Law Offices of
Dorfman and
Sitzberger

Real Estate Attorneys and Real Estate Law

Real Estate Purchase and Sales

Selling a residential or commercial property? For sale by owner?  Have us review your purchase and sale agreement, or fully represent your interests in negotiations to avoid legal problems later.

Are You Buying a Property?

Have us review your loan documents or purchase and sale agreement. This is particularly important if you are purchasing a bank-owned or foreclosure property.

Why Can’t My Real Estate Agent Handle My Legal Problems as Well as a Real Estate Attorney?

Real estate agents are experts in helping you select an appropriate property to buy, or soliciting a qualified purchaser to buy your property. However real estate agents cannot render legal advice when problems arise. We make sure the terms of the contracts are to your best advantage, and we consult with you to explain the terms and answer any questions you may have when problems arise. Many of our clients are referred to us by one of the many real estate agents in Nevada County who know there is no substitute for solid legal advice from a real estate attorney.

Mortgage/Loan Resolutions

Every day dozens of California residents face foreclosure and financial ruin as the value of their home or investments plummet and sink “underwater.” There are legal strategies to assist. But beware of unscrupulous “loan modification consultants” who charge thousands of dollars of fees with little results.

Short Sale

We have concentrated on ethically and economically guiding individuals through the minefield of legal options, toward financial safety and peace of mind. We have advocated on behalf of clients with every major lender. We know what is important to each, and how to elevate our clients’ case to the attention of actual decision makers to secure results. If a short sale is indicated we can review your short sale package before it goes to the lender.  Also, we can draft a hardship letter your lender will appreciate, instead of dismissing your application out of hand.

Deed in Lieu of Foreclosure

Meet with our real estate attorneys to explore all your options be they short sale, debt negotiation, deed-in-lieu of foreclosure, bankruptcy, or strategic default and foreclosure. Usually, a one-hour consultation to develop a strategy specific to your loan(s), your lender, and your needs provides a long-term solution. You can then determine what further participation by us you wish, and the extent to which you wish to handle matters yourself.

Other Mortgage Resolutions

Please call us to discuss your particular situation, and how we can best assist you.

Dorfman and Sitzberger is fully compliant with all California and federal laws governing the rendering of legal advice in connection with the modification of any federally insured loan.  We are current in all the latest developments in the field, including those concerning the federal Home Affordable Modification Program (HAMP), and the federal Home Affordable Foreclosure Alternative (HAFA).

General Real Estate Issues

You have bought or sold your property and now are ready to live happily ever after. But occasionally, issues arise. It may be that your neighbor claims he has an easement over your driveway, or that your garage crosses into your neighbor’s land.  You may discover the seller misrepresented a condition on the property in his disclosure statements, or that you are being accused of not making a necessary disclosure yourself. Dorfman and Sitzberger real estate attorneys have represented buyers, sellers, and real estate agents in every type of real estate controversy. We know the law, we know the evidence to look for, and we can help you with your real estate controversy.

The Tip of the Iceberg of Legal Problems in Real Estate Transactions

This is an overview of who the typical “players” are in the course of a residential purchase and sale and the legal obligations and liabilities that each may bear.

Whole articles can, and have been written about the law relating to each one of these persons, and in the future, we will concentrate on each, but for now, this will provide some orientation if you are involved in buying or selling a home. Before we discuss the “players” it is worthwhile explaining basic real estate law and terminology.

Basic Concepts, “In Escrow,” “Closing” etc.

Transactions are regarded as “in escrow” when the parties have agreed upon the basic terms of the contract and are waiting for the parties to exercise their rights (like conducting inspections) and options (such as voiding the contract if they don’t like the inspection results).

When/if the parties actually get to the point of paying money in exchange for passing the title, the transaction is said to have “closed.” Thus, a transaction can be “in escrow” for a while, and then have “closed,”

However if one of the parties pulls out of the contract, in accordance with the contract terms or even in breach of the terms, the transaction is said to have “fallen out of escrow.”

Real Estate Title and Escrow

When the transaction is “in escrow” a “title insurance company” will issue a “preliminary title report” to the Buyer. The PTR basically lists all of the circumstances appearing on the record that prevent the Seller from conveying an absolutely clean title.

Title Report

For instance, it may note the gas company has an easement to maintain its pipes, or the neighbor has an easement to use the driveway. The PTR is a statement that the title insurance company might use to ensure that the Seller can convey a clean title. It may note items on the list of exceptions. This may include anything the Seller knows about already, or anything that a survey might have revealed is a problem. In this respect, a title insurance policy verifies circumstances that have already occurred. It is very important for the Buyer and the Buyer’s agent to read the title report.  If they don’t understand it, they should seek clarification from the title company or an attorney.

Escrow Company

Transactions are “closed“ by an escrow company, which is often owned by a title insurance company. They act as the middleman between the parties. They keep the deposit and purchase money while the transaction is “in escrow.” When it comes time to “close,” the escrow agent will have the Buyer and Seller each sign the necessary documents. The agent will make sure the Buyers have deposited the funds necessary to make the purchase and cover any applicable fees. They make sure the Sellers have signed the documents necessary to convey ownership. They make sure other monies will be distributed to make sure other encumbrances are paid off (like the Seller’s mortgage), and fees are paid (like judgment liens or the agents’ real estate commissions). The escrow agency is bound to follow the “Joint Escrow Instructions” of the parties.

So, who are the main players in the typical residential real estate transaction and what are their duties?

The Seller

Obviously, the Seller is the person who owns the property and wishes to convey the property. The Seller  is obligated to abide by the conditions of the typical purchase and sale agreement.  In most cases this is a form prepared by the California Association of Realtors (CAR). The CAR form provides that the Seller will convey good title to the Buyer upon the completion of the terms and conditions of the contract. That means that by the date the transaction closes the Seller will be the owner and will convey it without any encumbrances affecting the title.

Warranty of Seller

Unless they do so by express representations, Seller’s do not warrant that the property they are selling is any particular condition. There is no Seller’s implied warranty of quality or physical condition.

Precisely because the Seller makes no implied warranty as to the condition of the property they have an important obligation.  It is to disclose to the Buyer any fact of which they are aware and which they know the Buyer is not aware, that might affect the desirability or value of the property.

Selling ‘As Is’

So, a Seller is not protected by the simple statement that the property is being sold “As Is.” That only advises that the Seller is not intending on making any changes or improvements to satisfy the Buyer..

When a property is being sold “as is” it is important that the Seller discloses conditions of which the Buyer is unaware.   We will discuss traps for the Seller in fulfilling their obligation of disclosure. Absent some reason to suspect the Seller has made a misrepresentation, the Buyer is under no obligation to confirm the Seller’s representations.

In addition to their obligation to disclose conditions about the home of which they are aware, the Seller is also obligated to complete various disclosure forms that are provided for by state statutes.

The Seller’s or “Listing” Agent/Broker

The Seller’s or “Listing” Agent and Broker is the agent and Broker the Seller has chosen to represent them in the sale of the property. The Agent is usually an independent contractor or employee working for the Broker. The Broker is liable for the errors and omissions of the Agent.

Seller’s Agent Fiduciary Duty

By statute, the Seller’s agent owes a fiduciary duty of utmost care, integrity, honesty and loyalty to the Seller. Fiduciary duty is the highest level of duty owed under the law,  Just as a trustee might owe to the beneficiary of a trust. So, for instance, a Seller’s agent has to disclose relationships they might have with the Buyers. He or she also owes the Seller the diligent exercise of reasonable skill and care.

That duty of professionalism means the Seller’s agent is the consultant to the Seller.  For instance, in investigating the creditworthiness of a Buyer to whom the Seller is going to extend financing.

Obligation of Disclosure

Another area in which the agent may be assisting the Seller is in complying with the Seller’s obligation of disclosure. We have had many cases in which a Seller has advised their agent of various circumstances affecting the property, which the agent has told the Seller they need not disclose. If those undisclosed circumstances turn out to be important, both the agent and the Seller can be held liable for non-disclosure.

The Seller’s agent is not obliged to investigate the ramifications of facts they are told about by the Seller.  And they do not need to determine if what the Seller tells them is true or not. They must, however, make sure they are disclosed if they are material. And they must make sure they do not make misrepresentations concerning the condition of the property.  For example misrepresenting that the property has a certain number of bedrooms, or misstating the acreage etc.

Seller’s Agent Duty to Buyer

Seller’s agents are obligated to do their own a visual inspection of accessible areas of the property,  They must also make their own disclosure of anything of note that they observe.

Not only are they obliged to the Seller, they have a duty to the Buyer of reasonable skill, care, honesty, and fair dealing. This means the Seller’s agent owes a duty to the Buyer to disclose material circumstance affecting the property of which the agent is aware,  This is true even if the Seller is not aware of them, or does not want to disclose them.

Commission Arrangements

A Seller’s agent is paid by a commission they receive from the Seller upon the sale of the property, typically 6%. They will generally split that commission with an agent that brings them a Buyer.

The Buyer

Obligations to Seller

Buyers are obligated to abide by their promises made in the purchase and sale agreement.  The most important obligation is to pay the purchase price by the date designated in the contract.  They also owe to the Seller an obligation of good faith and honesty. So, they cannot lie to the Seller about their creditworthiness in trying to persuade the Seller to extend them Seller financing.

More broadly, however, the Buyer is obligated to take those steps necessary to protect their own interests.

Buyer’s Obligation of Due Diligence

The Seller has a duty to disclose material conditions unknown to the Buyer and that are not within the Buyer’s “diligent attention and observation.” So, if the Buyer fails to exercise “diligent attention and observation” such as making a diligent visual inspection of the property, or calling for professional inspections where appropriate, they risk excusing misrepresentations by the Seller.

Statements of the Seller must be investigated by the Buyer. A Buyer of real property may well be charged with knowledge of the facts a reasonable inspection would disclose.

The Buyer’s Agent

While the Seller’s agent has no duty to discover the condition of the premises beyond their visual inspection, or to investigate the ramifications or truth of the Seller’s representations, the Buyer’s agents’ obligations are far different.

Buyer’s Agent Fiduciary Duty

Buyer’s agents owe their Buyers a fiduciary duty which encompasses the “utmost” care, and “diligent” exercise of skill and care. While the Seller’s agent must disclose facts, the Buyer’s agent must learn the facts. They must read everything and alert the Buyer if there is anything of particular importance contained in documents, such as unknown liens or easements encumbering the property disclosed on the preliminary title report.

A Buyer’s agent is the Buyer’s’ real estate advisor, who must investigate the representations made by the Seller, determine their possible ramifications, and advise concerning the need for further investigations and inspections, and the advisability of the transaction itself. The Buyer’s agent is not expected to render advise beyond his or her training, such as engineering or legal advice, but is obligated to advise the Buyer to seek that type of advise when it appears necessary to do so.

Verification of Seller’s Representations

The Buyer’s agent may not take at face value the representations of the Seller/Seller’s agent, he must either verify them or warn the Buyer that they are unverified. The Buyer’s agent’s obligations in this regard become particularly important when the Buyers have expressed a feature of the real estate with which they are particularly concerned, such as they really, really, want a property they can subdivide. In that situation, the Agent cannot merely accept the Seller’s representation the property can be sub-divided unless he warns the Buyer he has done nothing to verify that it can be sub-divided..

The Buyer’s agent is generally paid by receiving half of the commission the Seller owes to the Seller’s agent

The Dual Agent

A dual agent is one that represents both the Seller and the Buyer. The dual agent is the enviable position of being paid the full commission for selling the property without splitting it with another agent who has brought them a Buyer. When one agent lists the property and then also finds a Buyer for it, it is sometimes called “double ending” the transaction.

Fiduciary Duty of Dual Agent to Seller AND Buyer

There is nothing illegal about Dual Agency, The position has its perils, however. As a dual agent, the agent owes fiduciary duties to both the Buyer and the Seller. The same is true of a brokerage company in which both the Seller’s agent and Buyer’s agent are employed.

The dual agent must, on behalf of the Seller, make sure the Seller has made all necessary disclosures, and then must, on behalf of the Buyer, must assist the Buyer to investigate all the ramifications of those disclosed facts and advise what further investigations should be undertaken.

The dual agent has the obligation to communicate all offers or counter offers of either party to the other but is prevented from communicating confidential information such as what a party would “take” or “settle for.”

Conclusion

As this overview indicates, the sale of residential real estate employs a disclosure/investigation model. The Seller and his or her agent must disclose known material facts. The Buyers must protect themselves by doing any necessary investigation that the disclosure of such information indicates might be prudent. The Buyer’s agent is the Buyers consultant as to what that investigation should entail.

Like any system based on disclosure, the law creates an obligation of honesty and good faith on the part of the parties. Violation of those duties can have severe ramifications which we will discuss in a future article.

Contact Us Now to Schedule a Meeting

11750 Ridge Road

Nevada City, CA 95959

Debra Sitzberger (530) 349-4790

Neil Dorfman (530) 559-6881

Privacy Policy  |  Terms of Service

Our Local Office

We serve all of California from our Grass Valley / Nevada City, California Office. We'd love to meet you.

Facebook
Google+
Twitter