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Rental Property Sale went wrong due to not properly disclosing facts by seller

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kaban18

Member
Ok guys here is the situation:
Commercial property Sold ( 4plex) to an investor Sale price $125,000
Real Estate Agent in the middle of this and has both sides of the transaction ( represents the seller and the buyer)
After closing on the property buyer finds a heavy leak in the wall of one of the units and from talking to tenants finds out that seller was aware of the issue and made an attempt to fix it and he though it was fixed but the issues is still there and was not disclosed to the buyer during sale.
Another issue is that utility costs on this property are $120 higher per month( 1400 more per year) than sellers indication to the agent and agent has past this info to the buyer during sale.

Question: As an agent: how does he resolve this issue ? As a buyer: does he sue the seller or the agent if comes to that?
 
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HomeGuru

Senior Member
Ok guys here is the situation:
Commercial property Sold ( 4plex) to an investor Sale price $125,000
Real Estate Agent in the middle of this and has both sides of the transaction ( represents the seller and the buyer)
After closing on the property buyer finds a heavy leak in the wall of one of the units and from talking to tenants finds out that seller was aware of the issue and made an attempt to fix it and he though it was fixed but the issues is still there and was not disclosed to the buyer during sale.
Another issue is that utility costs on this property are $120 higher per month( 1400 more per year) than sellers indication to the agent and agent has past this info to the buyer during sale.

Question: As an agent: how to resolve this issue ? As a buyer: does he sue the seller or the agent if comes to that?
**A: is this a homework question? Who are you in all of this?
 

HomeGuru

Senior Member
I am the guy in the middle:rolleyes:
**A: please be more specific. Are you the agent that works for a principal broker, the broker, residential agent, commercial agent****************************....? Do you have any designations such as GRI, CRS, CRB, CCIM etc.? How much experience do you have in commercial brokerage?
 

kaban18

Member
**A: please be more specific. Are you the agent that works for a principal broker, the broker, residential agent, commercial agent****************************....? Do you have any designations such as GRI, CRS, CRB, CCIM etc.? How much experience do you have in commercial brokerage?
I am the Principal Broker , opened my own company last year, mostly I work with residential properties. No designations of any kind yet. This is my first commercial deal where i represent both seller and buyer on same transaction
 
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HomeGuru

Senior Member
I am the Principal Broker , opened my own company last year, no designations of any kind yet. This is my first commercial deal where i represent both seller and buyer on same transaction
**A: did you use a dual agency agreement and what was disclosed with respect to this issue?
 

kaban18

Member
**A: did you use a dual agency agreement and what was disclosed with respect to this issue?
Yes dual agency agreement was used

here is how wording is on one of our standard form

III. IF THE BROKER, ASSOCIATE LICENSEE OR APPOINTED AGENT REPRESENTS BOTH THE
21 SELLER/LANDLORD AND THE BUYER/TENANT: A real estate broker acting directly or through an associate licensee or
22 appointed agent can legally be the agent of both the seller/landlord and the buyer/tenant in a transaction, but only with the knowledge
23 and written consent of both parties. If a buyer/tenant represented by a broker wants to see a property of a seller/landlord being
24 represented by the same broker, the following provisions will govern the actions of the broker.
25
26 A. The broker may not knowingly say anything or do anything which might place one party at a disadvantage, disclose
27 personal confidences of one party or the other party, or any other information a party specifically instructs the broker
28 in writing not to disclose, unless disclosure is required by law.
29
30 B. The broker may not, without the prior express written consent of the owner, disclose to the buyer/tenant that the
31 owner might accept a price less than the listing price, nor shall the broker, without the prior express written consent of
32 the buyer/tenant, disclose to the owner that the buyer/tenant may be willing to pay a higher price, or accept terms less
33 favorable to the buyer/tenant than those indicated in the buyer’s/tenant’s previous offer.
34
35 C. The broker may not represent the interests of either the owner or buyer/tenant to the detriment of the other party. The
36 broker is obligated to inform each party of all facts the broker knows which would affect the party’s decision to
37 permit the broker to represent both the owner and the buyer/tenant.
38
39 CONSENT AGREEMENT: If the seller/landlord elects to negotiate with a buyer/tenant that is a client of the broker, or a
40 buyer/tenant elects to negotiate with a seller/landlord that is a client of the broker, it is understood that both parties will be required to
41 confirm, in writing, their election to have the broker act as a consensual limited agent.
42
43 AGENT OBLIGATIONS: Regardless of representation, the broker shall: Disclose all known material facts about the property
44 which could affect the buyer’s/tenant’s use or enjoyment of the property, disclose information which could have a material impact on
45 either party’s ability to fulfill their obligations under the purchase/lease agreement, respond honestly and accurately to questions
46 concerning the property, and deal honestly and fairly with all parties. The duties of the broker in a real estate transaction do not
47 relieve an owner or buyer/tenant from the responsibility to protect their own interests. You should carefully read all documents to
48 assure that they adequately express your understanding of the transaction. If you have questions regarding the duties and
49 responsibilities of the broker, you should resolve those questions before proceeding further.
 
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HomeGuru

Senior Member
Ok guys here is the situation:
Commercial property Sold ( 4plex) to an investor Sale price $125,000
Real Estate Agent in the middle of this and has both sides of the transaction ( represents the seller and the buyer)
After closing on the property buyer finds a heavy leak in the wall of one of the units and from talking to tenants finds out that seller was aware of the issue and made an attempt to fix it and he though it was fixed but the issues is still there and was not disclosed to the buyer during sale.


**A: Seller is obligated to fix the leak and resultant damage.


######
Another issue is that utility costs on this property are $120 higher per month( 1400 more per year) than sellers indication to the agent and agent has past this info to the buyer during sale.


**A: so what's the gripe if the Buyers knew of this fact prior to closing?



###########
Question: As an agent: how does he resolve this issue ? As a buyer: does he sue the seller or the agent if comes to that?


**A: yes, the Buyer will sue both tthe Seller and the agent unless you have an ADR clause in which case mediation and arbitration would prevail rather than litigation.
 

kaban18

Member
I agree with that seller should fix the leak
now to the second issue on utilities being higher, how can that be resolved?
 

FarmerJ

Senior Member
KB were there any increases in utility rates in your area during the last year ? The electric here at my home has gone up twice in one year.
 

kaban18

Member
KB were there any increases in utility rates in your area during the last year ? The electric here at my home has gone up twice in one year.

no its about the same ,I used last years numbers from utility co to compare to sellers stated utility numbers
 

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