Legal Question in Real Estate Law in Minnesota

Respondeat Superior

Mortgage Broker employs an Independent Contractor to originate mortgages only. IC is accused of helping buyers (mortgage clients) of a property fraudulently convert proceeds from Seller via Title Co passing proceed checks to others besides Seller. In addition, those buyers purchased a different home to place Seller in a lease with option (due to bad credit) that has ''unconscionable'' terms. Seller's Atty trying to sue all parties involved.

Does Mortgage Broker have a true agency with either the IC or title Co in general, or would any of the deceptive acts be considered outside the scope of their contracts w/ the broker? Broker does not have a history of negotiating sale prices of homes or setting up lease option agreements and these were not services detailed in IC's contract. All the alleged indiscretions were performed w/out Broker's knowledge, authorization or direction.


Asked on 10/09/07, 1:47 pm

1 Answer from Attorneys
Steven Vatndal Law Office of Steven J. Vatndal

Re: Respondeat Superior

First, the mortgage broker (MB) definitely needs to retain an attorney experienced in real property litigation NOW. It sounds like seller has started suit, which probably means that deadlines are running. In addition, although I do not practice criminal law, the facts described indicate possible criminal prosecution of some parties, and the MB attorney needs to keep this in mind when defending the civil suit.

Whether the MB is liable for the acts of IC under respondeat superior or an equitable remediy such as estoppel is so fact sensitive that it is impossible to predict the liklihood of liability with the facts given.

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Answered on 10/09/07, 2:03 pm


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