BROKER DOES NOT DISCLOSE HOUSE IS UNDER LITIGATION -IS THIS ETHICAL??
We put in an offer to buy a wonderful landmarked house which we were told the sellers (heirs) were eager to unload. We made an offer that the sellers Realtor recommended would be successful, which was accepted. We were then told that we had to both hire an attorney and get an engineer’s report before…
We put in an offer to buy a wonderful landmarked house which we were told the sellers (heirs) were eager to unload. We made an offer that the sellers Realtor recommended would be successful, which was accepted. We were then told that we had to both hire an attorney and get an engineer’s report before any contract would be signed. We were also told that we had to do all this in a big hurry to satisfy a pending state tax debt. We complied.
Strange things began to occur the very next day… and we suspected that someone else might be vying for this house. We were personally assured this was not the case. Phrases like, “no… no one else is involved†and, “don’t worry, the house is absolutely yours†were used. So, we hired the attorney, and an inspector (lots of $$$). We inspected and asked for concessions (credit) for some rather severe structural damage. We were resoundingly dismissed. No one contacted us from the realtor’s office again. However, the seller contacted us last night to ask what happened. In our talk, I discovered that this property was under litigation between the sellers. On sibling was suing the other two, trying to force then to sell to a speculator. Unbeknownst to us, a judge had decided the day before on behalf of the speculator because we had asked for repairs credits which might have made our offer less. We actually did nto ask for a particular amount, but this was enough to make the judge
I’m pretty angry about this.
But my question is: is this ethical for the realtor to have done? She did not advertise the house as an “As Isâ€, nor did she inform us that the house was under this litigation. Why would she have pushed us to get an attorney right away and an inspection- if the house sale was As Is? She also did not convey messages from both the seller and me requesting an urgent conference with the other. In fact the seller tried to locate me for days before this judgment. And I had requested numerous times a meeting with the seller. If I had known about this situation, I would have been able to respond.
If I had been informed, I likely would either not have bid at all, or not spent all that money for a structural engineers inspection when I was on my own to begin with. I would have been able to contemplate the ramifications of an As Is purchase. Instead I was lied to and tricked into competing in a pending legal mess.
By the way, even though I looked at this property at least 9 times, not once did the broker or realtor ask me to sign a disclosure sheet before seeing the property. I am told this is a violation of license.
Do I have any recourse?
sorry that I have not responded sooner.
I am still a bit in shock.
One of the sellers rang me on the phone the other night… and we cried at bit together.
She told me that she wanted me to get the house… but that a judge had a standing offer that we were supposed to exceed. Well… I really would have liked to have been in on this game!
The seller’s husband said that it this speculator doesn’t come up with the cash in 30 days… (unlikely) that the house is mine. I have phoned the dept of state licensing div and am formally filing the complaint. They (realtor )were required to tell us that there was a court-ordered sale in action. This is not a lien. They lied, that simple.
After 2 years of waiting for this house… to have it pulled out from under me- to be plundered by this speculator has spun me into a bad place. I will do whatever I can to make this bad thing into something good.
If it works out… and I get my house, you will hear me crow from the rooftops.
Hardwerkin, I’m truly sorry that this did not work out for you. You sound like the kind of person/family that should get a one of a kind property like this, not a speculator who more than likely, will turn it into apartments or condos to get the most from their investment. This house is a one family, in all the ways it counts; full kitchen on ground floor, parlor floor and then bedroom floors above, with original dressing rooms. With the central stairway, it will be hard to make a multi-unit house out of this without mangling it beyond belief. It should be illegal. I can only pray that not all speculators are cheap flippers, and this one has taste and vision. Are you sure the deal is dead?
On top of that, if you’ve been there 9 times (I think you got me beat, I was only there 5) you were emotionally invested, and probably had the place decorated mentally, and could picture yourself entertaining in that grand space. That’s so hard to let go of, and you have my sympathy. I hope you get something equally as wonderful, with none of the heartbreak.
I am very sorry you lost out on the house, and even sorrier that a speculator is getting it, but I think you need to chalk this up to education expense.
House sales are always “As Is” unless you’re told otherwise; you should make your offer based on what you see. The purpose of the inspection is to dig deeper, at which point you can revisit your accepted price before signing the contract. You seem surprised that the broker asked you to have the inspection – were you planning to sign the contract without one? By insisting that you have one, she actually may have saved your neck.
A lawyer is required for all real estate transactions in NYS, and you should have chosen one before even making an offer, just like getting pre-approved for a mortgage.
I must disagree with the statement that 95% of agent/brokers do not give the agency disclosure form until closing. All REBNY members have been very thoroughly trained in this, and some even go overboard – I was at an open house this weekend and the seller’s agent was giving to form to everyone, even though an open house is not really considered a “substantive” contact. You should have gotten one on your first private visit, however.
I’m even surprised that you didn’t get it from this non-REBNY, non-NAR broker (if this is 859 St. Marks) as the agency disclosure law has been in effect for over three years for 1 – 4 family houses (as of Jan. 1 it applies to all sales and rentals), so they should have had time to get used to it.
BTW, the listing on the broker’s website now states that there is a lien on the house and that no further offers will be considered until this is cleared.
Sounds like you dodged a bullet here – good luck to you in your search.
New York State is a Caveat Emptor – “Buyer beware” state – you and your lawyer are responsible to do your due diligence. You should assume every property is “as is” especially, if you are paying all cash.
The Realtor’s action’s seem to stem more out of naiveté (and the short-sighted need for his/her commission) more than anything else, as no experienced broker would expect a property to be sold if they know it is in litigation.
She said after all, that you “had to both hire an attorney and get an engineer’s report before any contract would be signed” Even if you’re paying cash – getting a clear title was still unlikely whilst there is a dispute and no sane lawyer would advise you to buy without.
The fact that it was a Judge – probably a court appointed referee, who decided in favor of someone who – even you admit – put in a higher offer, makes it your claims unfounded, as the property was never fully in the control or the person you refer to as the “seller” plus, you never had a signed contract.
Unless the broker “promised” you something in writing, you are out of luck. The only thing that you may have to go on, is the agency disclosure form, which should have been provided to you at first point of substantive contact but 95% of Brokers never give until closing.
Ugh – so sorry that you had the rug pulled out from under you.
Have to agree with serpentor in that you will probably go through the process a few times on a few different places that come along. I think we went through it four times, if not five, before we got into our current house. Each time it happened, we were devastated because we were somewhat emotionally attached to these houses. My husband and I would try to remind each other that everything happens for a reason and in hindsight, we are in a much better house on a much better block than any of the other houses that did not work out for one reason or another.
True, the St Marks house is spectacular but we walked through it just for fun when they were having an open house so I know the interior and you will spend FAR more than you can possibly imagine protecting the details that attracted you (and everyone else on this blog) to that house than updating the mechanicals and any cosmetic upgrades you would want to / have to do. Any number a contractor would give you, especially with the water damage you mentioned, would probably double.
Maybe this IS a good thing and is god’s way of looking out for you (at least tell yourself until you find another house to fall in love with).
I don’t think there’s much you can do, and you should expect to shell out for a lawyer and a building inspection a few more times before you actually wind up owning a home. At the risk of sounding callous, get used to it.
It is frustrating, since you probably shelled out a few thousand dollars at this point, and presumably got attached to the house, but it is what it is. I’ve had seller’s realtors feed us all manner of BS, including not telling us that the sellers were deeply in arrears on their mortgage and cruising towards foreclosuere. After six months, they ultimately couldn’t close (and wouldn’t go to the bank with a short sale — at that point they were just being wholly unreasonable). We were out a huge amount of energy as well as the money we paid to our lawyer, mortgage broker and building inspector.
We also (way back in the seller’s market of 2005 or 2006) spent an absurd amount of money bringing engineers, contractors, plumbers, electricians through a place that turned out to be in worse shape than we were going to be able to manage. Every new inspection turned up a “sure, you we could fix this within your budget but that over there doesn’t bother you?” We spent all that money before we’d even signed a contract.
Now, we’re in a great place, wholly satisfied and definitely consider the $10K we probably spent on multiple real estate courtships money well spent. It saved us from getting in over our heads.
PS. There’s really no need to put your title in all caps. That’s called “YELLING” and it is kind of loud.
Good points from Boerumresident. I don’t know if thats an ethical violation, but I’m leaning towards no because the realtor is the agent of the seller and not the buyer. That is the stance courts take when dealing with fiduciary duty issues, unless the realtor signed some kind of agreement with the buyer.
In essence, disclosing the litigation issue to you actually prejudices the seller (since it scares off buyers). Along the same line of reasoning, a realtor cannot disclose the offer amount of a competitive bid.
Additionally, the litigation issue is something that your attorney should have picked up. Maybe that’s something you can look into?
Is this the St. Marks mansion you mentioned the other day?
Anyway, it definitely sounds shady but there are some issues that are not clear:
Did the seller/heir that you spoke with tell you that the RE broker knew about the existing litigation? Or knew about the competing bid? Obviously, if this was a co-broke situation that might not be the case.
Also, is it actually litigation between the sellers, or a probate issue where the estate is seeking to dispose of the assets but the administrator cannot do so without consent of all the beneficiaries? The person to decide on whihc offer to accept is usually the court-appointed administrator or testator, and not the actual beneficiary (unless they are all serving as co-administrators).
In any event, I am assuming your attorney did not actually expend any effort on the matter and your inpsector was $2,000 or less. Am I missing any other out of pocket expenses?
In that case, you might consider small claims court against the RE broker and/or the estate itself under some type of promissory estoppel theory or breach of good faith and fair dealing — most lawyers don’t like it, and it’s hard to recover damages, but you might be able to convince the court that you are entitled to your out of pocket expenses. I am not sure if it is worth it.
Probably more rewarding emotionally would be to complain to the Department of State which governs the RE broker’s license:
http://www.dos.state.ny.us/forms/licensing/1507-a.pdf
Also, if the broker is a realtor (i.e., a member of the NAR), you can file a complaint with them as well.