Last week, one of my clients had his offer accepted on a house he wanted to buy as an investment property. Prior to execution of the contract, there were disclosures and notices to sign, i.e., Seller Disclosure and Lead Paint notices, and a Disclosure of Relationship with Residential Service Company.
The latter notice let my client know that the broker/sales agent receives compensation from the {XYZ Home Warranty Company} for providing admin/marketing services. This is all above board, as it should be.
One of the points we negotiated on, prior to arriving at consensus with the seller, was the use of the title company the seller (I'm 10000% certain the seller could care less and it was the listing agent) wanted to use. I had never heard of this title company, but if it meant my client could get the house, we'd close wherever they wanted us to close.
Fast forward a day. I headed out to drop off the earnest money and option checks. And guess where the title company is located? Inside the real estate broker's office. No big deal. At my office, United Real Estate Dallas, we have Fair Texas Title closers who are onsite twice a week. But there is no direct relationship between them and United. They are not real estate agents, they are only sharing space with us. It turns out that the closer the listing agent had us agree to use is an attorney for the brokerage she's affiliated with. This all seems a little dishonest. I was extremely uncomfortable with the situation.
My broker suggested I call the Texas Association of REALTORS Legal Hotline, which I did. One of the TAR attorneys called me back and said this relationship should have been disclosed prior to execution of the contract. I asked if there was a form for this, like there is a form to the Disclosure of Relationship with Residential Service Company. He said there isn't a form, but the disclosure could have been made in the Special Provisions paragraph of the contract.
My client eventually terminated the contract due to the seller's unwillingness to make repairs or reduce the price. Once we terminated, I emailed both the listing agent and the title company closer/attorney and explained what TAR said needed to be done. A few hours later, the owner of the title company called me to tell me he disagrees with the TAR decision and that he will not have agents in that brokerage provide notice before execution of a contract. He will have the parties to the contract sign something along those lines at the closing table.
One of the first things we learn in real estate is disclose, disclose, disclose. I don't understand - what does this title company have to hide?
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