Unethical Misconduct by Listing Agent: Illegal??

[Tegs15]

(California)

During my shortsale...My Listing Agent did not disclose to me or the lender that the buyer was her business associate and fellow investor. It was discovered, after the close of escrow, that 2 other buyers had approached my Agent with interest in the property. Those buyers were told a buyer was already indentified and additional offers were not being considered. Although my Agent's buyer was represented to us as an acquaintance who dearly loved the home, the buyer eventually flipped the house for over $100,000 6 months later (My Agent was the Listing Agent in that transaction as well). To me, this was unethical practice. But was it illegal??

 

[OHRoadwarrior]

It definitely sounds like she breached her duty from the way you described. Here is the real estate licensing board for CA. Contact them and give them the specifics for guidance and disciplinary actions.

http://www.dre.ca.gov/Consumers/

 

[STEPHAN]

Did you have any damage from it or only your bank?

 

[FlyingRon]

Did you have any damage from it or only your bank?

That would depend if the bank left him responsible for the deficiency.

 

[LdiJ]

That would depend if the bank left him responsible for the deficiency.

I am pretty sure that CA is a non-recourse state.

 

[Zigner]

(California)

During my shortsale...My Listing Agent did not disclose to me or the lender that the buyer was her business associate and fellow investor. It was discovered, after the close of escrow, that 2 other buyers had approached my Agent with interest in the property. Those buyers were told a buyer was already indentified and additional offers were not being considered. Although my Agent's buyer was represented to us as an acquaintance who dearly loved the home, the buyer eventually flipped the house for over $100,000 6 months later (My Agent was the Listing Agent in that transaction as well). To me, this was unethical practice. But was it illegal??

In other words, you were advised of the relationship.

 

[LdiJ]

In other words, you were advised of the relationship.

Not in my opinion. An acquaintance is really not the same as a business associate and fellow investor. Particularly an acquaintance who "loves the home" and gives the appearance of purchasing it for a personal residence. While I don't know if OP would win a case or not, I really don't think that the OP should simply roll over and play dead either.

 

[FlyingRon]

I am pretty sure that CA is a non-recourse state.

That only matters for foreclosures. They can very much hold you responsible (in an unsecured debt) for what was not satisfied by the short sale.

 

[LdiJ]

That only matters for foreclosures. They can very much hold you responsible (in an unsecured debt) for what was not satisfied by the short sale.

I don't see how a short sale could turn a non-recourse debt into a recourse debt?

 

[OHRoadwarrior]

I think the more important thing is whether the other 2 buyers would have paid more when they were blown off and whether a firm commitment to sell to friend had already been signed. It is clear the deal was finessed for the friend to buy and flip. If the deal was not in contract, the agent had an obligation to take bids with the highest bidder/assuming they had the means to pay, getting the house and possibly recoup some investment to OP.

 

[Zigner]

Not in my opinion. An acquaintance is really not the same as a business associate and fellow investor.

I entered the following in to Google: define: acquaintance

I received the following result (pay particular attention to the synonyms which I highlighted for you):

ac·quaint·ance
əˈkwāntəns/
noun
1.
a person's knowledge or experience of something.
"the students had little acquaintance with the language"
synonyms: familiarity with, knowledge of, experience with/of, awareness of, understanding of, comprehension of, grasp of
"the students had little acquaintance with the language"
one's slight knowledge of or friendship with someone.
"I renewed my acquaintance with Herbert"
synonyms: association, relationship, contact; More
2.
a person one knows slightly, but who is not a close friend.
"a wide circle of friends and acquaintances"
synonyms: contact, associate, ally, connection, colleague
"a business acquaintance"

 

[Szwaja]

Zinger...I see you are hung up on the word "acquaintance"...That deceptive description of the buyer is a far cry from the Listing Agents fiduciary's responsibilities of FULL DISCLOSURE. Based on how the scenario was explained, it seems to me an apparent "con" has occurred. For the listing agent to have manipulated the transaction in her and partners favor is an absolute Conflict of Interest at minimum and an act of Fraud at worst. Definitely worth looking into to legally!

 

[quincy]

Zinger...I see you are hung up on the word "acquaintance"...That deceptive description of the buyer is a far cry from the Listing Agents fiduciary's responsibilities of FULL DISCLOSURE. Based on how the scenario was explained, it seems to me an apparent "con" has occurred. For the listing agent to have manipulated the transaction in her and partners favor is an absolute Conflict of Interest at minimum and an act of Fraud at worst. Definitely worth looking into to legally!

Szwaja, I think you may be tossing some words around without understanding the legal meaning of these words. There has not necessarily been any conflict of interest, any fraud or any con. More needs to be known about the transaction to come to any conclusion like that.

Here is a direct link to California laws on agency and fiduciary relationships in real estate transactions:
http://www.dre.ca.gov/files/pdf/refbook/ref10.pdf

A real estate agent can represent both the seller and the buyer. A real estate agent cannot, without the express permission of a party, disclose to either the seller or the buyer what the other party will or won't offer or accept in the way of a final price. What needs to be disclosed is that there is a relationship between the agent and a party or parties to the transaction.

You can look through the link (perhaps starting on page 164 and reading through to pages 166 and 169) for more information on disclosure forms and dual agency.

I think OHRoadwarrior offered some solid advice when he suggested contacting the California RE licensing board for guidance.

 

[justalayman]

I don't see how a short sale could turn a non-recourse debt into a recourse debt?

well, in 2011 the law actually did change so that a creditor could not collect on a deficiency due to a short sale. Up until that time a short sale was no different than any other sale other than the bank agreed to release the security interest even though they were not receiving the total amount owed.

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ccp&group=00001-01000&file=577-582.5

check out 580e

so now it is a non-recourse debt but a few years ago it was a recourse debt.

It was discovered, after the close of escrow, that 2 other buyers had approached my Agent with interest in the property. Those buyers were told a buyer was already indentified and additional offers were not being considered

if there was not a contract signed at the time, the agent was in breach of his obligations.