Posted by Stupid in IL on February 13, 2002 at 18:18:42:
Thanks everyone for the input. I will sit down and sift through every suggestion and take some action. I am very glad I found this forum.
Thanks again!!
Matt
I got screwed bad…now what? - Posted by Stupid in IL
Posted by Stupid in IL on February 13, 2002 at 01:46:05:
Hi all…I am new here, and I need some advice. I recently bought a townhouse (with a bond assist program). My plan was to move in for a year or two (or until I got transfered out of state, in which case I would refinance traditionally so not to break my financing agreement to owner occupy) and rent my wife’s townhouse out. My broker and lawyer both assured me I was covered on all sides. There were absolutely no provisions in the association bylaws against renting they assured me, because my lawyer reviewed the bylaws, and the broker sited other examples of rented properties in my association. The broker also told me the schools were one district (the one I wanted because it is rated the best) and the day before closing, I find out otherwise.
Against my better judgement, I procede with closing. At closing my broker (who was acting as a dual agent) informs me that SELLER wants to rent back for one week…we agree on a rental fee, and establish a date of possession. Next week I get a job offer out of state. No big deal, right. I will take possesion, refinance, rent the sucker, and be one my way.
Not so fast. The SELLER trashed the carpeting and the walls and it costs me $2500 to get the place ready to rent. SELLER refuses to let me have the amount in escrow to cover the damages. I put my ad in the papaer to rent, and put the sign in the yard.
Then comes the call from the association. The association does NOT permit rentals. I call my lawyer, he denies responsiblity for misleading me and says rent it anyway. I call the broker. BROKER says she never told me I could rent there in the first place. I call her manager, and they agree to meet me. They tell me they will waive BROKERS commision if I want to sell the property, as long as I waive their liability.
So I call every lawyer in the book. They all tell me to sell it myself, so I can show losses and then sew both the broker and lawyer. So I sell the place, for $1500 more than I paid, but after closing costs, repairs, realtors, and my lost down payment, I am out a total of about 20k, and have to bring almost $8,000 to closing.
I had to turn down my job offer, and take out a personal loan for $8,000.
And now no attorney will take my case…well I found 1 who wants a $1,200 retainer, but no one is willing to take this on a contingency…
The BROKER works for one of the BIG real estate companies, and the lawyer…(big surprise) is the guy she uses on all HER deals…
I just paid a MAJOR stupid tax. Is there anything I can do?
Re: I got screwed bad…now what? - Posted by wpage
Posted by wpage on February 13, 2002 at 13:15:00:
First, read the bylaws again to be sure that you were not misled by the lawyer, the agent, or the condo association as to your ability to rent. If indeed you had the right to rent and you did not take advantage of that, well you are at fault. Then, assuming it is not your fault,I would start by sending a lawyer’s letter to the agent and her broker advising that you intend to sue if you cannot come to some agreement. Send a copy to the real estate board in your area. Agents have insurance for errors and omissions. State what advice you had received that caused you prejudice and state what you are willing to settle for. Next send a complaint to the bar association concerning your lawyer. If nothing else there will be a mark on the lawyers file for future reference for others. Too many complaints are not good. Furthermore if nothing happens you follow up with a suit in court.
Re: I got screwed bad…now what? - Posted by Suzanne
Posted by Suzanne on February 13, 2002 at 13:14:26:
After following all the other good advice, learn from your mistakes. The next time an agent and/or lawyer assures you of something, either do your due dillegence or have them put it in writing, sign it, and hand you a copy. If possible, get it noterized.
Now they are putting themselves on the line. If they ask why you want this done or state that you don’t need it, then tell them about this experience. If you started a company, you can just say it is company policy. They will either say, well I have to double check into this which means they didn’t do their homework in the first place. Or they can say yes I’ll sign, or take a walk in which case you do. I know they need to protect themselves, but if they can’t put their assurances down in writing then there is something wrong. They are assuring you when they themselves are not 100% sure.
Also, trust your judgement and yourself. You knew something was wrong when you found out that it was not located in the right school district. Your judgement saw the big red warning flag and was raising it higher. The question that would have come up in my mind was if they are wrong about the school district, what else are they wrong about?
After being a renter for several years, I have realized the importance to get everything documented as much as possible from taking pictures when you move in and move out even if you are buddies with the owner. The place where I live now, my husband didn’t document anything sayin oh the owner knows what was wrong. The problem is that this place is turning into a nightmare, and will get worse when we go to move. Everything from the bathroom wall having a hole and the floor around the tub getting soft (landord knows about) due to water leaking from the shower head which my husband broke, to the newley installed counter buckling under the weight of a microwave oven. We already had to replace one doorknob out of pocket. Now I am litterally dreading moving from this place thinking of all the damages the landlord will try to slap us with whether or not it was our falt.
All the realtors I have dealt with so far has tried to take us one way or the other. Then acuse of stuff we didn’t do, or tell us I never said that.
I even had one realtor go over a scenerio with me about a family damaging a rug. I didn’t realize at the time this was a prequalification for us to get into a rental. I agreed with her that it was not right. What I didn’t realize either was exactly what happens to a carpet around toddlers at the time. Now what is normal wear and tear to me is considered damage to them.
The realtor yelled me for messing up the carpet which was supposedly brand new, and said she told the owner that I promised not to mess it up. I never promised anything like that. I can only rationalize that she used my agreement that the carpet should not be totally destroyed as my promise not to have even one small stain mark on the carpet.
I still haven’t figured out how to stop spills and messes on a carpet. At least now I have found oxi-clean which takes out every stain I have applied to including lumped ground in cholocate which I didn’t discover until it got to the point where I couldn’t even scrape it off the carpet. At least my kids are very good at hiding their messes when they want to make one. It also took out bright red/pink stains that I had no clue to what it was, found under the couch at the edge. Also pitch black stains that looked like either an ink spill. Right now I have an indoor/outdoor dark grey carpet with a black design.
Sorry for some of the tangents. I guess I needed to vent some also. I know all realtors are not like that. I must have just gotten the rotten ones. I know my husband will not deal with realtors because of those experiences. I believe there are a some good hard to find ones.
Assemble your paper trail. - Posted by Glen SoCal
Posted by Glen SoCal on February 13, 2002 at 12:48:38:
This isn’t what you are looking for, I’m posting this mostly as a lesson to others and myself:
S. IL, you said:
My broker and lawyer both ASSURED ME I was covered on all sides. There were absolutely no provisions in the association bylaws against renting they ASSURED ME, because my lawyer reviewed the bylaws, and the broker SITED other examples of rented properties in my association.
It’s always good to get assurances in writing. If you can’t, it’s best to check it out for yourself. If you have the assurances in writing, sounds like you have a case. As Tim Jensen mentioned, small claims court is an option. But if you have everything in writing, you might just want to go through an attorney. Small claims can be a frustrating process.
The broker also TOLD ME the schools were one district (the one I wanted because it is rated the best) and the day before closing, I find out otherwise.
Shouldn’t there be a discount for that? The wrong school system would be a deal breaker for many. And IF the broker’s assurance was in writing, there would be room for a discount for misrepresentation. I could see that coming out of the broker’s double-ended payday. You were notified prior to closing however, so no recourse in the courts.
Against my better judgement, I procede with closing. At closing my broker (who was acting as a dual agent) informs me that SELLER wants to rent back for one week…we agree on a rental fee, and establish a date of possession.
They trashed your place. Before allowing a tenant or seller to stay beyond closing, photograph the place at the sellers expense, and add to the addendum a provision for payment of any damages the sellers/tenants might cause before you take possession while holding money in escrow be it a first and last rent or part of the sale proceeds.
. I call the broker. BROKER says she never told me I could rent there in the first place. I call her manager, and they agree to meet me. They tell me they will waive BROKERS commision if I want to sell the property, as long as I waive their liability.
Wouldn’t it have been great to get that converstation on video! Slam dunk! If nothing else, bring a voice activated tape recorder and a friend to meetings like that…not your attorney, they’d clam up.
So I call every lawyer in the book. They all tell me to sell it myself, so I can show losses and then sew both the broker and lawyer. So I sell the place, for $1500 more than I paid, but after closing costs, repairs, realtors, and my lost down payment, I am out a total of about 20k, and have to bring almost $8,000 to closing.
I had to turn down my job offer, and take out a personal loan for $8,000
I got lost here. Did you lose your job offer because you couldn’t rent the property and had to stay? If so, why did you have to sell? Couldn’t you have lived in the place? When you go to court, the judge will want to know.
It will appear to the court you didn’t have to sell, as you never took the job out of state, and never needed to rent because you could have been living in the home, OK’d the school district, however sold the property willfuly incurring great expense.
S.IL, if there is one thing I learned on this board, is get it in writing, and if you give something up, get something for it. I’ve tried to incorporate this in my way of thinking, except for charitable concerns. It’s pretty simple:
“Johnny, make your bed.”
“OK Mom, then can I go out and play?”
“Yes.”
Fair-weather attorney: “It’s simple, sell your place to show that you incurred a loss, then sue them for the losses.”
You: “OK, I’ll do it. Can we write up an agreement, for you to take my case on contingency?”
Attorney: “Well, er, uh, let me uh, you might uh…”
Then go to the next attorney until you find one that will stand by their advice.
If you willingly enter in to a situation where you will incur losses in hopes of future profits, and the losses are preventable, make sure that your profitable exit strategy is well planned.
S.IL, if you have everything in writing and are still having dificulty with legal action against the possibly colluding broker and attorney, then I’m baffled.
I wish you the best of luck, and I’m interested in hearing how it turns out.
Do you have proof? - Posted by Daniel Burger
Posted by Daniel Burger on February 13, 2002 at 11:49:25:
Can you prove that the seller trashed the place?
The fact that the seller has money in escrow might help you here as the escrow can not be released automatically back to the seller if you write the escrow holder claiming that money to be yours.
I think that Tim Jensen is right for suggesting small claims court. Have separate trials and represent yourself. The most you could lose is the $35 or so filing fee.
On the other hand, in my opinion, it was your responsibility to read the Associations Rules and Regulations and verify that you can indeed rent the place regardless what other owners have done or what you were told.
Dan
Dealing with HOA and Rentals - Posted by Frank Chin
Posted by Frank Chin on February 13, 2002 at 10:54:01:
Hi:
A bunch of things that doesn’t sound right here. Its either that, or a case of malpractice by the attorney.
The key statement you made here is “the broker sited (sic) other examples of rented properties in my association”. BIG MISTAKE.
I have a luxury condo I rent out at a complex consisting of 104 units. The HOA allows up to 25% of the total units, or 26 units, to be rented out and NO MORE. So the broker can point to a unit just rented out last week at one of these 26 units, and several others just rented this year, it still does not mean you can purchase a unit to rent out.
I know my HOA also makes hardship exceptions on a case by case bases where owners had to move and cannot sell right away. So the total may exceed the 25%, or 26 units, by a few.
Then you mentioned “There were absolutely no provisions in the association bylaws against renting they assured me”. VERY CURIOUS.
It is a well known fact that condo complexes go downhill real quick after going 50% rental, and at that point, buyers cannot obtain conventional financing via FHA, FNMA etc. It is INCONCEIVABLE that the HOA did not address the issue of rentals.
When I purchased the condo for rental, even though I was assured that there were only 17 rentals at the time, and I was well under the limit, I cannot count on
1- Brokers giving me bum information, ie it was 17 units six months ago.
2- The HOA changing its mind later and telling me, too bad.
So what I did was to insist on a “Resolution from the Board” saying they approve of the unit purchased for the purpose of rental. It is kept in a deposit box with the deed.
Believe it or not, every so often, we get a letter from the managing agent asking us if we ever received permission to rent the unit. We would fax them a copy of this board resolution, and I would not hear a beep.
Imagine if I have to argue with them that I was under the limit back in 1992, and Ms. so and so said so.
Good luck.
Frank Chin
Recovery Fund and “E&O Insurance” - Posted by John Behle
Posted by John Behle on February 13, 2002 at 10:42:39:
It sounds like the agent made some serious mis-representations as to the property being rentable. It may sound like a small thing, but has helped lead to major damages. The agent may be able to be held liable.
There are a couple resources to consider even before or in addition to legal action. You haven?t mentioned the state and state laws vary, but here is something to check into. In many states there is a ?Real Estate Recovery Fund? to cover losses and damages by agents. It starts with a complaint to the Real Estate Division or whatever your state calls the licensing agency. This may be something you can start easily without a lawyer. The state picks up the ball in many ways as to the investigation and determining the situation. If they find the agent liable, they can pay the claim from the Recovery Fund, which has been set aside for that purpose. Sometimes they can only pay a claim if you have received a legal judgement in the courts, but check it out.
Many agents are covered by ?Errors and Omissions Insurance? that may pay the claim - possibly even under the threat of a lawsuit without even having to have won. If they see the agent is likely to lose, they may settle to avoid legal costs and a larger claim. If what you say is correct, the agent made mis-representations about being able to rent the property. It doesn?t relieve the agent from liability whether they believed it was true or not. They should have known, found out or said they didn?t know.
I have a friend that while teaching a seminar had someone offer to take them to lunch. He said to Lorenzo that he just wanted to tell someone what he did for a living. He then explained how he made a 6 figure income suing real estate agents. He would look for an agent who was very active and successful (Million Dollar Roundtable) that also managed their own or a client?s rentals. His comments were that he would rent a property, not pay rent and then wait for the agent to ?hang themselves? by doing something illegal or violate licensing laws. He would then sue and end up with a 10-20k settlement - usually from their ?Errors and Omissions? insurance provider. I?m not advocating what the ?professional tenant? was doing, only illustrating the role and position of some of the Errors and Omissions providers.
Sadly, there may not be easy recourse against the attorney. A legal degree can be a free license to give lousy advice and the fact that they are an attorney protects them. You might be able to find a ?mal-practice? attorney willing to sue the other attorney, but you might want to look.
These are some areas to look into and find out more about. Of course, you should seek legal help, but from what you?ve described it hasn?t been very successful yet. I?m not an attorney, but as an agent and broker for 24 years I am trained in the laws of my state. As I mentioned, your state may differ - and get legal help if you can.
Here is an idea - Posted by TimJensen
Posted by TimJensen on February 13, 2002 at 10:28:10:
Here is my suggestion.
I would start litigation,in small claims court, against the lawyer, the seller, the broker, the real estate company. I would go after them each seperately, The limit in IL for small claims is 5k. 5k times 4 people is 20k.
Just my opinion,
Tim
Re: I got screwed bad…now what? - Posted by Kevin
Posted by Kevin on February 13, 2002 at 09:08:08:
I’m sorry to hear about your predicament. Unfortunately, there’s not a whole lot that can be done now, except to try to recoup your losses through legal channels. All I can recommend is that you keep calling around to lawyers and try to find one to accept your case on contingency. Look for solo practitioners or those with law offices of no more than a couple of lawyers. The larger offices/firms are more likely to require retainers. Also, call the local bar association and ask them for a referral. Keep in mind that most lawyers aren’t crazy about the idea of having to sue other lawyers, unless that is their specialty. This is especially true if you live in a small community where the legal community is even smaller and very chummy.
Perhaps you should consider going back to your original lawyer and ask what he recommends. In fact, it sounds like his advice to you that you go ahead and rent the place anyway, may have been correct–especially if there was no provision in the association bylaws preventing you from renting. It would, of course, be grossly negligent on his part to have overlooked such a provision–in fact, unless he didn’t read the bylaws at all, it’s hard to imagine that he would have. For that matter, it doesn’t take a lawyer to ascertain whether such a provision exists–it either does or it doesn’t. Did it contain a provision prohibiting rentals? If not, then your lawyer was correct. You should have gone ahead and rented the place. If that is the case, you still may have legitimate claims against the broker and seller.
Read those bylaws again!
Good post. - Posted by Glen SoCal
Posted by Glen SoCal on February 13, 2002 at 15:10:31:
Frank Chin–
Thanks for posting the info on HOA’s. I always learn something from you, and appreciate your sage contributions to this board.