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Exam 12: The Brokers Role in the Transfer of Real Estate

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Question 1

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A broker who sells a multiple list property is not an agent of the listing broker.

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Question 2

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Clauses in listing agreements exculpating brokers from liability to the seller are valid.

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Under an exclusive right-to-sell listing, the seller:

Once brokers are licensed, they are referred to as realtors.

Andrew Letsos listed his property for sale with Andrew Brusha, an agent with Century 21-New West Realty, on June 15, 1990. The property was listed at a price of $229,000, and Letsos agreed to pay a 6 percent commission. After eight consecutive listing renewals and no buyers, the property was listed again at a price of $129,000 on September 16, 1992. Following a listing period at the new price that ran one and a half years with no success, Mr. Brusha contracted with Mr. Letsos to buy the property for $92,000 on March 9, 1993. Sometime later in March 1993, Mr. Brusha met Anthony Hernandez, another real estate broker. In May, Mr. Brusha and Mr. Hernandez contracted for the sale and purchase of the Letsos property for $115,000, with closing to take place on or before July 27, 1993. Letsos and Brusha closed their deal on the property in July 1993. When Letsos's attorney called Brusha for a follow-up payment, Brusha asked for some time because he would have the money as soon as his sale of the property to Hernandez closed. Letsos's attorney then told Letsos about the Hernandez sale and Letsos filed suit against Brusha and Century 21 alleging breach of fiduciary duty by Brusha in his failure to disclose the sale. Should Letsos recover for breach of fiduciary duty?

Hannah Hall is a broker who has the listing agreement for the sale of the Taylor home. The Wettsteins visit the Taylor home during an open house and talk with Hannah. The Wettsteins are not completely sold on the Taylor home, so Hannah offers to show them five other homes she has in the area that she believes will suit the Wettsteins' needs. The Wettsteins explain to Hannah that they cannot spend more than $400,000. Hannah finds a house for the Wettsteins. It is listed for $400,000 but the Wettsteins, after looking at comparables in the area, decide to offer $375,000. The owner of the house (a house also listed by Hannah and her agency) asks Hannah, "How far do you think we can get them to go up?" Hannah responds, "I know exactly how far they will go." Discuss Hannah's relationship with the Wettsteins as well as the homeowner.

Jim Todd is selling his condominium in Vail. He is listing the property with his broker friend, Sam Clemens. Jim and Sam have agreed (in writing) that if Jim finds a buyer, Sam will not take a commission. Jim has also agreed that he will not use other brokers. Jim and Sam have:

Brokers generally have authority to accept offers on behalf of their sellers.

John Helm, an architect, designed and built a large home in 1989. Anne Marie Grossman was a co-owner of the home and property with Helm. Because the home was built on hilly terrain, Helm used a pier and grade-beam foundation. Helm and Grossman moved into the home in 1990 and listed it for sale with California Prudential Realty with Marti Gellens-Stubbs as the listing agent. When Ms. Gellens-Stubbs inspected the property, she noticed hairline stucco cracks, which Helm assured her were only cosmetic. Ms. Gellens-Stubbs did not note the cracks on her portion of the disclosure statement, but did write, "property appears to be in good condition ... I see nothing to contradict what the seller has mentioned...." Later, Gellens-Stubbs noticed that the interior paint was peeling near a dining room window. Helm explained that the peeling had been caused by water infiltration during construction, but that the problem had been remedied. Gellens-Stubbs did not note this information either. Mark and Susan Robinson looked at the home several times in 1991 and noticed the stucco cracks. When they discussed the cracks with their agent, Gracinda Maier, she recommended that they have the home professionally inspected. Helm told the Robinsons that the cracks "were caused by the finish of the house, which is called a Santa Barbara finish, and there was a product called elastomeric that ... would alleviate the stucco cracks." Helm and Grossman accepted an offer of $653,750 from the Robinsons. The purchase contract of May 22, 1991, required Helm and Grossman to furnish the Robinsons with a geological report by Ninyo & Moore. The contract permitted the Robinsons to cancel the agreement if any of the geological reports or testing commissioned by the Robinsons revealed problems they would be unwilling or unable to correct. On May 24, 1991, Maier added the following to the disclosure statement: My visual inspection found numerous cracks in the house. Buyer's agent recommends buyer to have property inspected by a professional home inspector and have the land checked by a geologist. Gellens-Stubbs then added the following: Stucco cracks on home are cosmetic in nature according to the seller because of finish and type of stucco. The Robinsons hired Ameritec Home Inspection Service. Robert Brand, an employee, listed the "very old" water stain in the dining room and "normal settling cracking" of the stucco. Brand found no soils-related distress and the report concluded, "the house was very well built ... [and] was not going anyplace...." A few weeks after moving into the home, as they were attempting to have a swimming pool installed, the entire excavation around the house collapsed. The Robinsons sued Helm, Grossman, Gellens-Stubbs, Prudential, and others for professional negligence and negligent and intentional misrepresentation. -Who is liable to the Robinsons?

Buyer brokers do not earn a commission, only a flat fee.

Dual agency status requires disclosure to both buyer and seller.

The broker has no duty or liability to the buyer/offeror in a transaction.

In a dual agency relationship, the agent represents both the buyer and the seller in the purchase and sale of property.

In an open listing, the seller may list the same property with more than one broker without fear of additional commission liability.

A contract for the purchase of ranch land contained the following provisions: "Condition of Property: Neither Seller nor any Agent makes any representations or warranties regarding the condition of the Property. Except as otherwise stated in this Contract or addenda, Purchaser accepts the Property in its present 'AS IS' condition." The contract also provided: "NO ORAL STATEMENT, REPRESENTATION, PROMISE, OR INDUCEMENT SHALL HAVE ANY VALIDITY NOR SHALL BE A PART OF THIS AGREEMENT." "DISCLAIMER: The Seller and Purchaser further acknowledge that neither of them have relied upon the representations, covenants, statements, warranties, or advice of any Broker, or agent of any Broker related to the legal and tax consequences of this contract or any other aspect of this contract unless expressly stated herein." After purchasing the property, the purchasers, Jason and Russell, made improvements to the property, which included constructing a lodge beside the lake and constructing two permanent docks on the lake. However, they discovered that the water level in the lake stayed low except for short periods immediately following a heavy rain. When the water level was low, 30 to 40 feet of shoreline was exposed and the permanent docks were above the head of anyone in a boat on the lake. Russell and Jason purchased the property to entertain clients and had intended for the lake to be the "jewel" of the property. The low water levels made the lake an eyesore rather than a jewel. Jason and Russell sued the seller and the real estate broker and agent for various forms of fraud through their misrepresentations that the lake was low due to the drought and that there was no problem with the lake. Discuss the liability of the broker and agent.

What is the purpose of protected person statutes?

Which of the following is the position of the NAR on the responsibility of agents to disclose the presence of sex offenders in the area of the listed property?

Once a listing agreement expires, the seller can sell to any buyer the next day without paying a commission.

A sub-agency relationship is a breach of fiduciary duty.

A listing agreement cannot be extended by the conduct of the parties.