In these difficult economic times realtors will not find many new listings where the borrower is not either in foreclosure or are close to being in foreclosure. When this is the case, the realtor faces significant malpractice and other liablity risk if that realtor does not insist that the borrower retain a local real estate attorney who has experience in the foreclosure market and knowledge of the practices, procedures and case law particular to the circuit in which the foreclosure case is filed.
Oftentimes, a client will retain a realtor to list their property when they are a few months behind on their payments or otherwise close to foreclosure. Recently, I have read listing agreements from realtors that recognize they will be engaging in a short sale listing and sale transaction. The problem is that both the listing agreement and supporting documents and many of the verbal representations made by the realtor in connection with the listing either subtly or directly suggest that the client’s problems will be solved when the short sale transaction occurs. The problem with this is that if the transaction does not occur, the realtor has no back up plan and offers no guidance if this does not occur. I have also interviewed realtors who have been providing legal guidance to clients about the short sale process and much of this information is just flat out wrong….bottom line is realtors should not be advising their clients of the consequences (legal and otherwise) of a short sale transaction if they are not qualified to offer such opinions.
There are several important reasons why it benefits the realtor for their clients to obtain legal counsel. The first and most important to that realtor is they can largely be shielded from malpractice or errors and ommissions liability if the legal matters are being addressed by the client’s attorney. The second is that if a client retains an attorney, there is a far greater liklihood that the attorney can delay the forecloure case and buy the realtor and client enough time to force a short sale transaction. Why waste months of listing and showing time only to have the property lost at foreclosure….this can largely be prevented by demanding that the client retain an attorney if foreclosure is threatened or active.
For more information contact matt weidner at www.mattweidnerlaw.com