More Problems, Great Solutions
Mishandling escrow, disclosure and documentation problems, and licensing violations are just a few of the risks you face. Here are a few others, along with tips for minimizing them.
Don’t aid and abet mortgage fraud. This is the third-most-common complaint the Florida Real Estate Commission handles, after escrow and licensing problems, according to Thomas O’Bryant, director of the Florida Division of Real Estate in Orlando. “Licensees have a responsibility to protect their customer, and one of the ways you do that is to look under the rock and figure out what’s going on,” says O’Bryant. “If you see swings in appraisals or [that] the valuation of a piece of property is unbelievable, you need to do some research. If a transaction sounds too good to be true, it probably is.”
If you run into legal trouble, come clean. Another common problem FREC handles is the failure of licensees to report legal troubles. If you plead guilty or no contest to, or are convicted or found guilty of any felony you must report it to FREC. “More than likely, we’re going to find out somehow, and it’ll come back to bite you,” says O’Bryant.
Know if you’ve sold a home in the past. Have a system for determining whether your firm has ever been involved in a transaction involving a specific property, says Jamie Billotte Moses, a shareholder at the law firm of Fisher, Rushmer, Werrenrath, Dickson, Talley & Dunlap in Orlando. What’s the big deal? If you’re sued for failure to disclose a problem, you could be blamed for all the knowledge you learned from your prior transaction. Too often, Moses has seen brokers realize—after searching their files to produce documents in litigation—that they learned of a defect with a property when they were involved in its sale years earlier.
Don’t use “as is” to avoid disclosing latent defects in residential transactions. “I advise brokers to make sure their sales associates really know what ‘as is’ means,” says Moses. “Many sales associates think that if a property is sold ‘as is,’ the buyers can’t sue them for nondisclosure. But ‘as is’ isn’t a miracle pill. It doesn’t mean you and the sellers don’t have to disclose material defects that you know about.”