Broker Referral Fee & Small Claims Court!?Is it worth it to tangle w a dirt-bag!

Real Estate Broker/Owner with Homestretch Properties

We recently had our most difficult REO escrow with a broker who brought a weak cash buyer and wanted us to cooperate with him to help secure the property for his clients.  So, we signed up a CA Broker Referral Fee agreement to document his plans to share his sell side commission with us.

I should have known we are dealing with a dirt bag the minute we got them a counter and he started claiming he needs credit for repairs despite his clients and him signing the counter that stated they accept the fact that they will get ZERO dollars for repairs discovered during inspection since this is an AS-IS REO property.

To make the long story short, the held the property hostage and refused to provide any estimates for repairs from contractors.  A lesson here, if a party eamils you requests for repairs that are round numbers ($10,000), then you know it's a bogus claim since estimates for repairs at least have some odd numbers in them which ends in cents and dollars.  After they held the property and escrow hostage, we got them a $4,000 reduction in sale price to account for their bogus claims!   But wait, this gets interesting.  

During a visit to the property we discovered that they had started working on the property and remodeling the property BEFORE the close of escrow!   They had removed fixtures, sheet rock and some signs from the property! So, I am thinking about Trespassing, Theft, Property Damage.....since they had busted a door to get into the property.  All the selling broker claimed ignorance that he was NOT aware the buyers intentions and that buyers thought the escrow had recorded.

We had to get Mechanic's Lien release to get our seller clear of any potential liability and then escrow closed.  Then the wait for the commission check turned from days to weeks; only to discover that the Escrow company is waiting for the Selling broker to send a Broker Demand which is consistent with the Broker Fee agreement they had signed with us!  

He was not sending it in and his admin claimed he was in Vietnam traveling with no access to phone and emails! On the 2nd week of the wait, I call the dirt-bag; only to discover that Vietnam had apparently installed new telephone lines and he was accepting phone calls.  His claim is that his Buyers are very upset about the Broker Fee agreement and he know wants to CANCEL this agreement or at least cut it in half!?  Are you smiling too!?  

Does it make sense to take this guy to small claims court!?  Have you ever work with such people before!?

Comments (4)

Graig Ponthier
Homes & Land of Greater San Antonio - San Antonio, TX

What a raquet. It will cost about $100 to file the claim. I have not been in the same situation but maybe the court paperwork will help settle thing (and then you wont have to go to court) or in many cases, they just dont show up in court and you win, but you still cant collect!! 

Jan 27, 2010 07:32 AM
Troy D. Village
Stearns Lending, LLC - San Mateo, CA
MBA - Branch Mgr | Sr. Loan Officer - NMLS #325112

Wow, that's a crazy story!  I think it depends on you and the amount, but it sounds like you have a great case with everything in writing!  I'm having a hard time understanding why his clients even care about your broker fee agreement.  If it ends up exceeding small claims, I know a good RE attorney in the area.  Best of luck with that!  

Jan 27, 2010 07:52 AM
Leila Mortaz
Homestretch Properties - Los Gatos, CA
Leila Mortaz

Thanks for the feedback guys.  The amount is just a tad under $10k and I need to check with the Small Claims court limits since we have to file more than 1 claim to get it.  

Thanks again for the feedback.

Jan 27, 2010 08:27 AM
Julie A. Black
KAUAI DREAMS REALTY Kauai Real Property Specialist - Kapaa, HI
CLHMS, CRS, GRI, Realtor, Broker

If the other broker is a member of the Board of Realtors you can file for binding arbitration there. Less costly and hassle then court. If he is a member I believe he has to agree.

Jan 27, 2010 04:11 PM