real estate purchase
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
Q: My real estate agent has told me that I have a duty to disclose to prospective buyers information about defective conditions in my house, but why do I need to disclose such conditions when the buyer is hiring a home inspector and has viewed the house during an open house?
A: Under California’s Civil Code and common law, a seller of real property has a duty to disclose any fact that materially affects the value or desirability of the property, including, but not limited to, the physical conditions of the property. If the seller is found to have breached the duty of disclosure, the seller may be held liable for actual fraud, negligence, and breach of contract, and may have to pay punitive damages and attorneys’ fees in addition to compensatory damages. The buyer does not need to ask about such conditions of the property; instead, the seller has the affirmative duty to volunteer the information. The duty of disclosure exists after the purchase contract is signed and continues until the escrow closes. In addition to the common law duty, completion by the seller of a transfer disclosure statement is required for all sales of residential property, and it provides a check list of the most commonly experienced conditions and required disclosures. Continue reading