Monday, August 9, 2010

Which attorney to use is the customers choice

I had a consult today with a lovely couple who were contemplating a foreclosure defense because when they had previously tried to sell their house with a real estate company in a short sale where the real estate agent required them to use a specific attorney and they felt very uncomfortable moving forward with the agent under this condition. I happened to know the agent so I gave him a ring and told him that this was not the way to do business. In full disclosure, I was not the attorney that he "recommended". The agent agreed to release the clients from his agency contract with them following my conversation. Yet, I found this to be a great teaching moment for all the agents that read this blog. You can recommend, not require, use of a specific attorney. Moreover, the attorney works for the customer, not you. I know that you often feel ownership over the real estate transaction and your wallet depends on a quick smooth closing, but you cannot put your interests over your customer's. In fact, the department of state has made the following finding in an ethics complaint against a real estate agent who required use of his attorney.

VII- When the Williams expressed an interest in using an attorney of their own choosing who had expressed skepticism regarding the transactions which Mr. Erez had proposed Mr. Erez told them that they would have to use an attorney of his choosing, Peter Goldberg. In so doing he clearly placed his interests above those of the Williams, his principals, in violation of his fiduciary duties. It appears that Mr. Erez acted as he did because, having dealt with Mr. Goldberg previously, he expected that Mr. Goldberg would, as he did, facilitate the sale of the Mofat Street property. His conduct was a demonstration of gross untrustworthiness.

To read the full decision, click here. While the matter was appealed, the appeal does not discuss this issue and I find it difficult to argue with the department's findings because a real estate agent has a fiduciary duty to their clients to use the utmost good faith and fair dealing when facilitating that client's transaction.