by Sean McManus
Staff Writer
A commissioner with the Florida Real Estate Commission and an attorney with the Florida Association of Realtors spoke to about 80 people at a breakout session during FAR’s real estate summit last week at the Osborn Center. Their advice was “PYF — Paper Your File.”
Dave Morgan, senior counsel with the FAR, works in the Orlando office, which maintains a real estate hot line where realtors can call and make sure that anything they are doing related to their job is legal.
“We are seeing an increase in real estate litigation overall,” said Morgan. “But mostly that’s just because the general population in Florida is increasing.”
The first case Morgan cited as a means of providing realtors (as well as property owners) with lessons on survival happened in South Florida where a real estate broker, after a potential client decided not to purchase a condo because it was too expensive, bought a similar condo from the same developer for less money.
“The potential client sued the broker, claiming that brokers have a ‘continuing duty’ to get their clients the best deal,” said Morgan.
The lesson, according to Morgan, is that brokers need to make sure that when a client backs out of a deal, they document the end of the relationship.
“Just a nice letter saying, ‘It was a pleasure serving you. I hope to work with you again in the future,’ would work,” said Morgan.
The Florida Supreme Court ruled in favor of the broker.
Another case involved a tenant who hired an independent contractor to install cabinets in an apartment without the knowledge of the landlord.
“When the cabinets fell and broke the tenant’s neck, he sued the landlord,” said Morgan, adding that while landlords are not usually responsible for the mistakes of independent contractors, it’s important to get a waiver signed absolving them of responsibility if any tenant makes decisions without their knowledge.
A third case highlighted a broker who had knowledge that a school was about to be built on property adjacent to a new development. He told the perspective owners that the land was set aside as a nature preserve.
“He definitely lied,” said Morgan. “But the school development project had been on the front page for months and so the judge ruled that the homeowners should have known about it.”
But Morgan reminded the brokers that in cases where they may accidentally mislead a buyer because of ignorance, they could be held responsible.
“Don’t guess about what’s going to happen to the neighborhood,” he said. “You need to know.”
The last case Morgan discussed involved activities that constitute real estate work and therefore must be performed by those with a real estate license.
“There was a guy doing marketing for a real estate firm and when he sued his employer for lack of pay, they said, ‘You weren’t eligible to perform that work anyway so we’re not paying you.’” The message was that contact with clients, even telephone calls inquiring about interest in a particular piece of property, must be completed by a licensed broker. “But just general office work doesn’t,” Morgan said.
Matey Veissi, who works for the state commission on real estate, an independent agency appointed by the governor that oversees real estate violations, also addressed the group. Veissi, who works out of the Miami office, said that there are about 5,000 complaints a year that come into her office.
“Usually half of those are completely spurious and get thrown out,” she said.
Veissi’s message was primarily one that dealt with financial practices. She reminded the audience that escrow accounts developed exclusively to temporarily hold deposits for clients in the midst of a transaction must exclusively remain for business transactions.
“People write checks for personal items out of their escrow accounts,” said Veissi. “It’s unbelievable.”
Veissi also said a paper trail is important, and will usually save a broker who may be under suspicion.
“You have to fax receipts of checks if the deposit is returned,” she said. “As long as you document the fax, you’re OK.”
Veissi also said that when applying for a real estate license any arrests, even traffic violations must be reported, otherwise it is considered lying.
One question after the speech related to advertising. An audience member said that he had an experience where he was held responsible because an ad for a property that had already been sold stayed on a newspaper’s website even after they had pulled the print version.
“Just record the pull,” advised Veissi.