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Anyone familiar w/seller's legal success when breach of sales contract by buyer/Realtor/Lender???

Mortgage and Lending with Sterling Home Mortgages 129359

A customer I was doing a loan for had their house under contract for 3 months only to find he was provided with:

  1. False preapproval letter from their unethical lender friend at the offer in Jan 08
  2. False commitment letter from the same guy in #1 on commitment date March 08
  3. The buyers had no way of obtaining a loan commitment through ANY lender they tried after extending the commitment date. 
  4. The buyer's/agent's plan was to keep the house they wanted off the marketwhile they worked on repairing the credit with hopes of qualifying and saving enough money before closing.
  5. During this time the house was under contract, the market worsened in this area

Now the house is active again, looking on the MLS like it's been on the market for a long time  even though it was under agreement.  My customers expect to sell for less as now they don't have time to wait.

 The sales contract limits the damages for breach of contract, including if the borrower provided false information to the sum of deposit monies paid.  $5,000 was paid so far with another $5,000 due soon.

If my customer ends up losing $50,000, due to fraud by the lender, with the borrower and agent likely having unclean hands as well, is that the name of the game?  It seems Lenders and Realtors should to be accountable as licensed professionals.

 I hear this happens often. It sickens me for what it does to people lives and our reputations.  There was no way to know these documents were false and no way to know when you have a buyer with a BIG NAME lender and a No Name Realtor, their history. 

 My customer wants to hold the parties legally responsible for all damages and will be in touch with an attorney soon.  Does the PA Realtor sales contract give a seller any recourse in any way?

Does anyone have first hand experience in sellers going after the deposit money, plus damages?  

My seller, a FSBO paying the licensed buyer's agent 3% commiss,  isn't happy about what happened not only because of the money and time he lost but because he really trusted the buyers and their Realtor, invested a lot of time with them, went through all the inspections, etc, did all his homework plus more, and was ripped off anyway. 

 Thank you for your input.  




Jean Powers
Kane & Associates call 510.908.9002 - Alameda, CA
CRS,e-PRO,HAFA,SFR Broker, Northern California

It is unfortunate that this happened. This is why a homeowner should not sell without a Realtor .If they had an agent they would have been looking our for their best interests. In CA the seller can go to small claims court if the deposit is no more than $7500. In my state, our contracts state that the seller must mediate before arbitrating, if it is fraud then seller can probably sue, this is definitely a situation where the seller needs a good real estate attorney to advise them.

Apr 08, 2008 03:22 PM
Mark Hawley
Keller Williams Realty - Indio, CA

Is there a liquidated damages clause in Pennsylvania?


Apr 08, 2008 03:32 PM
Christine, I have no idea about the odds of success, but this sounds like fraud, not just breach of contract.  Breach of contract is a civil matter.  Fraud is criminal.
Apr 08, 2008 03:44 PM
Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

Christine, I have no idea about the odds of success, but this sounds like fraud, not just breach of contract.  Breach of contract is a civil matter.  Fraud is criminal.

(Sorry, I wasn't logged in before.) 

Apr 08, 2008 03:50 PM
Erik Hitzelberger
RE/MAX Alliance - Louisville REALTOR-Luxury Homes - Louisville, KY
Louisville - Middletown Real Estate
In KY, the Real Estate Commission can pay up to $20,000 in damages to the aggrieved party if the real estate agent is found guilty of fraud and is unable to cover the damages within 20 days.  Your client should contact the PA Real Estate Commission and look into whether a case exists.
Apr 08, 2008 03:55 PM
Christine Thierry
Sterling Home Mortgages - Narberth, PA

Jean Powers,

In this case a seller's agent would not have helped because a fraudulent pre approval and commitment letter is what it is.  The seller did investigation that uncovered the fraud and terminated the contract.   The seller now has the option of how strongly to pursue the matter without having to consult/partner with an agent who may not want to get involved.

With this post, I am looking to see on this site if any agents have ever pursued a case of fraud.  I know it happens in our industry.  Weeding out the shady ones, agents and lenders who specialize in fraudulent deals because they use their position to take advantage of (rather than help) others, isn't the worst idea.   


Apr 09, 2008 01:57 AM