While I’m not an attorney (blatant disclaimer!) and I don’t practice law, I think it’s important as a professional practitioner and part-time professor (have you ever seen so many P’s?!) to keep up on current events that might affect my business and my clients. So here’s a recent legal issues in the real estate industry:

Court Holds that the Statute of Limitation for Breach of Fiduciary Duty is Four Years

In case you are not aware, “Fiduciary Duty” is what I pound into my real estate student’s heads as often as possible. It simply means that our client comes first under any and all legal & ethical circumstances (i.e, I don’t have to help my home owner cover up a murder . Among other things, full disclosure, honesty and complete ethics must be practiced with all parties involved in a real estate transaction, but the term “Fiduciary” just means that you go that extra mile for your own client.

Well, according to Thompson v Canyon (2011) 198 Cal.App.4th 594 there is a limit to how long this Fiduciary Duty is required.

In this case, a San Francisco homeowner was facing foreclosure and listed her home for sale with a licensed real estate agent. The buyer said he’d buy the house and sell it back to the homeowner (which was not yet illegal in 2004), however, once the buyer got the house, he did not sell it back to the homeowner as he said he would. The homeowner then sued the buyer and lost. Then the homeowner sued the broker, at which point the Court determined that the four-year period of fiduciary duty was expired.

This case is precedence-setting because the statute has never been exercised before. It’s also important for real estate professionals who are only obligated to keep files for 3 years, recognize that they should now keep them for four years. In my opinion, if the buyer had made an oral commitment to sell back the house to the homeowner, and the agent was aware of that fact, then the agent should have included that as a contract contingency. Again, this is just my opinion, but the agent DID have a fiduciary interest to protect his home owner-client so if he WAS aware that the buyer had made that promise, his due diligence would have been to make it a part of the contract.

What’s important to remember if you are buying or selling a house, is that your agent owes you, legally, the most honest, fair and ethical treatment possible, and that if you feel that the duty was somehow failing, you have the right to file a claim (within the four year period). I am not a big fan of law suits and feel that California courtrooms are replete with frivolous lawsuits. However, in the instance where someone has been clearly mistreated or dealt with in a manner that was anything less than honest and ethical, then vengeance is mine, sayeth the Tambo.

If you’re thinking of buying or selling a home in the Sacramento or Carmichael Areas, just give me a call.

Tamara

Many buyers with FHA government backed loans do not know that the FHA requires two appraisals on a flipped property to ensure buyers are not getting ripped off. The buyer must absorb this cost and this can mean around $400 extra if you are wanting to purchase a flipped property.

If you are an investor, you should be aware 1) that the FHA requires a home inspection within the 90-day period and 2) that due to the 90-day period, you are going to eliminate a lot of potential FHA buyers.

- Original Youtube vid – Buying or Selling a Sacramento Flipped Property 01/05/2011
Home Buyers
- Home Sellers

1D outlines the close of escrow you are agreeing to. Thirty days is the average turnaround of escrow, however many lenders can get your loan funded much sooner, particularly if there are no credit or serious issues. This is good to understand as price is not the only competitive force in real estate.

Shorter escrow can mean the difference between you being successful in a bid vs. another buyer. Even ten days shorter escrow can make a huge difference, especially on foreclosed properties where banks are gunning for a quick turnaround.

Buyers should consult with their agent and lender on the best escrow timeframe to indicate on the Residential Purchase agreement. It is crucial to be as realistic as possible because if you do not close when you say you are going to in term 1D, you could stand to lose your deposit.

- Original Youtube vid – Why Time of Escrow Counts When Buying a Sacto Home 01/03/2011
- Home Buyers

1)  HAVE A GOOD AGENT – You need someone who will be effective and get the job done.  One of the best ways to tell if an agent is for you is to consider – Is the agent interviewing you?

There are a variety of factors an agent should be considering when taking on a short sale. If they are not asking you a lot of questions during your initial meeting, perhaps they do not know a lot about short sales.

2)  FLEXIBILITY – The top priority is selling your home and agents will need to showcase your home as much as possible to do this. You may still be living in the home you are selling, but you need to be aware of how important flexibility is. This includes evening and weekend showings, the reality of when most potential buyers will be seeking to view properties.

3)  BE PREPARED – Your agent should provide you a list of items that need to be ready to go once an offer is made on the home. Certain paperwork, receipts, and the like need to be readily available once an offer is made for a smooth step to the next short sale phase.

4)  TRUST YOUR AGENT – If you have hired a good agent in the first place, this step should be easy. If the agent makes suggestions on price or accepting an offer, you need to trust their experience, otherwise the process will be slowed right down. There are steps your agent has to take with the bank following an offer and timeliness is best practice.

- Original Youtube vid – Sacramento Short Sale Sellers 12/21/2011
- Home Sellers