Jim Valentine: Real Estate and litigation
Real estate agents are not lawyers, but much of what they do involves agreements and activities that can have legal consequences. It is a fine line that we walk having working knowledge of the law yet not practicing law, which is prohibited for us.
Because of this, our offers are “fill in the blank” forms for the most part. As the forms are filled out and questions answered an agent must be very careful not to write a “lawyer” document while legally committing the parties to their agreement. Nor can we give legal advice with our answers.
We are often asked what the consequences are if the other party doesn’t honor their part of the contract. Some such consequences are laid out in the contract, either in the boilerplate, protected by law referenced in the contract, or by a well written clause that has the parties’ commitments and default consequences.
When that doesn’t work the alternative for satisfaction is litigation. That isn’t fun, can be protracted and the result isn’t always favorable. Even when you have a case you can’t lose, there is always the question of the jury, or the delay in getting a judgment, or the delay or never getting the awarded amount or action.
As they say, justice delayed is justice denied. Your attorney will help you assess these components for your situation. Your agent should be able to give you answers to “what if” questions when you are formulating and negotiating your transaction, but when the actual transgression that may be the subject of litigation occurs, you are best to discuss it with a real estate attorney. Don’t hire just any attorney — you must have an attorney that specializes in real estate. Your agent should be able to help you find the appropriate attorney for your case.
Litigation isn’t cheap and often isn’t worth the effort or financial cost/risk. This is important to recognize as you are making an agreement with somebody. If there is a component of the transaction that is particularly important to you make sure you can have it enforced in a manageable manner.
For instances, if the item in question is valued at $2,000 to you, it won’t be financially wise to pursue it with litigation. You might have something set up to forfeit, or automatically go into effect, it will depend on the item.
Agents are sometimes named in a legal action because they have errors and omissions insurance. The plaintiff’s attorney names many people in the initial complaint to see where the money is. Not all agents have errors and omissions insurance, and not all cases are covered by that insurance if they do have it. It isn’t usually something discussed by buyers and sellers but it can be very important when push comes to shove.
There are often breaches or defaults in real estate transactions that are allowed to pass without anything more than grumbling because of minimal actual cost value of the item, or the other party is effectively judgment proof, no/minimal assets.
Don’t count on that being the case in your situation. If you have substantial assets you might find yourself in litigation even if you did nothing wrong. Someone may try to extort money from you because you have it and might just want to settle without the hassle.
Advice: Transactions are as good as the people involved. In the old days we could shake hands and have an ironclad contract. Today you can write the tightest contract and people don’t always comply with it. Trust your intuition regarding the other party and their agents.
The buyer or seller makes the final decision, but they can be influenced one way or another by agents that might not know what they are doing, not have proper perspective, or are grandstanding for their client causing ego-influenced mistaken advisory comments. If it’s right you will instinctively know it and will understand that it is even if you don’t understand what is going on.
We don’t like thinking about litigation, but in reality you can never act without considering it in real estate. The stakes and emotion are high — be careful, trust your judgment, and you will be fine.
When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. email@example.com