Real Estate Mediation
With Deception, Comes Consequence
For transactions with a middleman that deceives both the seller and buyer, section 3543 of California’s Civil Code can break the tie where both parties are negligent, stating where one of two innocent persons must suffer by the act of a third (i.e., middleman), he, by whose negligence it happened, must be the sufferer. Huh? What does not mean in simple English?
In other words, if both parties are negligent in closing a sale after being deceived by the middleman, the one who is more responsible for the loss must suffer and bear the loss. That appears easier to understand, but the application of section 3543 depends on the facts.
First, being the victim of deception can be interpreted as negligence or unreasonable conduct, a rather sad commentary on our internet society that almost demands that you mistrust, confirm and verify everything you may be told. So it may not be enough to prevail by claiming there was no resisting the false promises or conduct of the middleman. Continue reading
Q: For a long time, my neighbor has used a trail across my backyard, even though I repeatedly told him he was trespassing. He recently told me that he would continue to use the trail and there was nothing I could do about it. Is he right, and what can I do to prevent his use of the trail?
A: There are many types of real property concepts that have continued since the middle ages, but a prescriptive easement is one of the more egregious types because it enables a person who is not an owner and who has repeatedly trespassed despite objections, to have the right to use the land together with the rightful owner. Once established, the prescriptive easement lasts forever, and must be disclosed as a cloud on the title to the property that can reduce the value of the property. Therefore, an owner must be vigilant when another person is repeatedly using the land. Continue reading
Q: I represent a buyer in a transaction where the seller has refused to close the escrow and has threatened to sell the real property to another buyer. The purchase agreement requires mediation of the dispute and the parties have agreed to arbitration, but what can be done to impede or prevent the seller from selling the property while the mediation and arbitration are pending?
A: Although the standard California Residential Purchase Agreement requires an attempt to mediate any dispute between the buyer and seller as a condition of recovering attorneys’ fees and may require arbitration to resolve any disputes, a court action is allowed to enable the recording of a notice of pendency of action, also known as a lis pendens, in order to preserve the status quo pending a resolution by the mediation or arbitration. Upon recording the lis pendens, notice of the legal action is provided to all persons who may search the title to the property, including prospective buyers. Continue reading
Q: I am a new agent and I want to guard against spending a lot of time representing a buyer and then learning that I may not be entitled to receive a commission because I am not considered the procuring cause of the successful transaction. What should I be aware of in order to maximize my chances of recovering a commission when I represent the buyer?
A: An issue that can arise between brokers and agents, and even lead to an arbitration, is a dispute regarding who is the procuring cause of a sale transaction and therefore entitled to the commission as the selling broker (i.e., representing the buyer). The California Model MLS rules provide that in filing a property with the MLS, the broker participant makes a blanket unilateral contractual offer of compensation to the other MLS broker participants for their services in selling the property. The rules provide that the broker’s contractual offer is accepted by the selling broker who procures a buyer that ultimately results in the creation of a sales or lease contract.
Therefore, by including the listing in the MLS, the listing broker (i.e., representing the seller) makes a unilateral contractual offer of compensation that is accepted by any selling broker that procures a buyer that results in a sales or lease contract. Although this is a relatively simple contractual arrangement, the difficulty arises when more than one broker participates with a buyer who presents an offer that is accepted by the seller. The dispute may arise when more than one broker contends that he/she was the procuring cause of the sale transaction and is entitled to the selling broker’s share of the commission. If the dispute is not resolved by the brokers, it can lead to an arbitration, the outcome of which is determined by the arbitrators’ consideration of various factors. Continue reading
Q: I recently purchased a residence and I signed a standard California Association of Realtors Residential Purchase Agreement. I now believe that there are defects in the home that were not disclosed to me by the seller and I want to file a lawsuit and recover my attorney fees. The Agreement has a provision for mediation, but do I need to request mediation before filing a lawsuit?
A: It depends. There is no requirement to mediate before filing a lawsuit against the seller or any broker involved in the transaction, unless there has been an agreement to arbitrate. If the parties agree to arbitrate and one of them files a lawsuit, the other party can file a motion with the court to stay the lawsuit and compel the arbitration.
However, pursuant to paragraph 26(A) in the recently revised C.A.R. Residential Purchase Agreement, both the buyer and seller agree to mediate any dispute or claim arising between them out of the Agreement, or any resulting transaction, before resorting to arbitration or court action. The mediation provision applies even if the parties have not agreed to arbitrate. The buyer and seller also agree to mediate any disputes or claims with brokers who agree in writing to such mediation prior to, or within a reasonable time after, the dispute or claim is presented to the Broker. Except under certain circumstances described below, any party who commences a lawsuit or arbitration without first attempting to resolve the dispute through mediation, or refuses to mediate after a request has been made, is not entitled to recover attorney fees even if they prevail. Continue reading