 Dear George: I'm relocating to a new town. I am pre-approved for a home loan from two different lenders in my old area. I found a home and was about to put an offer on it when the REALTOR® informed me that she would tell her client not to accept any offers from me unless I used a local lender. I explained that I could easily afford the house and would have a letter of approval from my lender faxed to her. Again, she said that she would advise her client not to accept my offer because I was not using a local lender. Another offer came in on the house that day. I asked about banks in the area and was informed that they couldn't approve me quickly enough; she recommended visting the mortgage company located next to her office.
Are her actions legal? I found the whole situation frustrating, especially since the REALTOR® had previously shown me two houses and had never mentioned that I needed to use a local lender. My lending companies are only 100 miles away. Does she get a referral fee or bonus for sending clients to mortgage companies?
Answer: You used the word "client" in your question. To make sure we are on the same page as to terminology, there is a very big difference between a customer and a client. A client is a person with whom the real estate licensee usually has a written contract and with whom that agent therefore has an agency relationship. In Texas, such a relationship carries with it certain fiduciary obligations. A customer, on the other hand, is someone with whom an agent may interact and even assist by filling out a contract, for example, but whom the agent does not represent in any legal way. Nonetheless, an agent has the legal obligation to treat all parties, including clients and customers, to the transaction fairly.
Only a REALTOR® who is affiliated with the listing firm can make the statement that a seller is her client. In actual fact, the broker of the listing firm owns the listing and represents the seller in an agency capacity. Any other agent affiliated with the firm represents the seller as a client through her broker. If an agent does represent a seller as a client, she can obey a client's lawful instructions but she does not have the legal authority to tell her client not to accept any offers from you or anybody else, regardless of whether you are using a local lender or not. A real estate agent who makes such a statement would appear to be skating on very thin ice when it comes to agency-representation issues.
On another matter, did this agent provide you with an Information About Brokerage Services form before she had any substantive discussion with you regarding properties? Did she inform you that unless you signed a Residential Buyer/Tenant Representation Agreement she could not give you advice or make suggestions since she would not represent you? Without a signed representation agreement you would be a customer, not a client, and she could only write up your offer and deliver it to the seller.
Regarding your question about referral fees and bonuses, there is a federal law called the Real Estate Settlement Procedures Act that prohibits a settlement-service provider (real estate licensees fall into this category) from getting referrals without actually performing a service or services in connection therewith.
| Dear George: I understand that Texas law does not protect an unlicensed individual who attempts to collect on an agreement with an owner to pay a referral fee on the sale of real property. However, is there anything that prohibits an owner of real property from agreeing to pay a referral fee to someone who is not a licensed broker or salesperson?
Answer: The property owner can probably get away with agreeing to pay a referral fee to an unlicensed person. But the unlicensed person would be in violation of the Texas Real Estate License Act. Go to TREC's Web site, select the Forms, Laws & Contracts tab, go to Chapter 1101 of the Texas Occupations Code, and see the definition of "broker" in Section 1101.002: "a person who, in exchange for a commission or other valuable consideration or with the expectation of receiving a commission or other valuable consideration, performs for another person one of the following acts." The definition lists 10 items, and the unlicensed person in your scenario would be performing actions that would fall under several of them. So, the owner can probably get away with paying, but the unlicensed recipient cannot legally accept the payment.
Dear George: I started to build my first home and have run into an issue with property lines. I incorrectly identified the lot line when I began to excavate, resulting in the excavation of several feet of my neighbors’ property. I recognized the mistake and, at my neighbors' request, planted cedar trees in place of the scrub brush, vines, and underbrush that were removed. The neighbors are now pushing for monetary damages, and claim to have an attorney. What can they legally ask for, and what can I do to rectify the situation?
Answer: What damages, above and beyond your replacement of the vegetation you removed, has your neighbor suffered? If they are reasonable, go ahead and pay. After all, it was your mistake. If your neighbor, however, is asking for an unreasonable amount, would the neighbor be willing to take the question to mediation as an alternative dispute-resolution process? If the neighbor actually retains an attorney who will file a lawsuit against you, hire an attorney to defend youself. Your actions in this matter subsequent to your recognition of the mistake are admirable and demonstrate a desire to restore your neighbor's property to its condition before your unintentional trespass. Unfortunately, that is not always adequate, and two neighbors who otherwise are capable of co-existing next to one another sometimes find themselves in court.
Dear George: I am selling my home. Will an abstract of judgment from a department store attach to my home, since my home is homesteaded? I homesteaded before the judgment was issued, and it's not a mechanic's or tax lien. Will this judgment have to be paid at closing?
Answer: That is a great question. The abstract of judgment does not attach to the homestead. It is not a valid lien on a Texas homestead. The problem is that the title company cannot confirm that the property is homestead and will show it as a cloud on title. The best procedure is to contact the attorney who filed the abstract, explain that the lien will block the sale of the homestead, and request a partial release of the lien, only as it relates to the homestead. Most attorneys are familiar with this procedure, and the lender can be liable for damages if they fail to release it and blow the sale.
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