If you want to learn about new issues in our industry – and what real estate agents need to learn to do – you need to be aware of the decisions of your regulatory bodies. These decisions highlight the mistakes real estate agents are making as consumer demands change. Here are some lessons learned from real estate agents who have been fined for failing to do things that many think are “not my job.”
Estate agents are not lawyers and should not give legal advice. They should – and in fact legally must – explain all forms and documents to their clients before they sign them. A recent decision clearly outlined precisely what real estate agents should do.
The real estate agent involved in the decision (referred to in the decision as “Mr. C”) advised his client to sign a waiver that waived her financing condition, even though she did not have her financing in place. Mr. C never explained the legal implications of signing the waiver, particularly when the condition being waived had not yet been met. He also didn’t explain to her what would happen if she couldn’t close on the completion date. Lo and behold, she couldn’t get financing in time, breaking the contract, and she lost her $50,000 deposit.
Although Mr. C faced a fine, his client lost his dreams of home ownership. The lesson: Realtors aren’t lawyers, but they need to understand every line of contracts signed by their clients and explain the implications of taking one route over another. Failure to do so is not only a violation of Section 5 of the Code of Ethics, but also a disservice to its client.
Estate agents often use the phrase “buyer beware” to absolve themselves of issues that arise after an offer is accepted if those issues were not known to the estate agent prior to the submission of the offer. offer. But this common law principle does not act as a shield to shield the estate agent from liability in many circumstances.
For example, many real estate agents assume that if a buyer buys a home with an illegal unit, it’s the buyer’s fault for not doing their own due diligence before submitting an offer. Most real estate agents believe that providing zoning information is outside their area of expertise and therefore not allowed or even advised. This reflection is erroneous, even if the listing agent does not claim the legality of the current use of the property.
As a recent ruling clearly states, real estate agents representing buyers must be fully aware of the zoning regulations that affect a home and must perform due diligence on the legalities and zoning permissions related to a home. Providing zoning information and performing zoning and regulatory due diligence is also true when a buyer declares their intention to change the current use of a property, such as adding another unit to rental, transformation of the property into a duplex, construction of a terrace or a swimming pool or any other modification of this kind to the house. As another decision indicates, real estate agents who fail to provide sound advice in these cases violate a real estate agent’s responsibility to provide conscientious advice, to act in the best interests of their client and to provide the client all important information before making a decision.
Another “shield” that real estate agents consider a legal defense is, “The seller didn’t tell me, so I can’t be held responsible.” This shield, however, can only be used if the real estate agent has done their own due diligence by asking all relevant questions and requesting documentation to support the seller’s claims.
Take, for example, a situation where a house had solar panels and, unbeknownst to the buyer and the buying realtor, the solar panels were rented out and not wholly owned by the seller. The buyer was not informed that the panels were rented, and that renting them would be expensive, until the date of completion. While the details are unclear in the decision, it is implied that the seller’s real estate agent was aware of the sign rental, but failed to exercise due diligence, such as reviewing the contract rent. As such, the listing real estate agent was held liable for this gross omission and was found to have failed in its duty to provide competent advice, to represent the best interests of its client and to provide all facts important.
More and more people are entering the real estate business. This has caused a lot of competition and real estate agents are struggling to distinguish themselves as they struggle to explain why or how they provide value. A simple way to show your value is to fully understand the legal implications of the documents signed by your client, to be proficient in reading and understanding zoning rules and regulations, and to obtain the necessary advice when in doubt. After all, the role of the real estate agent is to provide competent advice and to protect the interests of his clients. Fulfilling this role isn’t just a way to get more customers, it’s the law.