Comments on: Whose client is it, anyway

By: Eileen

Eileen — Thu, 25 Jan 2007 19:07:11 +0000

Craig, if we don’t write any unique language in the form (when I started in real estate, we wrote out “purchase will be from proceeds of conventional type financing in the amount of …….interest rate of…..
No inspections, no form 17. Now there’s a boilerplate form for everything, so we dont’ have to get into trouble if we know when and where to use them.
However, those bulder addenda are horrible. Have you seen the Intracorp one? I don’t know why anyone would buy using that addendum, but they tell me most buyers and their agents don’t even know what it says. For instance if you sell a unit before 4 years, you have to present the P&S to the builder! Do you think anyone will remember to do that?

By: Craig

Craig — Thu, 25 Jan 2007 17:42:24 +0000

Yes, the attorney review period would be sufficient, although the buyers should have the attorney on board so that the document can be immediately forwarded for review. Reba, in terms of your attorney reviewing addenda on behalf of your clients, and you paying for such legal services: this arrangement raises several issues under the WA attorney Rules of Professional Conduct (see RPC 1.8(f) and RPC 4.3 at least). Obviously, these are largely issues for your attorney, not you. However, the bottom line is that this arrangement may not provide your clients with appropriate representation. They are best served by incurring a relatively minimal cost themselves (my flat fee is $595 for a client with an agent) and having their own attorney whose duty runs clearly and exclusively to them.

By: Eileen

Eileen — Thu, 25 Jan 2007 01:45:29 +0000

Craig, I agree with Rebecca that you don’t get calls because the agents don’t understand the reality of those addendums. I would recommend buying the new construction and making it contingent on attorney review in 3-5 days. Most builders would go along with that and that way, it doesn’t matter if the agent understands, but the truth is, they don’t know what they don’t know. The trouble with getting the attorney involved before the purchase is that there is often not enough time, especially in a multiple offer situation. Doesn’t the attorney review period suffice for proper recommendation?

Rebecca, that builder was an idiot. Wonder if it was the same builder that I sold that had 62 items on his inspection report plus had several liens on title! I order a super fast title report on most small builders as they often don’t pay payroll taxes, etc or are in a lawsuit with some sub, etc.

By: Reba Haas

Reba Haas — Wed, 24 Jan 2007 20:16:18 +0000

I’ll tell you why you don’t get calls. Most people, buyers and agents, don’t read all of the document to begin with so they don’t realize what they’re missing. We stress reading of ALL documents to our clients, understanding them, and if they have questions to contact an attorney. With companies like Microsoft offering certain legal services benefits to their employees (if they choose to take them) many of our clients there take advantage of it to have documents explained to them. We still suggest this to all of our other clients and we also provide access to our attorney for this purpose – I’ve even sent copies to our attorney for her to review and provide feedback to our clients and I’ll pay the bill for her time. I’d really rather the client know exactly what they’re getting even though sometimes people act like ignorance is bliss and that it’s all sunshine and rainbows when buying property.

Eileen, I had one small builder on the Eastside who had his own listing agent and this guy tried to tell me the 2-yr warranty his builder offered was actually better than a 10-yr warranty a larger builder had because it “proved” that his builder’s product was better because he didn’t need to warrant it as long. I laughed at him and pointed out to my clients that they really needed to make sure and note all potential problems now and to keep track of them and not miss any deadlines for having construction flaws noted. This client also happened to work at MS and I told him to make sure and have his contract reviewed particularly with the builder’s addendum and warranty and he did, thankfully. Sure enough, a year into ownership a lot of issues with drywall came up and he had to go back after the builder for repairs.

By: Craig

Craig — Wed, 24 Jan 2007 18:51:37 +0000

All you need to understand is what constitutes the unauthorized practice of law. The agent does not even need to read a 12 page non-MLS addendum. The agent cannot legally discuss or explain the terms of this addendum with the client (and even cannot legally discuss or explain the terms of the MLS forms). Therefore, if the client has ANY questions or concerns at all, referral to an attorney is required.

The agent should stress to the client that the client needs to read and understand ALL contractual terms, including those in the addendum. But if the agent tries to understand the terms before deciding whether to refer to an attorney, then the agent is making a determination as to what constitutes a “significant” or “important” contractual term. I think this determination is also included in the definition of the “practice of law” and therefore is inappropriate if done by an agent.

Any agents out there have a different analysis? And if not, how come I don’t get calls from buyers of new construction?

By: Eileen

Eileen — Wed, 24 Jan 2007 05:29:16 +0000

couldn’t agree with you more, which is exactly what I did. However, don’t you need to understand the repercussions to know that they need an attorney?

By: Craig Blackmon

Craig Blackmon — Wed, 24 Jan 2007 05:01:57 +0000

You ask: ” Did you know that one very prominent builder requires the first buyer to hold the builder harmless if there is a sale before 4 years and the second buyer is part of a class action law suit? Would the average agent understand those 12 pages of builder addendum well enough to read this and have their buyer consider the repercussions?” How about this: SHOULD an agent be expected to understand those 12 pages? SHOULD the agent be explaining these 12 pages to the client and insuring that the client understands? If you’re reading non-MLS boilerplate contractual terms and explaining them to your client, doesn’t that constitute the practice of law? The WA State Bar Association certainly thinks so — and well beyond the scope of an agent’s limited authority to practice law. Perhaps its in the client’s best interests — not to mention the agent’s — to refer the client to an attorney under these circumstances.