Legal Question in Real Estate Law in New York
Ethics and Responsibilities of Real Estate Brokers
Are there any special responsibilities a broker must comply with when offering a property that is his own? In this case, the broker offered property he owns for $300,000. This was agreed to by the buyer. The buyer requested a contract be drawn and presented to the buyers attorney. It appears the broker is now peddling the same property to other brokers informing them that he has a sale and they better act quickly at a higher price. Is there anything illegal or unethical about this practice and why are binders in Suffolk County not binding?
1 Answer from Attorneys
Re: Ethics and Responsibilities of Real Estate Brokers
Q. Are there any special responsibilities a broker must comply with when offering a property that is his own?
A. No. The only responsibility a broker has is when he or she is purchasing property from a client. In that instance, a broker cannot purchase the property and take a commission.
Q. Is there anything illegal or unethical about this practice.
A. No. However, it is certainly bad business. It erodes confidence between the seller and prospective purchaser. If the real estate market crumbles before the contract is signed, the seller may take a large loss.
Q. Why are binders in Suffolk County not binding?
A. Supposedly, a binder is an agreement to agree, which is not binding because there is no �meeting of the minds� which is needed to form a contract. However, I have seen some binders that are contingent upon approval of an attorney within a short period of time. It seems that the binder converts to a contract if the seller�s attorney delays in review of the binder. Rule of thumb, read and understand what you are signing.
Mike.
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