[quote=SD Realtor]My answer is so what. The agent was lame and deserves what is coming to them. As I have said before a properly done PR will answer all those questions regarding liens and encumbrances. Agents do find this stuff out before the buyer spends a penny. Agents do ask their clients about this stuff when they take the listing. Any agent worth their salt already knows all of this information . . . [/quote]
You hit on the biggest issue right there that raised one of the justices’ ire, SDR. The “PR” is not available to the buyer until 7-15 days AFTER their offer is accepted and escrow is opened. These buyers apparently accepted a bona-fide offer on their OWN home during this critical period based upon the representation that sellers could sell to them for the offering price they accepted. When they couldn’t, buyers had to scramble to figure out where to move to.
A serious potential buyer should not have to wait until AFTER their offer is already accepted to learn the actual degree of encumbrance(s) that the particular property is burdened with. The condition of the title should be an “open book” to ALL potential buyers PRIOR to even placing an offer. How can buyers structure their offer properly if they don’t even know what they’re actually buying? In the Holmes case, the “short” was very large. Had the Holmeses known about this large “short,” they very likely would not have even placed this particular offer and subsequently marketed their own home and accepted an offer on it.
Correct me if I’m wrong, SDR, but from my understanding, you appear to be saying something here to the effect of, “Hook the buyer into contract, throw spaghetti on the ceiling and see what sticks. We’ll deal with all those nasty liens in the PR when it becomes an issue. Then, between the buyer and the agents, we’ll amend the contract to make it all work out (since sellers are usually insolvent in these cases).”
I’m not saying here that ALL agents or even any agents on this board conduct their business as Summer and her broker did. I DO believe that 90% of agents already disclose that a listed property will be sold “short” in the pfl that is distributed publicly. However, I believe the Holmes case will cause listing brokers to go 1-2 steps further than that. They will decide to disclose the degree of the short, how many known liens are against the property and the exact amount of total encumbrance at the time of taking the listing on the (public) pfl. Of course, this number could grow during market time and escrow(s) if sellers are behind in their mtg payments and not currently making any payments.
I believe Holmes will also have the effect of causing listing agents dealing with sellers behind in their payments to ask to see these sellers latest mortgage statements to find out HOW FAR they are behind and HOW MUCH is currently owing, as well as examine the latest HOA bills. As you know, the amount of the underlying notes shown on the face of their recorded trust deeds could very well be smaller that what is actually owed today. Buyers have a right to know, BEFORE placing an offer:
-if the property will be a “short sale”
-what the the total of the current trust deed encumbrances are, including late charges and neg am, etc
-if there are any income or payroll tax liens
-if there are any judgment liens
-if there are any HOA liens
-if there is a lis pendens on title
-if there are any child support liens
-the status of current tax payments
-to see any engineering reports already done
-to see any previous inspection reports by buyers who canceled their escrows
If the listing agent is claiming in the pfl that they already have a short-sale “approval” for the listed price, a potential buyer has the right to know if that “approval” will satisfy the 1st TD only or if that approval will also partially satisfy a 2nd TD holder to where they will release their lien. The listing agent will have to make this written “approval” available to potential buyers and their agents for viewing. This right extends to potential buyers who have not yet submitted an offer.
Sellers behind in their payments will now need to be told by their listing agent/broker that they will be on the hook for potential liability to buyers if they don’t disclose to their listing agent from the time of taking the listing any liens they currently have recorded against them and any pending problems they currently have which could result in a lien in the coming weeks/months.
A listing agent shouldn’t have to waive a PR in front of their sellers two weeks after they have already entered escrow and ask them, “What’s this all about??” And then suddenly, sellers “magically” remember. That’s b@llsh!t. Delinquent sellers of late have been acting like big kids in a candy store waiting to either get $$ or get a foolish buyer to “rescue” them from their self-made “situation” they spent themselves into.
SDR, I don’t think Holmes has anything to do with whether buyers “spent a penny” in escrow or not. It has to do with buyers basing life decisions on a “representation” made by sellers and their broker that they could convey their property for the agreed-upon price in the Holmeses accepted contract and they could not.
I don’t care what the property is, or looks like. If the property condition or condition of the title is unsatisfactory to a potential buyer PRIOR to placing an offer and there is no foreseeable way to make the deal work, then buyers would be better served to move on and find another property to make an offer on.
I see Holmes adversely affecting the marketability of short sales in CA unless lenders doing business here can take heed and retrain their personnel to issue more written approvals to their delinquent borrowers as to price they will accept (short) and time frame they will accept it in UP FRONT, prior to that delinquent seller attempting to market their property.
The condition of title to a marketed property should be an open book to the public, from the get go, so buyer and seller will be on the same page from the beginning. A buyer should not have to enter a “short-sale” transaction blindly, wasting months of his/her time and never having any control as to whether their accepted offer is even enforceable. “Short sale” buyers SHOULD deposit earnest money with the expectation that escrow WILL close in a particular time frame, based upon the terms and conditions set forth in their executed contract, along with lender(s) conditional written approval(s), based upon a timely closing.
If you, as a potential seller want “privacy,” then pay your bills on time, give a deed-in-lieu or just succumb to foreclosure, walk away and start over. The RE marketplace is no place to “hide” behind how you’ve lived your life up until now.
Holmes v Summer (2010) 188 CA 4th 1510 and its likely progeny (in fairly quick succession), will create a climate in CA where buyer and seller are on equal footing and the condition of the title (as well as the physical condition) of a marketed property is transparent right out of the starting blocks, as it should be :=]
