Question About My Liability

[allanb]

The State Of California.
Will try and make a very long story short. I represented Buyer & Seller on a Home purchase. Buyer, after the home inspection, asked for the replacement of seven roof tiles that were cracked. The seller agreed to replace the tiles in writing. The seller thought that Escrow was closing 5 days after it actually was scheduled to close. So he said he did not have time to replace the roof tiles. In writing, he agreed to do it after Escrow closed. To ease the Buyers concern I wrote an Addendum stating " That I would pay for the 7 roof tiles to be replaced if the Seller did not follow-thru. One day before Escrow closed, the Buyer did his final walkthru inspection, there were some other items that the Seller had repaired shoddily and the Buyer wanted to know what he could do to force the Seller to properly fix the other items. I said I don't know, you need to ask an attorney. He did but after Escrow had closed. I also followed up my advise with an e-mail saying the same thing. Seller did not replace tiles and got into an argument with the Buyer and refused to do anything stating that the Close of Escrow was adequate for the Seller to not have to do anything. So, I get a bill for $23,000 for a new roof. Remember, I only agreed to replace 7 broken roof tile. The buyer said his Contractor that he had given him an estimate 2 weeks after Escrow closed said, the roof tile manufacturer was out of business and the only solution was a new roof. I told him his Home Inspector had advised him twice in writing to have a certified roof inspection prior to Escrow closing. He set it up with a roofing contractor and a general contractor to further inspect the property 10 days prior to Escrow closing and before all contingencies had been removed, I have it in writing as he had asked me for a date to do the roof & electrical inspections. I was not at the Inspection, the Seller let everybody in. After the Inspections, all I got on a Request For Repair Form was a request for some electrical work and the replacement of 7 roof tiles. Evidently, the Roof Inspector never showed up and that was not disclosed to me. My point to the Buyer was I would not have signed anything in regards to the roof had I known that the roof had not been inspected as I thought it had. Bottom line I got sued.
Thoughts?

 

[quincy]

The State Of California.
Will try and make a very long story short. I represented Buyer & Seller on a Home purchase. Buyer, after the home inspection, asked for the replacement of seven roof tiles that were cracked. The seller agreed to replace the tiles in writing. The seller thought that Escrow was closing 5 days after it actually was scheduled to close. So he said he did not have time to replace the roof tiles. In writing, he agreed to do it after Escrow closed. To ease the Buyers concern I wrote an Addendum stating " That I would pay for the 7 roof tiles to be replaced if the Seller did not follow-thru. One day before Escrow closed, the Buyer did his final walkthru inspection, there were some other items that the Seller had repaired shoddily and the Buyer wanted to know what he could do to force the Seller to properly fix the other items. I said I don't know, you need to ask an attorney. He did but after Escrow had closed. I also followed up my advise with an e-mail saying the same thing. Seller did not replace tiles and got into an argument with the Buyer and refused to do anything stating that the Close of Escrow was adequate for the Seller to not have to do anything. So, I get a bill for $23,000 for a new roof. Remember, I only agreed to replace 7 broken roof tile. The buyer said his Contractor that he had given him an estimate 2 weeks after Escrow closed said, the roof tile manufacturer was out of business and the only solution was a new roof. I told him his Home Inspector had advised him twice in writing to have a certified roof inspection prior to Escrow closing. He set it up with a roofing contractor and a general contractor to further inspect the property 10 days prior to Escrow closing and before all contingencies had been removed, I have it in writing as he had asked me for a date to do the roof & electrical inspections. I was not at the Inspection, the Seller let everybody in. After the Inspections, all I got on a Request For Repair Form was a request for some electrical work and the replacement of 7 roof tiles. Evidently, the Roof Inspector never showed up and that was not disclosed to me. My point to the Buyer was I would not have signed anything in regards to the roof had I known that the roof had not been inspected as I thought it had. Bottom line I got sued.
Thoughts?

My thought is that you need an attorney.

The house sale was handled poorly. The closing should have been postponed until all issues with the house had been resolved.

I wish I had better advice for you.

 

[allanb]

Thanks for your thoughts, one item I forgot to mention is the Buyer waited until the last minute to do his final walk-thru and his loan had already funded but not recorded Title. In California, the contract says that the Buyer with-in 5 days of closing can conduct his final inspection. Plus the final inspection is not a contingency of the contract and does not relieve the Seller of his/her contractual obligation. Given those circumstances, I believe I acted correctly in advising the Buyer to contact an Attorney. Doing anything else would have been unethical. Not sure what I did that would make you think that I handled the house sale poorly other than the fact I ended up in a lawsuit :-( Thank you though, I appreciate your input!

 

[quincy]

Thanks for your thoughts, one item I forgot to mention is the Buyer waited until the last minute to do his final walk-thru and his loan had already funded but not recorded Title. In California, the contract says that the Buyer with-in 5 days of closing can conduct his final inspection. Plus the final inspection is not a contingency of the contract and does not relieve the Seller of his/her contractual obligation. Given those circumstances, I believe I acted correctly in advising the Buyer to contact an Attorney. Doing anything else would have been unethical. Not sure what I did that would make you think that I handled the house sale poorly other than the fact I ended up in a lawsuit :-( Thank you though, I appreciate your input!

When a house sale is handled properly, no one gets sued.

I am not excusing the acts of the seller or the buyer, by the way. It is just you are the one who needs an attorney to help you defend against the lawsuit.

 

[adjusterjack]

Not sure what I did that would make you think that I handled the house sale poorly

You handled it poorly by representing both the buyer and the seller. You're about to learn the hard (and expensive) way how dangerous this dual agency thing is. You can't work to the best interests of the buyer when you are also working to the best interests of the seller. I know dual agency is legal, more's the pity. It shouldn't be.

I don't blame the buyer for suing you.

 

[allanb]

Thanks for your response, I agree, Dual Agency should not be allowed, anywhere! I am an honest ethical guy, you all don't know that because you don't know me. There is so much more to this story that I don't want to elaborate on as it doesn't do much good. I have been doing this for 14 years, over 150 transactions. Both parties were aware of the pitfalls, both parties wanted to still use me. I did my best. Thank you so much for at least putting your 2 cents worth in. I truly appreciate it.

 

[adjusterjack]

Both parties were aware of the pitfalls, both parties wanted to still use me. I did my best.

Your "best" would have been to flat out refuse. That's what an honest ethical guy would have, and should have, done.

Maybe the thought of losing the commission got the better of you.

I have been doing this for 14 years, over 150 transactions.

Then perhaps you have professional liability insurance that would provide you with a defense attorney so that you don't have to pay for one.

 

[allanb]

My Commission with the Seller (who was a friend) was $3,200. The commission to the Buyers Agent was 2% of the asking price. I had the property listed for 3 months, open houses every Saturday & Sunday, at the last open house the Seller came back a half-hour before the open house was over. The Buyer was in the house, I had been talking to him and he had expressed interest in possibly putting in an offer. I instructed the Seller not to talk to anyone and he could either sit with me or just walk around the home or leave. He stayed and with-in 10 minutes he was talking to the Buyer and I heard him tell the Buyer that there was an extra 2% he would be willing to take off the price of the home as he would only have to pay me $3,200. Yes, I did explain how the commission structure worked if I brought in the Buyer during the listing meeting, either the Seller didn't understand, forgot or didn't care. The Buyer had me draw up the offer the next day and took off the 2% (my commission). I told my Broker and he said that he would still have to get his split of the commission which was 3% of the sales price ($575,000) price plus $395. = a total of $740. That brought my commission down to $2,460.
for 4 months of work. So no, it definitely was not about losing a commission, it was about helping a friend and a young family with their first home purchase and biting the bullet. Unfortunately, I bit the bullet on the wrong end and shot myself. Remember, I did disclose to both Buyer and Seller verbally and on my Agent Disclosure that I was acting as a Dual Agent and the pitfalls of that and they still wanted to proceed. So I understand that I should have flat out refused to do Dual/Agency but then I would have to inform the Buyer that if he brought in his own agent, which he did not have one that the 2% the Seller had offered him would be off the table, which could have upset the Seller had the Buyer then backed down and not submitted an offer. Isn't that a catch 22 situation ethically as I would not be representing the Sellers best interests.
Also, the Buyer filed a formal complaint against me with the DRE which I was categorically cleared of any wrongdoing before the lawsuit.
So, the old adage, no good deed goes unpunished, I think, would apply here.
And yes, I have learned from this and will never do it again for anyone.
Again thanks for the responses! I told you it was a long story! Believe me, it gets longer, but I will leave it be.
Al

 

[BuyLowSellHigh]

Have you discussed with the Broker who you were representing? Have you called your E&O insurance company? I would recommend discussing with both of them ASAP.

Do you have an estimate from a roofer of how much 7 roof tiles cost? You are at least going to be on the hook for the amount of 7 roof tiles since you agreed in writing to pay that to pay for them. That may be your cheapest option.

You said that you agreed to replace the roof tiles after closing. Did the seller agree in writing to do anything after closing? If the seller agreed in writing you could sue the seller to try to get reimbursed.

 

[allanb]

Yes, Broker is aware, Buyers Roof Inspector estimate is for a full replacement of a roof as he claims exact replacement tiles cannot be found as the tile manufacturing company went bankrupt years ago, $23,000. He would not allow my Roof Contractor on the property but My Roof Contractor did an estimate from the street as you can see all broken tiles from the street, they are all roof eve edge tiles. He had sources to locate the tile and gave me a tentative bid of under $500. The Buyer accused me of stacking the deck and he would accept nothing short of a new roof. At his point, he threatened to sue me, report me to the DRE and file a Grievance with my local board. He did all of that over a handful of replaceable roof tile.
Broker let the blanket E&O lapse so I am on my own. I am waiting to hire a lawyer at this point. It will probably cost me more to hire a Lawyer than pay for a new roof. I have a binder of evidence supporting my position and plan to submit with my response and ask for the case to be thrown out.
If it doesn't get thrown out then I will more than likely hire a Lawyer.
Do you see my point here, Buyer agreed to tile replacement in the contract and then refuses to allow my Roof Contractor access to the property to do the job. His last "excuse" was that replacement tile would devalue the actual appraised value of the property as to how could he be certain that the tiles were actually the same as the existing tiles on the roof.
BTW, he also knowingly lied on the DRE complaint stating that I tried to coerce him into signing the Verification Of Property Condition during the Final Walkthru, which I didn't, I told him to talk to a Lawyer and I have proof when I followed up with an e-mail stating per my opinion, he should obtain legal counsel. He replied by e-mail that he understood and would do so, which he did about a week after Escrow closed.
From what I understand "knowingly" lying on a complaint form to a government entity is a felony punishable by fine, imprisonment or both.
Thanks, Again.
Al

 

[quincy]

You should contact a few historic house renovation groups. I would bet you could find replacement tiles.

 

[BuyLowSellHigh]

After doing an inspection and having closing the buyer can't then start asking for more like a new roof. With some exceptions for fraud which doesn't appear to have happened here. This situation would be pretty straightforward to defend.

However, what it sounds like is the buyer feels like you didn't properly represent them potentially due to conflicts arising from dual agency. This is opening a can of worms. I wouldn't be so quick to throw a binder of evidence at the judge because that evidence may be interpreted differently than you expect. You definitely need an attorney because this has become a complicated matter.

 

[allanb]

If I had looked on this forum and saw what I had written, I would have thought to myself, something is missing here. But there isn't.
Looking at it from a psychological point of view, which is where I am at, I think he has "Buyers Remorse" and is trying to make everybody pay!
You are right, it is a can of worms, but I am very concerned that it has become so twisted and it is such a small case in comparison to most that I am afraid my potential Lawyer will not be able to represent me very well in front of a Judge. I have seen things as a spectator in court before where the Lawyers didn't seem to know their client's case very well. I realize that representing myself is foolhardy but I feel like I am stuck between a rock and a hard spot.
Thanks, everyone, that will be the last post on this issue from me for a while. I am sure I will post again in the future.
Al