Quick glimpse of this case: An agent showed a home which had a greenhouse. The agent said "There's a recorded easement for the greenhouse over the neighbor's property line. It's in the Preliminary Title Report." Agent delivered PTR, buyer signed off on it, purchased the home and greenhouse, and didn't ask any further questions.
The buyer didn't get along with the neighbor. Neighbor planted trees around the greenhouse, blocking light. Buyer thought they "owned" the property under the greenhouse, and could remove the trees. Buyers were told by their attorney what their easement entitled them to do. Neighbor kept trees. Buyer sued agent for "not interpreting" easement.
Agents have been sued for misrepresenting the boundaries of a property, no surprise here! What is dismaying is that many cases expect the agent to "investigate" and "interpret" the easements. This isn't in our job description.
Advisory: Easements can be confusing and very technical. Attorneys are the best at interpreting easements and the rights that go with them. Many title officers are qualified to do this as well. For licensees, the best course of action is to obtain the Preliminary Title Report and read it over. Deliver it to your clients and go over it with them, or instruct them to read it and check in with you with their questions. Most sales contracts contain a standard "built-in" contingency regarding the buyer approving the title report and matters affecting title. Since this issue is important enough to be part of every purchase agreement, make sure the buyers read the PTR documents.
Summary Points: It's not a licensee's job to interpret what an easement entitles someone to do or not do. It's your job to know 1) that easements certainly do impact the use of the property and 2) advise your buyers of that fact. Follow up by 3) instructing them to read the PTR and 4) encouraging them to ask questions. If there is anything they don't understand, get title issue professionals to answer. The final advice is 5) refrain from interpreting or making statements about the easement, unless you are quoting your source and explaining if you have personally verified the information or not. Buyers rely on what you say.
What if: Okay, so you read the PTR and find yourself confused. Your client is confused, too. No problem. Call the title company and ask your questions. Put your client on the line in a conference call. Doing this assures you that the source of the information is not you, it is the title officer. If there are indications that the property has some further or referenced covenenats, conditions, restrictions, or recorded rules, regulations, etc. ask the title company to research and get you and your client a copy of these. Read these additional title documents, as they are material facts which can affect the value or desireability of the property. Again, if you and your client don't understand what you read, you and your client can and should ask questions of the title company. Email works just as well as telephone in this regard. Send a BCC to yourself so you have a record of your email communications with your client and the title officer.
Perhaps you want to get the information yourself, and tell your clients what it means to them. Be careful! If the title officer gives you information, and you relay that information to your clients, be sure to tell your clients who gave you the data and that you didn't verify it yourself. If you interpret the issues of title, you are reaching beyond your duties as a real estate licensee and opening yourself up to risk.
Next column: Who Is Your Client?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment