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Real Estate Ethics - The New Roof Strategy

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What Might Have Been Done
It's difficult for me to come to conclusions without knowing much more information, especially about the contract terms. Most parties agree that the buyer can make inspections, while other terms spell out just who is responsible for repairs and to what dollar extent. A contract that does not address inspections is uncommon, but if the parties agree to one, so be it.

Based on your letter, you could have refused to let the inspectors on the property, but letting them on doesn’t make you responsible for paying for discovered defects. For another thing, the hundreds of contracts that I’ve been involved with where inspections are agreed upon only require that the roof be leak-free at time of inspection. Remaining roof life is not an issue, and it is clearly subject to wide variations in opinion. That’s one reason why the “leak-free” phrase is important, because most inspectors can agree on whether a roof is leaking or used to leak.

Unfortunately, I have personally experienced watching a Realtor try to get a new roof for a house his son and daughter-in-law were buying. Because there were half-a-dozen cracked tiles and the paint had faded, the inspector, who was chosen by the Realtor, recommended that the entire roof be replaced for $12,500. The sellers, smelling fraud, told the buyers to take a walk and soon had the roof looking like new for $750.

First Action to Take
If you conclude that the buyer is in breach of the contract, you should instruct the listing office broker in writing that you are claiming the deposit and will be consulting an attorney. That should lock up the deposit and prevent it from being returned to the buyer until the situation is resolved.

Then find a lawyer who has real estate litigation experience and discuss a suit for specific performance, damages, and costs against the buyer. The first meeting could even be without cost to you. The attorney will advise you if the real estate office and its broker should also be named in a suit. Most contracts call for the prevailing party in a law suit to recover legal fees and expenses from the losing party – check to see what yours says about attorney fees.

Where It Stands
Finally, regarding the lack of disclosure, you had the right to know that all the parties worked for the one firm, and your listing agent had a duty to tell you about this intimate, almost incestuous relationship. You can file a complaint against the firm and agents with the state licensing agency and with the Board of Realtors where the agents are members.

The former will investigate and decide if there was a violation of license law, while the latter will decide if the Realtors’ Code of Ethics – particularly Article 2 about disclosure -- was violated. But it may take a judge to decide what to do if the buyer breached his contract.

I'm sorry you are having such an awful experience with your sale and hope things work out for the best.

The Author: Larry Lowenthal is a Florida REALTOR® with extensive experience in ethics hearings and resolutions. He provides expert witness testimony in cases involving real estate ethics questions. More about Larry Lowenthal.

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