Attorney Comments
By Dave Freeman, Association Counsel
Buyer’s Broker Agreement Recently, a buyer asked his good friend to represent him in making an offer on a $65 million property. Since they were friends, NO WRITTEN COMMISSION AGREEMENT was executed! After a couple of offers and counters around $42 million were made, the buyer consulted with his attorney (near Arcadia), and the deal was ended. Sometime later, the same buyer bought the same property for approximately $46 million, using the same attorney as his broker. The original agent/broker/friend sued for the $925 thousand commission, and lost! The Appellate Court made it clear that the Statute of Frauds requires any agreement concerning the sale of real property to be in writing to be binding. Unless you have nothing better to do with your time and gas, be aware, many folks will use you to show them property and then have their relative, attorney or friend write the transaction up for them and receive the commission. Please get the CAR Buyer’s Broker Agreement signed, before finding your buyer their dream home.
Escrow Company Disappears with Clients’ Money This happened recently with a small, apparently broker-owned escrow company, whose name was very similar to a large, well respected escrow company. Buyers lost their (sometimes life savings) money, and agents and brokers are threatened with lawsuits. Rule: A. Don’t push your clients toward a particular escrow unless you know they have been around for some time and are likely to be here tomorrow. Title company escrows are covered by insurance companies, independent escrows are generally bonded and insured and audited by the Department of Corporations/ Secretary of State. Broker-owned escrow companies operate separately from the above, and under the Broker. B. Review your own Errors and Omissions Insurance to be sure you are actually covered and that you can live with the amount of the deductible that you must pay before the insurance kicks in.
Judgment Liens It is a good idea to check the Preliminary Title Report as soon as the escrow is opened (or sooner, if representing the Seller). Various clouds on title may show up that the Seller is reluctant to disclose, or may have forgotten. A perfect example is the Judgment Lien. When a party gets a judgment (even a small claims judgment) against another, they can get an Abstract of Judgment, that can be recorded. When recorded, this becomes a lien against the losing party and any real property they own, now or in the (limited) future, until the lien is paid. The abstract can be recorded in as many counties in California as desired. The lien is good for ten years from the date of entry of Judgment, but the Judgment and the lien can be renewed before the ten years is up. A Judgment of Divorce, requiring spousal or child support can also be recorded, and will be a lien, not limited by the ten year requirement.
MARCH/APRIL 2017 · ARCADIA REALTOR®
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