When helping a former client gets you in trouble

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A woman with glasses using a magnifying glass to look at a toy house in her hand

02/26/2016 | Author: Editorial Staff

Remember those first-time homebuyers you helped a few months ago? They closed on their new home, moved in, and everything was going well … until a few days ago when their air conditioner died. The couple called you to complain—and to ask what you’re going to do to fix it. While you want to preserve a good relationship with your former clients, consider the following factors before you act.

Are you even allowed to help?
First, talk with your broker. He or she is ultimately responsible for your actions and may not want you to get involved. In addition, remember that you no longer represent the couple since they completed the transaction for which they hired you—in this case, the purchase of a home.

Watch your words
If you do get involved, avoid phrases that imply you’ll solve or fix the problem. Instead, focus on being a resource for them to help themselves—never assume responsibility for what happened.

Who is the best person to ask?
In this situation, tell the new homeowners to contact an HVAC technician to assess the problem. Be wary of recommending a certain service provider, as the buyers may blame you if they have a negative experience. Instead, you can provide a list of professionals in the area they may want to contact, while taking care not to favor one over another. If the homeowners contend the system failure was the result of negligence by the seller or the seller’s agent and they try to discuss this with you, suggest they consult an attorney.

Of course you never want a former client to be upset, but providing services or advice outside of an agency relationship can be risky. Even if you haven’t encountered this exact scenario yet, talk with your broker now about how you should handle a similar situation—your business may depend on it. 

Categories: Legal, Buyers, Sellers
Tags: legal, agency, buyer representation, broker, clients, former clients


Kellie J on 03/04/2016

I had a similar incident happen as Jenna Whitehead.
Home warranties do not cover much. I always advise to get one, usually ask the seller to pay for it. But even with a home warranty they only cover appliances HVAC etc. They don’t cover termites, foundations, mold, leaky pipes etc.
I represented a buyer, she had an inspection, someone she hired, (I never suggest an inspector for this very reason) and seller paid for a home warranty.
Within 1 month the buyer discovered a leaking pipe under the house (pier and beam) which caused mold. When the buyer called me screaming I told her to call the inspector, when that got her no where I told her to call an attorney.
Long story, she ended up suing the inspector, the seller, sellers agent and ME! Her lawyer said sellers agent and buyers agent (me) should have known. Really? I never went under the house. I was not present at the inspection so in my opinion that should have excluded me.  How could the sellers agent know unless her client told her about the mold (doubtful)
  I ended up paying $1500 (deductible for E&O ) to prove I did nothing wrong… Expensive and ridiculous. in civil court you are guilty till proven innocent. Even though I told the buyer to call an attorney as soon as I heard about her problem I was still sued.
BTW, the judge said I did nothing wrong but I still paid for legal council. After the legal fees I barely made $1000 on this sale. Hardest $1000 I even made.

Dan Brunner on 03/03/2016

Avoid the problem entirely by asking the Seller to provide a home warranty. I always encourage my Seller’s to provide the home warranty for “insurance” against an issue such as this.

anita farr on 03/03/2016

At closing I provide the buyers list of people to call in case of plumbing, heating, etc. problems that may arise.  I remind them that my job was to help them find a suitable home and accordingly, I have done that.

I asked them to keep copies of Home Inspection Reports and all repairs that were completed per their instructions to include the re-inspection after repairs.  There is no perfect transaction all the time.  We can cover many areas but a dissatisfied people can always find something.  Removing ourselves from the problem though not ignoring the buyers’ state of discontent can result to an amiable solution, in my opinion.

Jenna Whitehead on 02/27/2016

Thank you for posting this. I found myself in this predicament recently, a client that was referred to me bought an all cash house, as is. The buyers mother has been overly involved but is a mortgage lender, and during the process actually contacted the sellers agent and seller directly to show her disgust because they wouldn’t lower the price, putting me in a situation to face disciplinary action. After we had an inspection and five contractors out during the option period, they still closed. They immmediately began tearing walls out and came across extensive termite damage to the Sheetrock (we knew there was carpenter ants and this damage was such that no one would have found unless you tore the walls out.) the mother called me two days after closing and wanted me to come look at the damage and contact the sellers agent and just knew they’d been duped and began discussing mediation. Well, I knew they hadn’t been and after her previous behavior of borderline getting me into trouble, I immediately called my broker and the TREC legal hotline to find out what my responsibility was, and the answer from both was, I didn’t have any responsibility. I Told her that I could no longer speak with her, as she wasn’t the buyer, and then told her kids that while I would cooperate with providing emails or documents that I had collected during the process I could not speak on their behalf to the agent or represent them with any legal action, they needed to hire a real estate attorney. The mother quickly wrote her disgust with me that I was letting her children do this on her own. I felt really bad because this couple was very nice and they bought a house in my neighborhood, but their mother had proven gee unpredictability abc it’s not worth my license to overstep my bounds. It’s hard but sometimes you just have to make sure they know that it’s not in their best interest for you to handle this, they need to deal with it on their own. And if they’ve taken on the responsibility of home ownership, they should be up to the challenge,

Doris Snipp on 02/26/2016

I find that even with a new build the buyers forget they need to process the form in their builder packet to start the process. I have not had another call after the reminder. Referring to the buyer of a resale home I remind them to go online and fill out a request for service with the home warranty company. In the event you have a major incident in which a home warranty is not the answer, I refer them to their attorney for guidance in how to proceed. I then put all of the information in my file plus the
Broker file and a copy of what transpired on the office managers desk. Stay out of the fray.

Scott Billingsley on 02/26/2016

It should be a very rare situation when a real estate agent or broker has such a problem.

It was common over 30 years ago as we did not have seller’s disclosures, inspectors that were not as well trained as today and, in my case, no residential home warranties to provide.

If such a call came from a buyer it is easy to tell them to call the home warranty company as they are provided one way or another in 100% of my contracts (even if I have to pay or subsidize them).

Other problems can arise but typically because the buyer did not want to pay for an inspection at which point I have them sign a document saying that they have waived their right of having the property inspected and that I recommended that they do (even and especially on brand new homes).

We want happy, life long clients and the best way to keep them is to do your job right and out of a desire to please them.

Lou Burns on 02/26/2016

Finally, some common sense directed towards a serious and continuing problem. I have been counseling agents (often too late) for years about not getting sucked into post closing issues.

Lilly Hughes on 02/26/2016

That’s why they get a residential home warranty even if I have to pay for it. Strangely, enough many of them forget they even have it until they call you for help.

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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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