When a little thing becomes a big thing - Listing Agent Beware!!

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Under contract law in most states,  real estate litigation cases can be filed in the county that the property is located or where the contract was negotiated.  This may not seem important for a real estate agent to think about but consider this.

On the purchase contract,  there is typically a blank line for the agent to fill in where the agent was when the contracat was written.  The reason for this blank is to determine jurisdicaiton for litigation purposes.  In the past this wasn't a problem since since MLS systems were pretty local and the Internet did not allow outside the area agents to find properties,  most of the agents who wrote offers were pretty much local.

That has all changed with the internet.  And,  many state are working on or considering a statewide MLS.   One of the unintended consequences of this will be that a lot more out of area agents will be writing buyer's offers on your listings.  The problem with that is that when the buyer decides to sue your seller,  they can file in their county.  This is expecially common for areas in the county where the properties are vacation or 2nd homes.  Most buyers and buyers agents are out of the area.  f This is not good for your seller.  And,  it can become even more confusing if the buyer's agent is from another state,  if your market area is next to a neighboring state e.g. (Kansas City, Kansas & Kansas City, Kansas)

Let me give you an example.  A property is listed for sale in San Francisco.  A buyer has their friend in Los Angeles write the offer for them on the property.  When the buyer runs into a problem,  the go to a Los Angeles attorney,  who files the lawsuit in Los Angeles.  Your seller then goes to a local attorney in San Francisco,  who advises them to file a motion to move the case to San Francisco.  Can you imagine what that will costs since they will have to file the motion and travel to Los Angeles to move the case.  In the real world,  it will probably be moved but just another expensive hassel for your Seller.  And,  more imporantly,  it will give the Seller's attorney a chance to tell your seller ......"Gee,  I wish you agent would have caught this!"

So, what is the answere. Actually,  it is very simple.  In your Seller's counter offer,  include language such as:  "Legal jurisdiciton for this transaction shall be (fill in your county)

Again,  a little thing that could turn into a big thing.








Posted by


Guy Berry

Email - guy@guyberry.com

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Comments (5)

RE/MAX Advantage Realtors, Searcy, AR - Searcy, AR

I had never thought about that, but it does make sense.  Very good post, thanks!

Feb 21, 2009 05:37 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

We have a statewide contract with county addenda.

It works.



Feb 21, 2009 05:41 AM
Thomas R. Martin Broker/Owner ICPM
Investors Choice Property Management - Sacramento, CA
Property Management the way it SHOULD be.

The chatter about going to a state wide MLS is very negative up here in Sacramento. We are not looking forward to bay area Agents poaching our local listings. However, I can see where the packaging is appealing to the sellers (added exposure). Nice post.

Feb 21, 2009 05:43 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

You are so right and everyone needs to take heed. Here the contracts say jurisdiction is where the property is located.

Feb 21, 2009 05:53 AM
Associate Broker Falmouth MA Cape Cod Heath Coker
https://teamcoker.robertpaul.com - Falmouth, MA
Heath Coker Berkshire Hathaway HS Robert Paul Prop

Thank you for the next insurance policy we have to buy!  LOL. 

I have another topic for you: 

  • A listing agent goes on a listing appointment and has the sellers sign a disclosure statement indicating that the agent is there as a selling agent, but doesn't get the listing.
  • What happens when the same agent doesn't get the listing, and then has a buyer client - as a buyer agent - who wants to see the same property? 
  • Agent has already gone in as seller agent and gotten all the sellers' info, but not the listing.  Then the same agent returns as a buyer agent. 

Isn't this a conflict and a possible legal problem?

Feb 21, 2009 06:01 AM