June 24th, 2019 at 9:42 am
Question: How many legal issues involving the agent can you spot?
Answer: At least 4 issues. First and foremost, the agent should not have taken $5,000 in cash or otherwise gotten involved with the payment arrangement. She has no way of verifying that she delivered the funds, nor does she even have written instructions for what to do with the money. Furthermore, a client’s funds must be properly handled as trust funds, e.g. the funds must be logged in and out of the broker’s trust log. Mishandling trust funds is a DRE license violation that can cause the agent to lose her license.
Second, as the listing agent, the agent must generally disclose to the tenant that there would be a lot of homeless people in the area if it were not for the arrangement to relocate them. The lease may be invalid if entered into under false pretenses. After all, the tenant should be able to successfully argue that the tenant would never have rented the property if he or she had known that homeless people were paid to stay away.
Third, as the buyer’s agent for the property a few doors down, the agent must disclose the homeless issue to the buyer, especially considering the agent’s own involvement. The arrangement to relocate the homeless is highly likely to be considered a material fact that affects the value or desirability of the property that is not otherwise within the buyer’s diligent attention.
Fourth, any misdeeds committed by the agent not only expose her to potential claims, but they also implicate her broker for possible liability and DRE license violations (e.g. a broker’s failure to properly supervise an agent’s activities is a DRE violation).
-Thank you to Lauren Ravitz (Brentwood Office) for suggesting this week’s legal tip.
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