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Holmes v. Summer – Fiduciary Duties of Real Estate Broker
In the recent decision in Holmes v. Summer (Oct. 6, 2010) 188 Cal.App.4th 1510, the court discussed the fiduciary obligations owed by a real estate broker in a sales transaction.
The facts were not difficult. The broker represented the seller. According to the opinion, “the buyers and the seller agreed to the purchase and sale of a residential real property for the price of $749,000 . . . The counter offer did not disclose that the property was subject to three deeds of trust totaling $1,141,000 . . . Unbeknownst to the buyers, the property was subject to a first deed of trust in the amount of $695,000, a second deed of trust in the amount of $196,000 and a third deed of trust in the amount of $250,000, for a total debt of $1,141,000.”
Thus, the amount offered was $392,000 less than the debt encumbering the property. When the sale did not close for the price in the listing agreement, the buyer’s sued the listing agent.
Stop here. How could the buyers have any expectancy damages? The debt was $1.1 million, while the offer was $750,000. The buyers expected to pay $750,000, while the debt was $1.1 million. The buyers ... more

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