A buyer asks for your help in buying a new home, stating that after acquiring it he intends to "dump" his current home (walk away and let the bank pursue foreclosure). Knowing this, should you help the buyer, and if you do, are you courting risk in some way?
This question arose at a recent seminar I attended in Scottsdale on real estate contract law, moderated by Chris Combs, a local real estate attorney and columnist for the Arizona Republic and Arizona REALTOR Digest, and Chris Charles, a real estate attorney in Chris Combs' law firm.
Laws and regulations very from state to state, of course, but in Arizona the answer is this: there appears to be no additional liability or duty to disclose anything for the real estate agent who helps this buyer.
If the buyer qualifies for a loan on the second house, and the lender is willing to fund that loan, there is no obligation to disclose to the lender that the buyer is planning to default on his current home. Nor is there any obligation to tell the lender on the first home that the buyer is preparing to default and walk away.
So much for the legality. It doesn't say much for the morality of the scenario, though, does it?