Legal Question in Real Estate Law in California
mortgage: misrep/negligence/fraud/collusion/conflict of interest
On 1/6,I signed 2 Purchase Agreements re: res. properties in Manteca,CA. with a Mortgage Broker met through my longtime friend & Finance Lender. I'm told next day that the sellers accept my offer, but never receive signed copies of the Agreements nor anything with Broker's (acting as a Dual Agent)signature. Two days later, my finance lender produces 2 Loan-Approval-Submission-Letters from an affiliate Lender. c.Week later, Lender informs us my loans are on hold because appraisals, procured by Broker, acutely overvalue properties. Broker says, ''I'll fix it''. c.3 more weeks Broker is inaccessable & no one in his office knows what's happening. c.2 more anxious weeks & my loan offers expire & suddenly I receive 2 sets of loan docs from 2 different Lenders with differing loan amounts also differing from those in orig.Purchase Agreements. c.3 more weeks of haggling with Broker over unresolved items. I've had it & remit Purchase Agreement & Escrow Cancellations & Request for my $5K Earnest Money Deposit. I since learn: the loan docs came from Lenders that employ Broker's relatives & that Broker & my Escrow Officer had/have a Grantor/Grantee TD relationship.
Any advice/remedies for recovering my $5K??? Liability? Damages?
J.D.
1 Answer from Attorneys
Re: mortgage: misrep/negligence/fraud/collusion/conflict of interest
The broker owes you a fiduciary duty of communication and responsibility. Many times brokers have their clients sign a document stating that they are not your agent. Regardless, the law makes them your agent and they cannot contract away that duty.
On the first page of the purchase agreement, there is a paragraph setting forth the financing that you will attempt to get. The financing is generally a contingency of the deal. Thus, the first question is whether you could obtain the financing set forth in the purchase agreement. You said you received two sets of loan docs for differing amounts. What were the amounts? Did any of them satisfy the financing contingency? If not, the seller must return your $5k. If you did obtain such financing, then you may have to use another reason to back out of the deal. For example, an inspection with results acceptable to the buyer is usually a condition to the deal as well. Thus, if your inspection revealed something unacceptable to you, you have the right to cancel and a return of the deposit.
If you cannot obtain a return of the deposit, the next question is whether your broker should have to reimburse you. He did produce two loans. You will have to show that he either made false promises or that he was negligent in some manner, which acts/inactions caused you to lose your $5k. You indicated that you were fed up and chose to cancel the deal. Did the broker perform?
Your real estate agent also owes you a fiduciary duty. Did you ever receive copies of the purchase agreement?
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