Only 12 states of 50 don’t routinely involve attorneys in the sale of residential real estate, allowing most closings to be handled by title and escrow companies, lenders and real estate agents. But 26 states require that attorneys either handle the closing, or at a minimum, prepare all transfer documentation. Another 12 states, plus the District of Columbia, routinely involve attorneys in the closing process, along with title and escrow companies and lenders. So, why do 76% of states feel the need to involve attorneys in real estate sales? And what should this say to agents in California?
California is one of the 12 states that normally allows escrows for residential real estate sales to close with only the assistance of title and escrow companies, the agents involved and the buyers’ lender. And given the ever-increasing complexity of the Residential Purchase Agreement, this lack of attorney involvement places much more responsibility on the agents, as they act in their capacities as fiduciaries to their clients.
Excerpts from California Association of Realtors required Agency Disclosure form, which includes the provisions of Civil Code Sections 2079.13-2079.24:
Seller’s or Buyer’s Agent has the following affirmative obligations: To the Seller and/or Buyer: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Seller or Buyer.
“Fiduciary relationships often concern money, but the word fiduciary does not, in and of itself, suggest financial matters. Rather, fiduciary applies to any situation in which one person justifiably places confidence and trust in someone else and seeks that person’s help or advice in some matter. The attorney-client relationship is a fiduciary one, for example, because the client trusts the attorney to act in the best interest of the client at all times.” Merriam-Webster definition.
But are most agents really aware of the level of legal responsibility they carry in California and of the importance of a good working knowledge of what the contracts say? Do we all truly appreciate the weight of our duty as fiduciaries? Are we able to properly explain to our clients, the content and consequences of the contracts we ask them to sign? Or is it possible that too many agents focus only on those items that are written in – offer price, contingency periods, escrow closing date and buyer requests – disregarding or taking for granted the 10-14 pages of contract “boilerplate”, which clarify the actual rights and responsibilities of all parties to the sale?
I believe the majority of real estate agents today are doing the best they know how, to properly represent their clients, based on their understanding of their responsibilities. And I believe most brokers are doing all they can, to effectively educate and support the agents in their office. But, in light of all the possibilities for miscommunication throughout the sale or purchase of what is the largest asset most people will ever possess, Agency (fiduciary representation) remains the most serious area of concern. And the key to the success of that Agency relationship is an understanding of its legal nature and of the opportunity for legal consequence, for ourselves, our brokers and our clients. #Californiarealestate #Agency #fiduciary #realestatecontracts http://bit.ly/gailmtravers-Blogs