Having a real estate agent can make transactions easier. People often use an agent to do the research for them. Agents can take your goals and limitations for a property and create a list of properties that you are likely to be interested in. This can save you a lot of time in your search for the perfect property. Unfortunately, a real estate agent, like anyone else, can also take advantage of you.
Jennifer and Guy Worthington found themselves in this situation and chose to sue their realtor, Thomas Polander (“Polander”). The Worthingtons sued their realtor for four real estate transactions, in which they believe their realtor intentionally gave them incorrect information so he would receive a commission. In the first and second transactions, the Worthingtons bought two investment homes from Polander and trusted him to find a tenant for each home. In both transactions, the tenants Polander chose ultimately could not make the monthly payments and had to be evicted from the properties. In the third property transaction, the Worthingtons bought property through Polander which they could not afford to maintain, under the promise that Polander would find a tenant to rent it out and take over the payments. Polander was unable to find a tenant which caused the Worthingtons to lose the property through foreclosure. In the final property sale, Polander claimed he was selling the Worthington property but after the paperwork was signed the Worthingtons were not given the title to the property; instead it went to a nonprofit, Fresh Start Foundation, which was controlled by Polander. In each transaction the Worthingtons lost money due to their trust in Polander as a real estate agent.
At first the case was brought to arbitration. The arbitrator found for the Worthingtons on all four transactions. The arbitrator found that Polander was in a position where his opinion was trusted and taken at face value and that he did not maintain expectations. After winning the case, the Worthingtons found out that Polander was unable to pay the damages.
The Worthingtons then filed an application with the Department of Real Estate (“DRE”). The DRE has a recovery account which is used to make payments in unsatisfied judgments. However, the DRE only makes payments in the case of fraud. The Commissioner of the DRE reviewed the facts of the case and the previous arbitrator’s decision. The Commissioner found that the arbitrator only found fraud as the basis of the Worthingtons fourth property sale, therefore the Commissioner would only allow payment pay for the damages from that transaction.
The Worthingtons then brought the case to trial court in an attempt to appeal the DRE’s findings. After reviewing the previous cases, the trial court found that fraud was an underlying issue in all but the third property sale. Therefore, it overturned the findings by the Commissioner for the first and second sale, which allowed the Worthingtons to receive more money from the recovery account. The case was once again appealed to an appellate court, and the appellate court agreed with the trial court.
Litigation can be long and complicated and the appeals process is not always clear. Arbitration and state agency hearings are lesser known ways to get a case resolved, and in some cases are a requirement for getting your case heard. This can be a term in a contract or a general law in a statute that you may not know about. An attorney can help you bring your best case forward in any forum. If you have a real estate issue and are in the the Sacramento area, call our experienced Sacramento business attorney.