December 7th - 2013

Legal Beat: Two sets of buyers leads to court case

In this case that took place in the United States, an Ohio couple wanted to buy a house.

In this case that took place in the United States, an Ohio couple wanted to buy a house.  Jeff and Lisa Ford were working with Donna Brooks, a REALTOR®. Mrs. Brooks escorted the couple to a house and showed them through. Later on, her husband, who was also a REALTOR®, showed the couple through the house again and they discussed various issues. They took measurements and indicated that they were seriously interested in buying the property.

Mr. Brooks told one of his friends that the Fords were interested in the property. His friend then also expressed an interest in the property, and Mr. Brooks wrote up an offer to purchase the property for the friend. Meanwhile, Mrs. Brooks wrote an offer for the Fords. The offer submitted by Mr. Brooks’ friend was successful. The Fords then sued Mrs. Brooks and the brokerage.

The Ohio appeal court found that there was enough evidence to go to a jury to decide whether the Brooks breached their duty of confidentiality in telling the friend of the couple’s offer, as well as the question of whether the Brooks breached their fiduciary duty in writing offers for competing buyers.

Ohio law specifically says that, “a licensee does not breach any duty or obligation to the purchaser by showing the same properties to other purchasers or by acting as an agent or subagent for other purchasers”.  The court of appeal was not certain whether that allowed for the writing of competing offers and let a jury decide that issue as well as the issue of a breach of confidentiality.

Ford v Brooks 2012-Ohio-943

MERV'S COMMENTS

Representing competing buyers is a difficult process, but it is one that can be dealt with to everyone’s satisfaction if the steps are handled carefully. It involves making the buyers aware of the possibility of competing clients and getting full consent. The next step is to include that in a signed Buyer Representation Agreement (BRA). Then, if a situation does arise, get their written consent to proceed before preparing any offers. In California, for example, there exists a separate form called “Disclosure and Consent for Representation of More than One Buyer or Seller.”

This case would not have happened if proper disclosures had been used and the clients had given their fully informed consent. How does everyone in your brokerage deal with such a situation?  Does your brokerage train you on its suggested process and in the use of the forms they provide? Do you always ask every buyer to sign a BRA and work hard to help them understand what they’re signing?

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