foreclosure action.  MERS did not have the man power to accomplish that and so it then authorized employees of the mortgage companies to, in effect, sign its name to the foreclosure documents to begin the foreclosure process.  This raised the question of whether or not the intervening transfers that were not recorded at the local courthouse invalidated a subsequent transfer by MERS to the mortgage company that currently held the obligation.

All of this creates a potentially interesting problem for any lawyer involved in any of these transactions, whether it be on the transferor end or on the transferee or on the end of  defending against an attempted foreclosure.  It may be that any of these mortgages held by MERS are in effect unenforceable  unless the chain of title of transfers can be clarified and properly recorded.

Although these types of matters should not involve the real estate agent, sometimes the agent can get entangled in these thorny issues.

Real Estate Malpractice-Look to The Lawyer

Real estate malpractice may be a form of legal malpractice.For more information about real estate malpractice and related topics dealing with legal malpractice see the other pages within this site. For more information on legal malpractice see the pages on Wikipedia.

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Real Estate Malpractice

Fairfax Injury Lawyer Brien Roche Addresses Real Estate Malpractice

Brien Roche

Real Estate Malpractice-Role Of The Agent

Real estate malpractice i.e., malpractice by a real estate agent is a form of professional malpractice. The claims bear some relationship to a legal malpractice or medical malpractice case in that typically the plaintiff would need to prove what the standard of care is.  The standard of care may be governed by the real estate regulations, state code or simply what another expert in the field of real estate says is the standard of care.

The relationship between a real estate agent and a seller typically is governed by a Listing Agreement.  As such that Listing Agreement is in large measure going to define what the duties are or the standard of care is.  If for some reason there is no Listing Agreement then the standard of care may be established by professional testimony.

As to a buyer there may be a Buyer/Broker Agreement between the real estate agent and the buyer which again determines what the duties are of the real estate agent.

Some common areas where real estate agents get themselves into trouble in terms of dealing with buyers and sellers are:

  • failing to properly describe the property that is being listed for sale.  For instance if the seller informs the agent that the property has certain characteristics and those characteristics then are not set forth in the sales information available to the public then there may be some liability on the part of the agent;
  • if the agent fails to properly convey all offers and demands for settlement then there may be liability on the part of the agent;
  • if the agent incorrectly explains certain contract provisions to the buyer or seller, there may be potential liability in that regard.  The sellers or buyers however are expected to read the contract documents and to understand them and if they don’t understand them then it is expected that they would ask questions of the agent.  The agent is not an attorney and therefore cannot necessarily interpret the contract.  Most real estate contracts however are prepared by the local Board of Realtors and as such they are form documents.
  • sometimes zoning issues can arise as part of a real estate transaction.  Again the real estate agent is not expected to be a zoning attorney but it is important that the real estate agent not mislead either buyer or seller as to certain obligations that may apply to streams or bodies of water that are nearby, set-back issues or right to build issues.  The Listing Agreement and/or Sales Contract typically would cover these matters and clearly put the burden of investigation on the buyer or seller as to those issues.

As is true with legal malpractice cases, frequently in a real estate malpractice case the core issue becomes not so much whether or not the agent was guilty of some act of negligence but what exactly did that negligence cause?  For instance if an agent is accused of having failed to make some disclosure about the property that the agent knew of then the issue becomes what exactly did that cause?  It obviously didn’t cause the underlying damage.  It may however have caused the buyer to buy a property that the buyer otherwise would not have bought.  In the alternative it may have caused the buyer to incur certain expenses that the buyer had not otherwise anticipated.  Those issues of causation can be tricky issues and frequently become the focal point of a claim against a real estate agent.

Within a real estate malpractice case there may in some instances be a defense of contributory negligence or breach of contract by the plaintiff who is bringing the claim.  That breach of contract or negligence may consist of the fact that the plaintiff failed to properly read the contract documents or failed to obtain their own professional assistance either in the form of a lawyer, architect or otherwise.

Real Estate Malpractice-Property Conveyances

In the early 1990s the mortgage industry undertook to form an entity known as the Mortgage Electronic Registration System (MERS) which  eventually came to hold thousands of mortgages.  The idea was that this central electronic clearing house would allow companies to transfer thousands of mortgages electronically thereby speeding up the process by which loans could be bought and sold and further simplifying the process by which mortgages could become the security for mortgage backed securities.  The time consuming  process of having to record assignments of mortgages at local courthouses was slowing down the process by which mortgages could be signed and by which they could be bundled into securities.

As this process developed, it became unclear as to who actually was the holder of the promissory note or mortgage and/or deed of trust that on paper represented the security for the original lender.  Mortgage bankers over time decided that for purposes of simplifying their record keeping MERS would become listed as the nominee for the mortgage holder.  When the loans changed hands the new owner or servicing company would register the transaction electronically in the MERS system without having to record the transaction at the local courthouse.  That left MERS in a situation where it was the owner of record of  many mortgages and when these mortgages went into foreclosure it  then had to initiate the foreclosure action.  MERS did not have the man power to accomplish that and so it then authorized employees of the mortgage companies to, in effect, sign its name to the foreclosure documents to begin the foreclosure process.  This raised the question of whether or not the intervening transfers that were not recorded at the local courthouse invalidated a subsequent transfer by MERS to the mortgage company that currently held the obligation.

All of this creates a potentially interesting problem for any lawyer involved in any of these transactions, whether it be on the transferor end or on the transferee or on the end of  defending against an attempted foreclosure.  It may be that any of these mortgages held by MERS are in effect unenforceable  unless the chain of title of transfers can be clarified and properly recorded.

Although these types of matters should not involve the real estate agent, sometimes the agent can get entangled in these thorny issues.

Real Estate Malpractice-Look to The Lawyer

Real estate malpractice may be a form of legal malpractice.For more information about real estate malpractice and related topics dealing with legal malpractice see the other pages within this site. For more information on legal malpractice see the pages on Wikipedia.

Contact Us For A Free Consultation

Contact Us For A Free Consultation