Lawsuit May Be Only Way to Solve a Real Estate Problem
New home buyers often find themselves deluged with mail once they move into a new home. Buyers in Santa Clarita and other Southern California communities recently received a surprising invitation to sue their real estate brokers from a Los Angeles law firm scouting for new business:
“May I begin by congratulating you on the purchase of your new home. . . .
“Do you feel that you’re completely satisfied with your recent purchase? . . . Was your broker truly representing you? Did you overpay for this property?
“If your answer to the last question was ‘yes,’ then the next question must be: ‘Is there anything I can legally do about this?’
“We believe the answer is YES, and we’re confident enough to be willing to represent you, as your lawyers, on a contingent fee basis.”
This is not the kind of letter that gives attorneys a good reputation. And most lawyers who have seen the letter are embarrassed.
The problems that some buyers and sellers have with their real estate brokers can be pretty vexing, though. If you’re unhappy with some aspect of selling or buying a home, there seems to be little recourse other than filing a lawsuit because local Realtor boards and the California Department of Real Estate only focus on investigating and disciplining their members, not on remedying any disputes between brokers and the general public.
“We cannot investigate legal complaints,” conceded Michael Ribons, chairman of the San Fernando Valley Board of Realtors grievance committee and a broker with Paramount Properties in Northridge.
Ribons’ committee includes 25 other brokers and meets once a month to review between five and 15 cases brought against brokers by members of the public or other brokers.
The Board of Realtors can’t settle disputes involving brokers or order a broker to remedy the complaints of a client. The board does, however, have the power to expel, suspend, censure or impose up to a $500 fine.
The board, however, is very reluctant to release the numbers of complaints, censures and fines.
“The number of complaints is down slightly from previous years, but the number of transactions is down too,” Ribons reported. Because clients don’t get any remedial action out of their complaints, the reasons for complaining are a bit more limited. “A lot of people do it for revenge,” Ribons said. “Some attorneys also feel it helps their civil cases.”
Once a complaint is filed with the Valley board, a broker has 15 days to answer before the matter is assigned to one of its members, who investigates the case. That investigator contacts all parties and writes a report that results in the matter being dismissed or forwarded to a hearing. Ultimately, it’s the board’s Professional Standards panel that makes a final decision on what disciplinary action to take.
Expulsions and suspensions are printed in the board’s newsletter, which only goes out to its members. Other than that, the files are considered confidential and off limits to the general public. This unfortunately means that a query to the board about any problems that previously arose with a particular broker will yield no results.
Steve Ellis, Los Angeles district office manager for the California Department of Real Estate, reports that his office reviews about 300 written complaints every month, that the office gets about 75 phone calls a day, and most of those calls involve some complaint.
Caseloads are climbing for the department’s four investigative teams, said Ellis, thanks to a lack of adequate staffing. If a team determines that there’s a serious breach of ethics by a broker, the department will present its case against that broker to an administrative law judge. That judge makes a recommendation, but it’s up to the department commissioner to decide what the final disposition of the case will be. The respondent broker can also seek to block any action of the commissioner with a writ of mandate from Superior Court. As with local boards of realty, the most that the department can do is take a person’s real estate license away and impose a small fine.
For fiscal year ending June 30, the department reviewed 2,987 written complaints in Los Angeles and submitted 471 to action before an administrative law judge. These numbers are slightly lower than the 1991 and 1990 tallies, but that’s because San Bernardino cases are no longer included as part of the Los Angeles totals, Ellis said.
For the fiscal year ended June 30, Ellis said, 138 brokers and agents had their licenses revoked in Los Angeles, Ventura and Santa Barbara counties, up slightly from 130 the previous year.
At the San Fernando Valley Board of Realtors, most of the complaints received from the general public involve the alleged breach of an oral promise by a broker, or some lack of adequate disclosure by a broker of some defect in a residence. “These are considered business practices and not within our purview,” Ribons said. “It’s not within our mandate, so the complainants should contact an attorney.”
Unless, of course, the attorney has already contacted you.
