SPECIAL REPORT
(Second in Series)
SHORT SALE NEGOTIATORS
Fiduciary Duties / Contractual Relationships / MLS Issues
THIS IS CONTINUED FROM THIS ARTICLE
In last month’s article, we discussed various issues regarding short sale negotiators, including, among other things, their use, license requirements, and duties. This month, we continue the discussion of issues arising from the utilization of short sale negotiators, highlighting the various rules and obligations that apply to their use. Like last month’s article, we acknowledge and thank the California Department of Real Estate for permission to use material from the recent short sale article by Wayne Bell and Mark Tutera, published in the DRE California Real Estate Bulletin, Spring 2010.
Recent Development in Fraudulent Short-Sale Activities
The DRE article details an example of a fraudulent straw-man flipping scheme for short sale properties. Let’s recap that scenario and then briefly discuss the applicable laws, Articles of the Code of Ethics and MLS Rules that are violated in that scenario.
The example includes an unlicensed short sale service company (we will refer to it as “the Service Company”) that contacts a distressed homeowner to tell him that it will facilitate the sale of the homeowner’s “underwater” (negative equity) property. The Service Company demands an up-front fee from the homeowner. To induce the homeowner to hire the Service Company, the Service Company may promise payments to the homeowner after the home sells.
