Expert: liznarr - 3/8/2010

Question
QUESTION: Could you please give me a possible contact if you are unable to answer for Iowa's laws. Our problem is we hired a agent who has lower fees and the night we signed papers to buy, he asked the seller to join him at lower fees and without confirming it with us.
She agreed and all during the process, problems we found were not addressed not taken care of. Our fault we did not hire a inspector! But these plumbing, sewer, leaks, holes in wood floors and no running of water softener which is required in this city due to 18-20 grains hard. She had everything hidden and turned off water very early into the sale. A inspector would probably not have seen these problems.
I realize it's our fault for not hired a inspector but do we have any recourse as she signed the disclosure free of any problems and we got little if any help from our agent. Also, we never got a final walk through due to the closing being postponed too long.
We would appreciate any bit of help. A lawyer would just cost us money we don't have and we don't know who to go to.
         With best regards, Jan

ANSWER: Hi Jan,

Sorry to hear of your dilemma.  You are learning the hard way that the least expensive real estate agent can sometimes be the most expensive mistake you ever make when purchasing a property.

First of all, dual agency requires SIGNED consent of BOTH parties to a transaction.  An agent cannot practice dual agency and then, after-the-fact, try to get permission to do so.  The law is VERY specific on this.  If your agent did not obtain your permission before entering into dual agency, there can be SEVERE consequences for such behavior.  I’m quoting below from the Iowa Real Estate Commission Law as it concerns dual agency:

543B.58  Licensees representing more than one client in a transaction.
1.   A licensee shall not be the agent for both a buyer and a seller to a transaction without obtaining the written consent of both the buyer and the seller. The written consent shall state that the licensee has made a full disclosure of the type of representation the licensee will provide. The consent to multiple representation shall contain a statement of the licensee's duties under section 543B.56, subsection 1, a statement of the licensee's duties to the client under section 543B.56, subsection 2, paragraphs "b" and "c", and a statement that the clients understand the licensee's duties and consent to the licensee's providing brokerage services to more than one client.

You can research anything you want to on the Iowa Real Estate Commission site at http://www.state.ia.us/government/com/prof/sales/about.html

To get to my quote above about representing more than one party in a transaction, on the main page click on the law index link at the lower left-hand corner of the page under “Code of Iowa.”  On the next page that comes up, scroll down to “Real Estate License Related Law” and click on the “Word” link for “543B Real Estate Brokers and Salespersons and 558A Real Estate Disclosures.”

There are numerous forms to be signed when in dual agency.  In the link below this paragraph, you will find explanations on the different types of agency representation, including dual agency; and there are also forms at the bottom of the link below.
http://www.state.ia.us/government/com/prof/sales/PDFs/agency_disclosure.pdf

In addition to first signing an agency disclosure form, your agent should have next also asked you to sign the form for “potential” of dual agency, and finally the actual dual agency consent agreement form.  Dual agency is person and property specific and cannot be used in a general sense for numerous properties:  It applies to specific parties and ONE specific property.  If you are missing one or more of copies of the above-mentioned agency formS, the Iowa Commission will want to hear from you.

As additional information, defects in a property are NOT confidential information and MUST be disclosed if known, or “should have been known,” by an agent.

The purpose of the Real Estate Commission is to protect the public against unscrupulous agents, and it sounds like you have certainly located one.

I would strongly consider doing one or both of the following:

1.  Call the Iowa Real Estate Commission and file a formal complaint against this agent for practicing dual agency without your advance consent (if this is actually what happened).  I’m sure there is much more to tell in your case, but this is a starting point for you, and…depending on the details…the Iowa Commission can revoke this agent’s license to sell real estate if they choose to do so.  From the Iowa Real Estate Commission site, the name and contact number of an investigator you can speak with about this is:  Jeff Evans, Investigator       515-281-7361.  The Commission/investigator will not address any of your issues with your home, only any Iowa Real Estate Commission Laws this agent may have violated.  You will, of course, need to explain to him all the problems you have had, but remember that the duty of the Commission is only to deal with a violating agent.  Neither will this Commission get involved with any monetary dispute.  Again, all they do is fine, reprimand, suspend and revoke licenses of violating agents.

2.  Call the Broker-in-Charge (BIC) of this agent.  The BIC is responsible AND liable for all actions of ALL agents working under him/her.  Demand that restitution be made by the BIC and/or his/her agent for all the damages you have uncovered, or you will file suit for Breach of Agency and practicing undisclosed Dual Agency.

If you don’t get some favorable responses after doing one or both of the above, you need to speak with an attorney ASAP.  If you don’t feel you can afford one, apply for legal aid.

If this Seller (also represented by YOUR agent, WITHOUT your WRITTEN permission), falsified a disclosure form, that is FRAUD – “intentional” misrepresentation.  There can also be severe consequences for fraud, and if you don’t get any reimbursement on your own, you will have no choice but to retain an attorney or either be left hanging out to dry.  

Many good attorneys will consult with you at no charge.  Possibly you could find a good, reputable TRIAL attorney (not an office paper-pusher) who would take your case on a contingency basis.  That way, you could possibly not have to up-front any money except out-of-pocket costs of the attorney, and then any award you receive would be split with the attorney.  I have heard of attorneys doing this for 1/3 of the recovery, PLUS their out-of-pocket expenses for filing fees, etc.

I do hope you will take whatever action you can against this agent.  There is no room in the real estate business for agents who operate in this manner.
Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth

---------- FOLLOW-UP ----------

QUESTION: I've been sick so just now found your so helpful message. And I want to thank you with a monetary gift but need to wait until our taxes come back which is possibly this coming Fri., so I want to keep this open until then.
As for your feedback, It sounds like the agent could be in alot of trouble. We were not forewarned of the dual agent's intentions nor did we sign any document pertaining to this. I don't think it would help to contact his broker due to her being his wife. And no problems we brought to his attention were taken care of by the seller. When I told the agent of the water softner (which is a necessity in this area) not working but claimed to be by the seller his reply was, "we took ours out because it made my wife's hair too soft and she didn't like that", "so you're probably better off without it". He doesn't even live in a area that needs softners. Same with garbage disposal, his comment was. "well... you can't put much down them these days and it's almost easier to just put the waste into your trash." The seller noted these appliances in the home sale description papers she made.
This was a shady and very unfair sale and I'm not sure I can live happily in this house with the resentment I have. I did email a couple lawyers who specialize in this area and neither of them responded. I will work on trying to get this resolved if I'm lucky enough to find a lawyer who honestly cares. All I've been told by other agents, etc., is that I have no recourse since we didn't hire a inspector. Maybe they're right but I sure hope not. Again, I can't thank you enough but I will send you a thank you. So sincerely, Jan

Answer
Jan,
Sorry to hear you have been sick.  Hope you are better by now.

Don’t even think of trying to compensate me for any advice that may or may not be helpful to you.  For whatever it’s worth, any advice or suggestions I give or make through this site are simply because I enjoy helping people.  I truly resent it when I hear stories like yours, and I’m sure there are thousands of others out there.  Unscrupulous agents are the terrorists of the real estate industry, and their motivation is greed.

You may, or may not, have any recourse for not having done an inspection.  That is where an attorney will need to advise you.  However, breach of agency has nothing to do with your Contract of Sale.  That is a violation of license law in all 50 states if your agent did, in fact, violate the rules of dual agency.

If you still have not heard back from either of the attorneys you emailed, keep trying.  You can also file a formal complaint with your Real Estate Commission against your agent for her alleged breach of agency.  That will not cost you anything and could be your best starting point.

Please keep me posted on your progress.  If you want, you can send me your email address through this site, and we can correspond privately from there.

Regards,
Elizabeth