Need Help on a Big Problem (Long) - Posted by Ray

Posted by John Behle on May 13, 1999 at 21:51:04:

True. Sometimes the capable attorney that can get the job done bills me for dreaming about my case. I just had one that billed me for imaginary conversations. Now that I’ve asked him to detail and justify his bill - he is billing me for that.

Sometimes the quiet, mild mannered - but extremely bright attorney is the one to get. I have one now that is one of the most tactful people I have ever met. Yet he sees the whole picture and sets the other attorney or party up for traps. He quietly leads them down the road he wants them to go down. Like chess, he has it planned out many moves ahead.

Need Help on a Big Problem (Long) - Posted by Ray

Posted by Ray on May 12, 1999 at 10:03:24:

We have bought a half dozen properties from a particular R.E. Company over the last 6-7 months. This company specializes in “Investor Properties” (wholesale/cash/handyman specials, etc.) It is a family business, the Father/Grandfather is the Broker. Our agent is one of the daughters(although the Father/Broker generally gets involved at some point during the deals, sometimes presenting our offers, other times helping to get them accepted). They’ve been in business for 20-30yrs and we’ve never had any problems, other than the usual problems associated with R.E. We just bought a property (closed Monday) from the youngest family member, a cousin with 1 year experience as an agent. The property is 2 doubles on one lot being sold along with the adjacent vacant corner lot. The buildings need a good deal of work,(depending on an investors intentions,our intention is to flip it to another investor) However, 3 of the 4 units are currently rented so it’s not too bad. A major selling factor is the extra corner lot! We had to schedule 2 walkthroughs because of the tenants schedules. The first (front bldg.) was with the youngest agent and he emphasized what a deal it was “Not only 2 doubles on one lot, but, the extra corner lot really makes it an incredible deal” The 2nd walkthrough (back bldg.)was with the Father, 2 Daughters and the cousin. Again they talked about the vacant lot and the possibilities, ie: Build more units, Private picnic area, extra parking. Well, after closing we discovered that the vacant lot was not owned by the seller!
We’ve already been marketing this to our investors as “2 2-Family Homes on 1 Huge Corner Lot” and we have scheduled walkthroughs with 4 people today! They’ve all done a drive-by and are excited about the huge corner lot.
Has anybody had an experience like this? How much responsibility does the R.E. Company have in a situation like this? I understand “Caveat Emptor” and all that, but, we have somewhat of a long relationship with this company and they portrayed the sale as including the vacant lot.
I apologize for the length of my post, but, I thought a little background info would help.
Any ideas on how to proceed? Any advice would be Greatly Appreciated, Thank You

Re: Need Help on a Big Problem (Long) - Posted by Ray

Posted by Ray on May 14, 1999 at 11:10:11:

My Brother and I want to thank all of you for your advice on our problem. Your input helped us come up with an equitable solution. We also met with an attorney before we met with the broker, just so we would have a better handle on our position.
We initionally thought the misrepresentation was incompetence rather than intentional. The result of their mistake was that we’re going to lose 5-8,000 in revenue.(we won’t know until we sell the property)
We thought they should share in this lost revenue as it was their misrepresentation.
The end result:
We had recieved a 40,000 offer for the property(including the adjacent vacant lot)which was full price as we were going to be in a multiple offer situation. We’ve had to drop our price to 35k just to maintain interest in the property and we will probably not be in a multiple offer situation anymore. They have agreed to discount future commissions equal to the amount of lost revenue we realize on this deal.
Everybody agrees and accepts the loss and now we move on to the next deal.
Case closed:)
Thanks again All!!!

Re: Need Help on a Big Problem (Long) - Posted by ScottE

Posted by ScottE on May 13, 1999 at 24:36:54:

It would be a good idea to get an attorney NOW that you have met some resistance. Every lawyer I know, especially my brother, hates to be ‘out of the loop’ for any period of time. Better to get one and bring ‘em up to speed. Besides, it has that ‘I’m not jackin’ around with you bozos’ flavor to it.

Happy hunting!


Re: Need Help on a Big Problem (Long) - Posted by Ray

Posted by Ray on May 12, 1999 at 21:50:40:

Thanks All,
We talked with the Daughter and the Cousin today and the impression we were left with was,"Oh Well, the deal is done, you got what you got, What do you want us to do about it, there’s nothing we can do now."
We have a face to face with the Broker tomorrow. We think that he will be a bit more concerned and will try to make it right in some way.
We rescheduled our walkthrough with our investors for Saturday. None of them were interested anymore without the vacant lot, until we said we’d drop our price (understandably).
I’ll update tomorrow.
Thanks again for the help.

It may be overkill, but… - Posted by ScottE

Posted by ScottE on May 12, 1999 at 17:28:55:

adding to what the others have said, did you get a survey done? I am sure after this deal you will be much more careful anyway, but a survey and the representation of a good RE attorney may be a great use of a little money to avoid headaches like these.

Good luck!

P.S. PLEASE take John’s advice on a “pitbull” lawyer with a reputation. Chances are he will be more expensive, but I can tell you from experience there are no ‘slamdunks’ in the courtroom.


Re: Need Help on a Big Problem (Long) - Posted by Bill Gatten

Posted by Bill Gatten on May 12, 1999 at 15:33:03:


I can’t add anything to what John and Jim (and KF) have said; but if your perceived dilemma is whether or not to sue a friend…your RE attorney will handle that for you. You don’t need to worry about it. My guess is that when the wind blows hard enough down the necks of the licensees involved, you’ll end up with that extra lot, or your transaction will be unrolled at the Realtor’s expense.

If the title insurance was issued in error, they’ll cover it: if the title search was accurate and excluded the lot, the Realtor will cover it. If the seller lied, he’ll cover it (big time).

However, if you can live without the lot, and the Realtors are making you money, sometimes its best to overlook the goose’s occasional faux pas in order to keep those golden eggs a’comin’.


Ditto, Plus - Posted by John Behle

Posted by John Behle on May 12, 1999 at 12:57:13:

Jim Piper is right. I’m sure nobody is surprised by that :slight_smile:

I would talk to the broker immediately, explain that your next call will be to the licensing division. If they have been in business that long, they should care about their brokerage. He could lose his license over this.

Your best hopes of compensation when a broker has purposely or un-intentionally messed up a deal is usually through this avenue. The threat of losing his license should cause some action. Sometimes the state licensing will get involved early and put pressure on. They may have a fund (varies state to state) to cover legal situations where an agent causes damage. Judgements against the agent/broker can be covered by this fund. Check it out. As I said your state MAY have this fund. Of course, you have some responsibility here and have learned a lesson, buy the courts will likely barbecue the agent if it comes down to it.

Of course, get legal advice - from an attorney that specializes in both real estate and litigation and has experience pursuing these types of claims. Look for the “pitbull on crack” variety.

The hopes would be that the broker will see the mistakes, errors, misrepresentations, etc. and work to solve the problem. He may have “Errors and Omissions” insurance that will cover this also. At the threat of the loss of his license, he should start paying attention very quickly.

Re: Need Help on a Big Problem (Long) - Posted by JPiper

Posted by JPiper on May 12, 1999 at 11:31:45:

Actually, “caveat emptor” is not a guiding principle these days in real estate transactions. Rather, the principle for brokers (an anyone else) is DISCLOSE, DISCLOSE, DISCLOSE.

What the broker has done here is misrepresent a material fact. That’s serious stuff in any state I’m aware of. Questions that might come up are whether you can prove it, whether it harmed you, etc. These are questions that might be appropriately directed to your attorney. Failure to disclose material facts is also reason for loss of license in probably every state.

Further, brokers DO have a responsibility to know what they are selling?..this burden is NOT simply shifted off to the title company. Now, in all likelihood the broker did cause a preliminary title report to be delivered to you?..or he should have. If he did, this would probably weaken your position. If he didn’t, that’s an even bigger problem.

A further complicating factor is that you’ve had a longstanding relationship which evidently has been beneficial to you. How you come down on all this is obviously a personal choice. But speaking with an attorney might be of help to you in determining your legal rights, and what they will cost to pursue.


Re: Need Help on a Big Problem (Long) - Posted by KF

Posted by KF on May 12, 1999 at 10:54:21:

Just curious, how did this slip through the title search by the title company? How come it was discovered after closing and not before? I would think your legal beef is with the title company. A RE broker or agent will never truly know what the ownership situation is on any property without the title company doing their job. This is the case unless you feel the RE broker knew about the situation and intentionally misrepresented the deal. Based on your long standing positive relationship with them and their knowledge of the ramifications of such a tactic, this is probably not the case. Just my two cents worth.

Good luck and please keep us posted on the outcome.


Pitbull on Crack - Posted by John Behle

Posted by John Behle on May 12, 1999 at 18:50:30:

A friend of mine made that comment one time. He said we needed an attorney that was like a pitbull on crack for a situation. He then hired his divorce attorney - who was more like a “Chihuahua on Valium”. Good lesson in hiring an attorney.

California - Posted by Sean

Posted by Sean on May 12, 1999 at 14:54:09:

California has a fund exactly like that.

Re: Pitbull on Crack/Where or How do U find them? - Posted by J.D. [Journey]

Posted by J.D. [Journey] on May 13, 1999 at 07:28:31:

I have been looking for a "Pitbull on Crack"
real estate attourney in the DFW,TX area. I have a
few recomendations, but what do I look for and/or
how can I find out if an attourney is really an
agressive “Pitbull” type? Any suggestions as to
where or how to look for this type of attourney? Any insight and/or assistance would be greatly
appreciated.J.D.[Journey] Swindell

Pitbulls can turn on their owners!! - Posted by Ben

Posted by Ben on May 13, 1999 at 16:07:41:

A sleazebag is a sleazebag and can just as easily
turn on you as your adversary. I was once referred to a
"courtroom tiger" whose appetite for fees was enormous. Finally when I pulled the plug he wouldn’t give me my files back!I had to go to his office with a police escort to demand them back. I guess “tigers” don’t change their stripes!

Re: Pitbull on Crack/Where or How do U find them? - Posted by Bill Gatten

Posted by Bill Gatten on May 13, 1999 at 13:08:59:

My ex-wife’s divorce attorney is the man for you!


Re: Pitbull on Crack/Where or How do U find them? - Posted by Brad Croouch

Posted by Brad Croouch on May 13, 1999 at 12:43:20:


Have you considered hiring an attorney who works for a title company?