#3 Actions vs Expectations
I can’t say that this journey hasn’t been educational. When I signed my listing agreement, even though I didn’t know it at the time, I had just gained a fiduciary who had a duty to uphold.
Cool, so what is a fiduciary?
“A fiduciary has control over another individual's money,
property, or person, and has a duty to always act on that person's behalf in a
loyal, honest, and trustworthy manner. A fiduciary must put the individual's
needs, goals, and benefit ahead of their own by virtue of their position.”
https://www.thebalancesmb.com/what-are-the-duties-and-responsibilities-of-a-fiduciary-4583851
And there’s more! What exactly are all the duties of a
fiduciary?
OLDCAR is an acronym for the central fiduciary duties required
of a real estate professional acting as an agent of their client.
- Obedience: As an agent of
your client, you must obey their instructions, barring illegal, unethical
requests, or requests which contradict terms of the contract.
- Loyalty: As the agent for
your client, you must be loyal and keep their best
interests ahead of those of any other party, including yourself. How
much commission you might make, particularly in competing offer
situations, should not be a consideration and would be disloyal to your
client.
- Disclosure: In many states the
law requires a real estate agent, whether in an "agency"
capacity or not, to disclose material facts to their client. Material
facts are those which, if known by the buyer or seller, might affect
purchase or sale actions.
- Confidentiality: Your fiduciary
duty of confidentiality means that you do not disclose anything that
you learn about your client, their business, financial or personal affairs
or motivations.
- Accounting: Accounting for all
documents and funds in the transaction is a fiduciary duty. Accurate
reporting of the whereabouts of all monies pertaining to the transaction
and their ultimate disposition is a fiduciary responsibility.
- Reasonable
Care: This
duty is one to which special care should always be paid. The words
"reasonable care" are only finally fully defined in many cases
by a judge or jury when it's too late to change your actions, but amount
essentially to the duty owed to any client by an agent/brokerage through
state and Federal agency/common law and Federal regulatory law. https://www.thebalancesmb.com/fiduciary-definition-2866602
With all this going in my favor, nothing could possibly go wrong. NOT. The following paragraph has been a main motivator for me through this ordeal.
“Violating Fiduciary Duties
If a real estate agent enters into a fiduciary relationship with you and
subsequently violates any of the associated duties, he or she can face
substantial penalties. Though the type of penalty differs depending on the
circumstances of each situation, a real estate agent who violates these duties
can be denied a commission from the transaction, be forced to compensate
you for any damages arising from the breach of duty, face real estate
license restrictions or revocations, or even face criminal charges.”
https://www.moneycrashers.com/real-estate-agent-responsibilities-duties/
My problem has been finding someone
to enforce any of these penalties; if
they are deserved. Are they? You decide.
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There is another issue that I did not mention in
my letter given to Mr. Hanley at closing. I didn’t mention it because I didn’t
have time to understand what had actually occurred. This problem deals with the
amount of money I received for my house.
I’ll start with a timeline from the perspective
of my wife and I. During the first week of December, Honnie Edwards of Calabash
Real Estate brought by the wife of a couple. Honnie and my wife showed her
around. She loved our home and wanted her husband to see it. A few days later,
the couple along with Honnie came by for a second look. I was able to be home
that day, so I showed him around. While they were there, Honnie pulled my wife
aside and said that they were going to make an offer.
As an aside, I want to clarify something. You
were probably surprised to read that my wife and I were present during
showings. We are not new. We know what to say and what not to say. We know when
to be present to answer questions and when to be invisible to allow people time
to think. We did this back in Massachusetts when we were selling our house
there. Most brokers were initially miffed. But then later complimented us on
our knowledgeable and comforting demeanor. When they came back for a second
showing or with new clients, they wanted us around. On St. Croix, our need to
be present was compounded by one additional factor. Many people in the Virgin
Islands don’t treat animals well. Our home was a haven for stray and unwanted
pets. We had five cats and a dog. Three of the five cats lived indoors. If they
escaped, we might never see them again. The dog barked incessantly at strangers
unless we were present. We explained all this to Chris. However, he insisted we
not be present. We reluctantly agreed. For the very first showing, we loaded
all six pets into our car, the cats in crates and the dog in the back seat,
then drove a couple hundred feet down the road. The cats howled like we were
trying to kill them. One peed all over. The dog threw up. We swore, “Never
again” and made that very clear to Chris. He acquiesced and there was never a
problem. All of this further explains why, in my letter, when Chris ordered us
out of the house for the buying couple, we were concerned that something was
seriously wrong. Little did we know.
Back to the timeline, we received an offer for
$630,000. Chris and I had a long chat about this. He told me about a couple
from Florida that he had been corresponding with who were very interested in
our house and had scheduled a flight. We needed to stall for time. The original
offer was too low but rather than counter, we let it expire, feeling confident
that they would make a new offer. They did. Unfortunately, they did it too
quickly. The new offer was $650,000. That offer expired on Wednesday, December
11th but Chris’s clients weren’t arriving until Saturday, December
14th.
My wife and I are not greedy people. Our asking
price was $695,000. We had met the couple, liked them, and thought that they
would be happy in our home. We are firm believers in the old adage, “A bird in
the hand is worth two in the bush”. The difference of $45,000 was tolerable and
we told Chris so. Amazingly, Chris called on Wednesday, the day the offer had
to be accepted or it would expire and said that his clients had offered full
asking price, sight unseen. He also mentioned they would be seeking a VA loan.
So, I asked Chris to explain about VA loans. He said that VA loans were assured
by the government and were therefore better than a typical loan such as
Honnie’s clients would be getting. We decided to forgo Honnie’s clients in
favor of Chris’s.
For two days I was on top of the world. I was
getting full asking price for my home. Then on Friday, Chris called to inform
me that I had to pay the buyers’ closing costs of $30,000 because they were
getting a VA loan. I’m no expert on VA loans but at the time I thought that VA
buyers had their closing costs rolled into their mortgage and told Chris so. He
insisted that was not the case and that I had to pay them. So, I told him to
counter with an offer of $15,000 along with there being no credits related to the
home inspection. They countered with $22,500 and no home inspection credits. I
had to accept.
Months
later, despite all of Mr. Hanley’s foul attempts to keep us apart, we finally
met the new buyers and became the best of friends. They are younger than our
children and needed to learn a lot as quickly as possible. So, we took them
under our wings. When I saw Rachel’s letter to Mr. Hanley, I was surprised to
read that he had actually told them the dollar amount of the offer that they
were bidding against. I did not sanction that and don’t believe it is allowed.
Recently,
I spoke with Tyler and Rachel in order to completely understand what went on in
those few days. They told me that after discussing the situation with Chris
they felt they needed to make the $695,000 offer so that with the $30,000
assist they would be $15,000 over the other offer. They were all aware of the
disaster that VA loans can turn into and wanted to insure I would accept their
offer.
To
date, I am unaware if Chris knew that the maximum amount of a seller’s
concession allowed by the VA is 4% of the loan, or in this case $27,800.
Telling them that he would obtain a seller’s concession of $30,000 was either a
lie or incompetence. Regardless, Chris’s obligation was to explain EVERYTHING
on Wednesday when I verbally accepted their offer. He needed to tell me of
their request for a $30,000 assist, as well as information that VA closing
costs can be paid by the seller, the brokers, the lender as a form of reverse
points, or some combination. And that the buyer is even allowed to pay for the
appraisal, credit report, title insurance, origination fee, recording fee, and
survey. Then on Friday after his two-day unwarranted delay, saying that the
entire cost was my responsibility was just one more HUGE lie.
When
all of this was going on, Tyler and Rachel were just people we had never met,
not our friends. If my wife and I had met them that Saturday, as the four of us
wanted, I certainly would have questioned them about the timing of their
$30,000 request. Likewise, they would have asked why I waited until Friday
afternoon to negotiate that number down. And things would have gone to hell for
Chris Hanley. The only way to cover a lie is with a bigger lie. Chris knew he
had to keep us apart. So, his lies had no bounds.
How
is it possible that so much could have gone so wrong? What could have prevented
this mess? I have a guess. I read dire warnings on a professional real estate
blog about dual agency. That person said that dual agency is illegal in several
states and that anyone who enters into it, where it is legal, is either stupid
or greedy. I know Chris is not stupid. So that leaves only one option.
With
dual agency, Chris could say and do ANYTHING he wanted. There were no checks or
balances, and Chris ran amok. If only he had taken the time to read the first paragraph of The Code of Ethics
of the NATIONAL ASSOCIATION OF REALTORS® which reads:
“The real estate agent should be absolutely
honest, truthful, faithful, and efficient. He should bear in mind that he is an
employee—that his client is his employer and is entitled to the best service
the real estate man can give—his information, talent, time, services, loyalty,
confidence, and fidelity.”
All that Chris had to do was to tell the truth. I
read somewhere, the N.A.R. conducted a survey to have people rank various
occupations according to how trustworthy they thought those individuals would
be. Real estate agents finished second to last, just above used car salesmen.
The bar is pretty low, but Chris couldn’t even step over it.
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A closer look at
Chris Hanley’s management of dual agency
Friday December 13th started out as a great day.
I was getting asking price for my house and my wife and I were going to be
meeting the new buyers on the next day to show them around and see if they
would be able to move in as soon as we left. But then, that afternoon things went
downhill. It started with an email from Chris.
From: Chris
Hanley <chris@chrishanley.com>
Date: Fri, Dec 13, 2019 at 2:05 PM
Subject: 2 Offers
To: David & Deb Mattera
Cc: Steph Schoyer <steph@chrishanley.com>, kerri@chrishanley.com <kerri@chrishanley.com>
Hi Dave
I'll also call you shortly but wanted
email summarize this as well:
Offer #1 (Honnie): $650,000.00, $20k
earnest deposit, subject to 14 day inspection and mortgage contingency (80%
loan) closing 90 days or sooner.
Offer #2 (Hanley): $695,000.00, $20k
earnest, subject 14 day inspection and mortgage contingency (100% VA
loan), closing 90 days or sooner, SELLER ASSIST OF UP TO $30K. What this means
is that you are agreeing to pay for up to $30k of buyers closing costs which
include pre-paid insurance, lener legal fee, buyer's title insurance, survey, 3
months hazard insurance reserves, and a bunch of other stuff. I called
Nathan for what he estimates the buyers closing costs to be and it will run
about $30k. If it is less, you get the balance, but he said it will be
close to $30k.
So this makes Offer #2 actually more
like $665,000... not $695,000 with this SELLER ASSIST. You could counter
and say you will pay up to a maximum of $15k which would make the offer
$680,000.00.
Calling you now to discuss the plan.
C
Chris
Hanley
Principal Broker
There are two things that need to be noted in this email.
First, he mentions offer #1 as if it still exists. It expired two days earlier.
So, why did Chris wait those two days to inform me of the buyer’s closing
costs? If he hadn’t, things probably would have turned out differently.
Chris had no right to withhold the seller assist information
when he called me on Wednesday with the offer. He was also contractually
obligated to give me all the truth about VA loans when I asked. And one other
thing that would have been helpful was his honest opinion that our house might
not appraise for $695,000. He didn’t mention this for two months until we were
all losing sleep while waiting weeks for the result to come in.
I would have been looking at a difference between the two
offers of $15,000. Subtracting the additional commission that I would have had
to pay on $695,000 versus $650,000 and that number becomes $12,300. With full
and honest information from Mr. Hanley on Wednesday I would have been able to
decide what I wanted to do rather than being backed into a corner with no
options on Friday. In hindsight, I’m not sure what I would have done on
Wednesday. Although I am quite certain, whatever I did, Chris would have made
less money.
The second thing in the email to note, offering $15,000 was
Chris’s idea that I agreed to in his subsequent phone call. At this time, I was
fuming. I was being cheated. So, I added a part about not giving inspection
credits. Chris said he would send me an email to summarize our call and said that
I should respond by sending an email that said his summary sounded good.
Hi Dave,
To recap our conversation just now;
you have decided to counter offer #2 by offering a maximum of $15k SELLER
ASSIST... AND buyer may inspect all he wants, but you will not be
offering any credits or doing any repairs... the property will be sold as
is.
Correct?
Thanks,
C
Chris Hanley
Hi Chris
That all sounds good.
Dave
Later, Chris called and told me the buyers had countered
with $22,500 and no inspection credits. I was ready to chew glass. What could I
do? I was forced to agree under duress.
The next morning, Saturday December 14th,
Chantelle brought by the Offer To Purchase for us to sign; Exhibit 3 – 2 of 3.
We signed, initialed, and dated but didn’t really read it thoroughly. We were
excited about meeting the new buyers that afternoon. But as you’ve read, Chris
had other plans.
Upon closer examination of the contract, there are some things worth noting. First, the effective date listed on the top and defined in paragraph 19 is blank.
Why is it blank? Obviously, because you wouldn’t list an effective date that was the day after the contract had expired.
Oh, but wait. Somebody wrote an acceptable date on top of the expired date that my wife and I had written. Seeing as Chris has no problems with lying, slander and false representation, you might as well add forgery as a sort of icing on the cake.
If we were going to worry about expired dates, Tyler and Rachel could not possibly have signed this before 5:00pm on Friday either. But then again, the contract doesn’t even mention that the buyers have to sign before the contract expires. Why should it? It’s just assumed that they would have already signed in order to make the offer. However, they would not have signed an offer without closing costs included and at the time I didn’t even know about them. Chris probably wanted everyone to get comfortable, me thinking I had sold a house and them thinking they had bought a house. So, he waited until Friday afternoon and then tried to coerce, manipulate, and then slam everything through. Unfortunately for Chris, he just ran out of time. But for Mr. Hanley this is a minor problem, just fudge the dates on the contract.
I’m beginning to wonder. Is it possible that Chris just
assumes that contracts don’t apply to him; that he is somehow above them? The
following is from our Listing Agreement that he signed; Exhibit 3 – 3 of 3:
How did he do with this list of promises?
Treat both clients honestly – Well, this one got shredded. It’s good to know that if I ever take Mr. Hanley to court, I won’t just be relying on the NAR’s code of ethics to point out his responsibility for honesty. --- Honesty was his contractual obligation ---
Provide information regarding lenders… - I tried to get information about VA loans and the buyer’s closing costs. Chris’s information was at best incorrect or more likely, he knows all about VA loans and was just lying through his teeth. If he had told me the truth, there is no way on earth that he wouldn’t have ended up chipping in for the closing costs.
Shall not disclose information that is confidential – Chris told the buyers the dollar value of the other offer. Enough said.
Shall not advocate or negotiate on behalf of either the buyer or seller – When Chris suggested that I offer $15,000, he might as well have negotiated the offer himself. His power of suggestion is very powerful. If I were to disagree, he would demand a reason. And I wouldn’t have one. To truly not negotiate, he needed to not make any suggestions whatsoever.
Shall not suggest or recommend specific terms, including price, or disclose the terms or price a buyer is willing to offer or that the seller/owner is willing to accept – All that Chris did was to suggest terms and prices. He knows he’ll get his way and he takes full advantage of it.
Shall not engage in conduct that is contrary to the instructions of either party – We all told Chris multiple time that we wanted to meet each other. He did everything in his power to prevent it.
Such was the story of Chris Hanley’s management of dual agency.
I read an interesting analogy of dual agency. The writer
compared it to a football game in which instead of each team having a coach,
there is only one coach who coaches both teams. On top of this, the coach is
betting on the outcome of the game. By calling a particular type of play for
the offense and then telling the defense to defend for either that play or
something different, the coach can control the game and likely be able to predict
the score in order to win his bet. Spectators of the game would be completely
unaware of any wrongdoing. Only the teams would suffer, …while the coach got
rich.
Exhibit 1 – 2 of 3: [written before closing]
Chris, your handling for the sale of our house has not gone well. Your efforts as the listing broker were quite acceptable and your three percent commission was earned. As the selling broker, not so. Some of the more egregious actions are as follows:
In the buyers offer to buy, they listed a ten-thousand-dollar retainer that would be forfeited to me if they failed to properly live up to the contract. You called to inform me that this was unacceptable and that the number should be twenty thousand. I accepted your guidance. When I saw the contract, I noticed that the number had been changed to twenty thousand. I also noticed that ten thousand would go to me and ten thousand to you. Quite devious on your part but with only a desire for expediency, I signed.
The buyers had already agreed to buy our house. They were
coming to look at it. We had informed you that we wanted to meet them. You
agreed. Five minutes before your and their arrival, you called and ordered us
out of the house. We complied. The magnitude of this purely evil deed was not
apparent at the time. When we finally met Tyler and Rachel, we compared notes
and learned:
•
Your text message to us, as we sat in patio
chairs on the road not more than two hundred feet away, was that you ordered us
out of the house because Rachel was “a nervous Nelly who didn't want to deal
with the previous owners.” This was an abominable LIE.
• You had us sit on the road in the hot sun with our dog for over two hours and later learned from Tyler and Rachel that they were simply waiting for us to return in order to meet us. We also learned that when they asked you where we were, you answered, “They're up the road.”, implying we're sitting on the neighbor's patio sipping cocktails. You then told them that we had no interest in meeting them. These LIES were unconscionable and deserve a lawsuit for slander.
• Your final repugnant deed, which is probably illegal, involved Tyler and Rachel moving into our house before closing. We told you repeated that we were leaving before closing and hoped the new owners could move in immediately after we left. We had no desire to hire a house sitter, a landscaper, and a pool guy. We didn't want to be paid rent; we only wanted the house to be secure. Little did we know that they were begging you to be allowed to move into the house and pay rent until closing. And you had the audacity to tell them that that was “Impossible.” The contract, that the buyers and sellers sign, contains all kinds of language about what happens if either side violates the contract. Since you provided it, I'm sure it doesn't state what happens when the broker violates all decency and harms both the buyers and the sellers. I intend to have a conversation with Scott to discuss suing you. I am also happy to inform you, contrary to your wishes, that Tyler and Rachel have been living in their new home since we left.
After our misery with you, you handed us off to Stephanie. We have no complaints with Stephanie. She is a peach.
… [The rest of this
document details the lies and incompetent actions of one of Mr. Hanley’s
employees that left my wife and I plus the buyers absolutely furious, as well
as causing all of us financial losses. However, my fight is with Mr. Hanley not
her, so I’ll leave out the details knowing that Mr. Hanley is responsible for
what she did.] …
In my motivational paragraph that I mentioned earlier the author lists possible penalties of losing a commission, financial compensation, licensure restrictions or criminal charges. It needs to be understood that these penalties cannot all be imposed by all authorities. It is my understanding that the following authorities can impose the following penalties:
VITAR -
full/partial return of commission
Real Estate Comm. -
full/partial return of commission?, licensure restriction, fines
Civil court -
financial compensation
Criminal court - fines, jail time
The types of violation
considered and requirement of proof varies by the different authorities:
VITAR - Arbitration has no finding of “guilt”
or “innocence”, but rather simply a determination of whether the person filing
the arbitration is entitled to an award. [Belton Jennings] Seems rather vague. [Me]
Real Estate Comm. -
Bad faith, dishonesty,
untrustworthiness, or incompetency – proof?
Civil court -
Civil violation - Preponderance of the evidence
Criminal court - Criminal violation - Beyond a reasonable doubt
The following is the list of criminal violations I feel in my humble amateur opinion that Mr. Hanley committed. It’s the list I sent to the Attorney General’s Office. I believe that each violation falls into one or more of the following criminal violations: breach of contract, breach of fiduciary duty, or fraudulent misrepresentation.
Wednesday:
1. Hanley informed his buyers of
the other buyers’ 650k offer price. Disclosing confidential information is
forbidden by contract.
2. Hanley was told by his buyers to
write and submit to me, the seller, an offer for 665k consisting of 695k with a
seller assist of 30k. He did not produce a written offer.
3. Hanley did not inform his buyers
that a seller’s assist of 30k exceeded VA rules
4. Hanley misinformed seller of an
offer by his buyers because no signed offer existed.
5. Hanley informed seller of 695k.
Actual amount was to have been 665k.
6. Hanley allowed seller to
verbally accept a nonexistent offer and turn down the only real offer.
7. Hanley
did not provide useful information on VA loans when asked. Providing lender
information is required by contract.
Friday:
8. Hanley misinformed the seller
regarding who must pay the previously unmentioned 30k. Providing lender
information is required by contract.
9. Hanley
essentially negotiated 30k to 22.5k. Forbidden by contract.
Saturday:
10. Hanley allowed the written offer to expire.
11. Hanley
forged the dates on the
offer.
For a reader friendly version of this:
Chris
Hanley told me over the phone that his client offered 45k more than another
broker’s client. An offer is a signed document. No real written offer existed.
He wanted me to accept the fictitious offer so that he could tell the other
broker to go away. After I accepted the nonexistent offer, he then had two days
to manipulate me and his buyer into some deal, any deal so that he could get it
on paper before they arrived, all to guarantee himself a double commission of 40k
vs 20k.