Get Real About Property! Travels through Real Estate Law – Guardian Angel

Something called “transaction brokerage” has become the norm in Florida in recent years.  What it means is that no one gets the full fiduciary duties from agents that used to be the norm.

Typically, it doesn’t make a lot of difference, but sometimes it makes all the difference in the world.

I was recently consulted by a seventy-four year old woman.  While she is as sharp as anyone I know, and actually brilliant in her chosen field (nursing), she knows very little about money and property.

Her husband had passed away and the property his well-known local business stood on was the last asset of his estate, being her last chance to guarantee her own retirement and make it possible to continue helping her family.

She actually told the agent who listed the property for sale that she didn’t know anything about money or selling real estate and she was depending on him to protect her.  He guided her in executing a listing contract under which he represented her, with full fiduciary responsibility to do just what she asked for, i.e, advise and protect her.

A relatively short time later, the listing agent produced a buyer, who was willing to pay the asking price for the property, but needed seller financing to close.  There were no other agents involved, so the agent put a document in front of the seller, disclosing that he was changing from her “single” agent, to a transaction broker, who no longer owed her full fiduciary duties.  She signed it.

He then proceeded to negotiate a deal under which most of the purchase price (everything except for a $100,000 down payment) would be paid by a seller mortgage, amortized over 30 years, with a 20 year balloon.  She signed it. Then she started having second thoughts.

When I first spoke to her, it became apparent that she was deeply confused about a couple of basic elements of the deal.  For example, she thought she would get the entire $100,000 down at closing, when, in fact, a nearly $42,000 commission had to be paid first.  With the other closing costs, she would only end up with much less than half the down payment at closing.

She also didn’t understand that the balloon was paid in 20 years.  What good is a big payment in 20 years to a 74 year old?  It just didn’t make any sense to me.  Finally, she was also accepting monthly payments smaller that the rental value of the property.

To be fair, all this information was disclosed to her in writing, and she signed that too, yet she still didn’t understand.  I don’t know if it was explained too quickly for her to follow or the fact that she was from another country, with some very different business customs.  For example, she explained to me how she felt sure that nothing she had signed was truly final because it wasn’t notarized.

To make a long story short, we renegotiated the deal with another $28,000 to the seller at closing and monthly payments of $1,400 more than before.

As the seller told me, it is great to have someone truly on your side, her “guardian angel.”

Article by Tom Brodersen, Esq.

Real Estate: Who Do Agents Represent? 

Get Real about Property! Travels through Real Estate Law by Tom Brodersen, Esq.

It used to be that listing agents always represented Sellers, in the fullest legal sense. The problem was, under the structure of most Multiple Listing Systems (MLS), the cooperating agent, who drives Buyers around in his or her car all day (maybe even buying them lunch to win their loyalty, or beers at the end of the day) also represented the Seller (under what was called a sub-agency agreement, which was triggered by an agent showing properties listed in the MLS).

The Buyers often didn’t understand that.  It is true that some agents executed special agreements to be Buyers agents exclusively, but that wasn’t typically the case.

In recent years, Florida law has changed and all agents are presumed to be what is called  “transaction brokers,” unless the paperwork clearly says differently.  Transaction brokers (or agents) don’t truly represent anyone and as some would (inartfully) say, they  “represent the deal.” What does that mean? Do they really only represent themselves?  It’s a fair question.

The truth is, there is a list of seven specific duties, all of which add up to full representation, but in the case of a transaction broker, three of those duties are reduced or eliminated. They are confidentiality (for example, does the agent tell the Seller that the Buyer could afford or is willing to pay more for the property than is being offered, if necessary), disclosure (everyone is entitled to full disclosure as to property condition and value, but not necessarily information about the parties bargaining position), and loyalty.

I don’t think this framework is a good idea, because agents charge the same, but give the public less as transaction brokers.  And just try to explain to people that you can’t give them your undivided loyalty.  It’s a real hard sell.  However, that’s up to brokers and their business strategy, and, in all fairness, this all doesn’t really add up to much practical difference to Buyers and Sellers, in most cases.

Sometimes, however, it counts for a lot.  When one party has little or no experience with buying and selling real estate, they need more help, maybe a lot more help.  They should be fully represented, but they need to ask for it very clearly, or they probably won’t get it.

If you don’t feel up to reading (and able to understand) every line of every document put in front of you, you should probably talk to a real estate lawyer.

Next month we’ll talk about a recent horror story caused by exactly these considerations.

Anderson & Brodersen, P.A. 727.363.6100, www.propertylawgroup.com

Legal: LOVE IS NOT ENOUGH

property-law-groupSome make the choice to forego getting married, even though they are in committed relationships which they intend to honor. Having felt the great pain of going through divorce, they don’t want to ever again, and for good reason. Almost everyone who’s been divorced felt like they were “screwed to the wall.” Also, the emotional trauma of all those broken dreams is more than people think they can endure again. 

But life is about learning and growing. Part of that growth needs to be learning to heal, but even more, learning not to make the mistakes that led to that pain and suffering in the first place. Sincere people of good conscience can put personal trauma aside and learn to trust again. We’re older, we’re wiser, and we’re less likely to choose the wrong person again. Hopefully, we’re a lot less likely to contribute to the destruction of our relationships, as when we were younger. Getting stuck in the past is a disability, which we all need to overcome.

Meeting later in life, each partner perhaps having had a previous family, there are plenty of forces that would discourage us from conquering our fears. But happiness, as well as a simple sense of fairness, requires that we do. Your new partner is not to blame for your past mistakes, only their own. But to fail to plan for the needs of both parties is a mistake.

The unmarried partner can be put at a huge disadvantage as changes in life come. That person you love (and actually do trust) might not have their name on your shared home. If you don’t have proper documents, medical professionals might not be able to talk to them when it counts the most. The person who may have the best insight into the choices you would make might be locked out of the process. And your children, who might never accept someone new taking the place of their natural parent, cannot be expected to automatically respect your new partner as you do.

What would happen to your partner if you should die tomorrow? Would he or she be homeless? Many are. Would they be without sufficient funds to meet everyday expenses? Most are! Would they even have use of the car you might have shared? Simply put, can you live with the thought that your lack of planning contributed to their ultimate demise? You must, at least plan for these possibilities. Sooner or later we all pass.

Get Real about Property! Travels through Real Estate Law by Tom Brodersen, Esq.