ask george & chuck
Oct. 6, 2008

Multiple buyers for property, taxes after closing
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: We recently entered into a contract to purchase real estate. Our REALTOR® marketed the property we submitted an offer on to his friends and used their interest to pressure us into accepting the seller's counteroffer. Isn't this practice unethical?

Answer: If I read your question correctly, after you entered into a buyer representation agreement with your REALTOR®, he marketed the subject property to his friends to create a false market for that property. Feeling your property was slipping away from your grasp, you accepted the seller’s counteroffer without further negotiations because you believed the friends of your REALTOR® were legitimate buyers. If that is what happened, your REALTOR® should've informed you that the other potential buyers were friends of his. However, that same representation agreement you entered into with your REALTOR® also states that he may show properties, including the one you made an offer on, to other buyers. So the real question is whether the other buyers were legitimate buyers who also entered into a representation agreement with your REALTOR®.

If he created a false market so you would accept the seller’s counteroffer, his actions were not only unethical but also illegal; he failed to disclose all information that came within his knowledge and acted contrary to his obligation to be loyal to your interests. If, however, he was acting upon your specific instructions to accept the seller’s counteroffer, he has an obligation to obey all lawful instructions that you give to him. One school of thought is that an agent shouldn't represent two buyers that want the same property. Some attorneys as well as some real estate licensees believe that in such a situation it is impossible to avoid a conflict of interest.

Dear George: My home was sold in November 2004. I found out in 2005 that my 2004 taxes were not paid. A clerk at the title company informed me that a clerical error had caused my taxes not to be paid. She said that I would have to pay the 2004 taxes since the title company could not go back on the buyer. This caused me a loss on my profit on the sale. Do I have any recourse since it was the title company’s fault and not mine?

Answer: If the home sold in 2004, the taxes for 2004 are the buyer's responsibility. Did the buyer receive a credit at closing? If the clerical error was that the title company didn't properly prorate taxes, the seller is still responsible for his share of the taxes.