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Caught in a possible ‘double-ending’ sale

By From page C2 | February 15, 2014

Q:  Late last year I bought my first home, a condominium. I should say upfront that, unbeknownst to me at the time, the Realtor who both listed the condominium and represented me in the sale is the president of the homeowners association. I never met the seller because they had long since moved out and this was a short sale.

As soon as I got in, I started to notice cracks were appearing on the walls. My dad used to be a contractor and he says the cracks had recently been filled in and painted over. He says that he’s sure the cracks are from a movement in the foundation of the building itself. He has a laser that measures how flat the floor is, and it turns out there’s a 2-degree slope in the floor. I called my Realtor who basically said it wasn’t his problem because the outside of the building, including the foundation, is the responsibility of the homeowners association. But, like I said, he’s the president of the homeowners association. I’m confused and don’t know what to do.

A:  Well, it’s wishful thinking on his part to think that the settling of the building, which I presume includes any number of other condo units, isn’t his problem.

There’s nothing illegal about a member of a homeowners association also being a Realtor who deals in the purchase or sale of the houses, or condos, in the association.

But this person wore two hats in the transaction.

Hat No. 1 was his Realtor cap. So let’s talk about that first.

Realtors are allowed in California to represent both the buyer and the seller at the same time. That’s not true in many other states, but it is here. However, they must disclose, in writing, that they are representing both sides (called, “double-ending” in the profession) and must get both the buyer’s and seller’s signature on a consent form.

So let’s assume he properly did that and you consented to his double-ending the sale.

He then has the same duty as any buyer’s real estate agent to do two things.

First, he has to disclose in writing anything he knows to be wrong with the property. Technically, the definition of “wrong” in this case is anything that might tend to make the buyer believe the property is worth less than it would be if the thing wasn’t wrong.

Now under normal circumstances, a Realtor probably wouldn’t suspect a house is moving if all of the signs, such as the cracks, were covered over by the seller. But it’s quite possible the president of the HOA had received complaints from your neighbors. If so, it became his job as your Realtor to tell you. It matters not that he got the information in his position as the HOA president.

Secondly, your Realtor has a legal obligation to inspect the property. To be sure, buyers shouldn’t read too much into this. Realtors, at least most of them, are not contractors or engineers and nor are they supposed to be. They aren’t required to crawl into the attic or under the house. They’re not expected to know the appropriate building codes.

They’re responsibility is to take a careful walk through and around the property, just as a conscientious buyer would, and identify areas of concern.

The classic example is a Realtor spotting cracks appearing at the corner to doorways that might indicate the house is settling. However, if the cracks are repaired and therefore not visible, the Realtor isn’t expected to spot them.

Since we’re talking about a condominium, I have no doubt the HOA is responsible for any repairs to the building and its foundation. So ultimately everything should be fixed.

But the fact that you paid a certain amount for the unit without knowing of the condition is a concern since you might not have paid so much knowing of the hassle that’s coming down the road. Not to mention the fact that you may be required to pay special assessments assigned by the HOA for what it likely an expensive repair.

So here are my suggestions: Start by going to everyone in the building and see if any of them are experiencing the same problems.  If so, find out if anyone had previously complained to the HOA about it.

If there were complaints before your purchase, your president/Realtor may have some personal responsibility to you.

It’s likely the actual seller of the property does too if you can show that they knew of the problem.

Perhaps more importantly, you and your neighbors have to unite to get the HOA to investigate and repair the problem. It’s their obligation regardless of whether you knew about the problem before you purchased the property.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column you can contact him at [email protected].

Tim Jones


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