Legal Question in Real Estate Law in California
Is it improper (i.e. is there a basis for filing a report with the agency overseeing RE agents) or illegal for a real estate agent (in this case, the seller's agent) to be dishonest concerning unpermitted renovation work on a home? Facts that might be pertinent: 1) Buyers in this case explicitly questioned seller's agent about unpermitted recent renno work; 2) the seller's agent initially stated that no permits had been required for the work; 3) buyers met with city building department and learned that permits were required for the work and informed seller's agent of this; 4) seller's agent contacted prospective buyers and stated that: a) permits had since been pulled; b) seller paid for expedited processing; and c) that seller had met with the city officials and permits would "definitely" be issued by the following week; 5) Prospective buyers followed up on the agent's representations and learned from the city that neither the seller nor his agent had met with city officials, the seller had not pulled any permits nor filed for any permits of any kind, 'expedited' or not. In short, it appears that the seller's agent had knowledge that permits were important to the buyers; that no permits existed for work that required them, and then the seller's agent proceeded to mislead the buyers.
This wasn't a situation where the seller's agent had no knowledge of the unpermitted work. That was made entirely clear to him by the buyers. Further, the seller's agent made statements to the buyers that proved to be untrue, statements that the agent should have known were untrue.
2 Answers from Attorneys
The facts as stated show improper conduct by the agent which, if clearly and fully documented in a complaint to the Department of Real Estate would very likely result in discipline. In addition, I believe a successful lawsuit is theoretically possible, but unless you have sustained financial losses, going to court is probably impractical. All this assumes, of course, that there aren't additional facts giving the agent a defense.
I agree with Mr. Whipple about the complaint to the state DRE, but he is completely wrong regarding a lawsuit. Had you believed the seller's agent and closed the transaction, only to later find out these facts, you would most certainly have a case. However Mr. Whipple has, apparently, forgotten basic first-year Torts class. In order for a cause of action for misrepresentation to arise, the plaintiff must have both reasonably relied on the misrepresentation and have damages from it. You clearly did not rely on what the agent said, and therefore also cannot have damages from that reliance. That doesn't make going to court "impractical." It would make going to court an abuse of process and/or malicious prosecution.
I would also add that if the agent is a true "agent" working for a broker, or is a broker working for another broker, I would make a complaint to the employing broker. The supervising broker will most certainly want to know about this, because if you had relied and been damaged, the supervising broker would have been liable to you along with the person who made the actual misrepresentation. You are also much more likely to get swift action against the agent from their employer than the bureaucrats at DRE.
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