Tag Archives: Real Estate Brokers

What is a Lis Pendens?

A Lis Pendens, also known as a “Notice of Pendency of Action” can be recorded on real estate through the County Recorder’s office. The purpose of a Lis Pendens is to provide “constructive notice” to a subsequent buyer, claimant, or anyone who has encumbered the real estate that there is a legal action that may affect title or possession of the real estate.

A Lis Pendens should be recorded immediately after filing a lawsuit that affects the title or possession of real estate. Prior to recording the Lis Pendens, a proof of service must be attached that shows that that the plaintiff has served the Lis Pendens by registered or certified mail all known parties that have an adverse interest in the property along with the title owner of the property. If you are not an attorney, a judge must approve that you can record a lis pendens on a property.

How Does a Lis Pendens Affect Title?

If there is a Lis Pendens recorded on a property, a title insurance company will not be able to insure title. This could hold up a sale and basically make a property unmarketable. Ultimately, because a Lis Pendens shows that a property is subject to a lawsuit that may affect title or possession, a seller would not be able to sell with clear title until the underlying lawsuit is resolved. If a buyer purchases a property with a properly recorded lis pendens, the buyer has “constructive notice” which may mean that the buyer could lose the property through the lawsuit if a plaintiff is successful at gaining title or possession. Therefore, a property with a lis pendens is difficult, if not impossible, to sell.

What types of lawsuits use a Lis Pendens?

Lis Pendens are used in quiet title actions but can also be used in lawsuits where title or possession of a property is in question. For example, a buyer of a property can file a lawsuit for specific performance and record a lis pendens when a seller refuses to sell under a real estate contract.

You should speak with an attorney prior to filing any action that would require a lis pendens or any action that could affect property rights. California law requires strict procedural requirements to record a Lis Pendens and for service of a summons and complaint for actions that affect title to real estate. Please contact Attorney Anthony Marinaccio at (818) 839-5220 for more information.

Real Estate Salesperson Owes Same Duty to Buyer and Seller When Broker Represents Both

A recent California decision found that a real estate salesperson representing a buyer or seller has the same duty as the broker who represents both the buyer and seller. This could happen when a broker represents both the buyer and seller but two separate salespersons actually represent the buyer and seller. In this case, both salespersons would owe a duty to the other party even if they are not acting as a dual agent because their broker is acting as a dual agent. Horiike v. Coldwell Banker Residential Brokerage Company provides guidance for real estate salespersons, brokers, and parties to a real estate transaction when the same broker represents both the buyer and seller.

In 2006, the property owners of a home in Malibu, California hired Chris Cortazzo with Coldwell Banker Residential Brokerage Company to sell their property. Building permits for the property listed the square footage of the buildings at 11,050 square feet, including a single family residence at 9,224 square feet, a guest house at 746 square feet, a garage at 1,080 square feet, and a basement. Cortazzo listed the property and advertised as having 15,000 square feet of livable space. A couple made an offer on the property but wanted confirmation of the building square footage, which could not be provided because architectural plans could not be provided.

The plaintiff, represented by another real estate salesperson, Chizuko Namba, from Coldwell Banker Residential Brokerage Company, made an offer on the property. He was provided a flier stating that there was 15,000 square feet of living space and was also provided a copy of the building permits. The parties also signed a dual agency disclosure form required under Civil Code Section 2079.16.

The form described two types of relationships relevant here:

  • The seller’s agent acts as an agent for the seller only and has a fiduciary duty in dealings with the seller. The seller’s agent has obligations to both the buyer and the seller to exercise reasonable skill and care, as well as a duty of fair dealing and good faith, and a “duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.”
  • “A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer.” An agent in a dual agency situation has a fiduciary duty to both the seller and the buyer, as well as the  duties to buyer and seller listed in the previous sections.

Soon after the transaction was completed, the Plaintiff filed a lawsuit against Coldwell Banker for intentional and negligent misrepresentation, breach of fiduciary duty, unfair business practices in violation of Business and Professions Code section 17200, and false advertising in violation of Business and Professions Code section 17500. He had discovered the total square footage of the building was different from building permits or what was advertised.

On appeal, the Court found that the Listing Agent owed a fiduciary duty to the Buyer because he was employed by the same broker as the one representing the Buyer. A broker who represents both parties to a real estate transaction owes both parties a fiduciary duty even when different salespersons represent each party. If the Listing Agent was aware of material facts, he should have provided them to the Buyer.

There is a common misconception that if two different real estate salespersons represent the buyer and seller, there is no issue of dual agency even when both salespersons work for the same broker. California law does not agree. This case has important implications for real estate salespersons and brokers who deal with the seller and buyer to a real estate transaction.

April is Fair Housing Month

April is Fair Housing Month, so I will be writing a few articles on how Federal and California fair housing laws apply to landlords, real estate brokers, property managers and other real estate professionals who lease property. The Federal Fair Housing Act prohibits unlawful discrimination based upon a tenant or potential tenant’s race, color, national origin, religion, sex, familial status, or handicap. California has its own version, known as the Unruh Civil Rights Act found in Civil Code Section 51 et seq.

The Unruh Civil Rights Act prohibits discrimination based upon sex, race, color, religion, ancestry, national origin, disability, or medical condition. Further, California also has the Fair Employment and Housing Act found in Government Code Section 12900 et seq. The Fair Employment and Housing Act is much broader than the Federal Fair Housing Act or the Unruh Civil Rights Act. It prohibits discrimination based upon the following:

  • Age (40 and over)
  • Ancestry
  • Color
  • Religious Creed (including religious dress and grooming practices)
  • Denial of Family and Medical Care Leave
  • Disability (mental and physical) including HIV and AIDS
  • Marital Status
  • Medical Condition (cancer and genetic characteristics)
  • Genetic Information
  • Military and Veteran Status
  • National Origin (including langauge use restrictions)
  • Race
  • Sex (which includes pregnancy, childbirth, breastfeeding and medical conditions related to pregnancy, childbirth or breastfeeding)
  • Gender, Gender Identity, and Gender Expression
  • Sexual Orientation

Further posts will highlight some of these categories and what constitutes discrimination. It is important for all real estate professionals, brokers, landlords, and property managers to understand fair housing laws and apply them in their course of business.

Transfer Disclosure Statement Required for Mixed Use Properties With Four or Fewer Residential Units

A recent California decision found that a Transfer Disclosure Statement that is required on all sales of properties with four or fewer residential units also applies to a mixed use property that has four or fewer residential units. Richman v. Hartley provides further guidance when a Transfer Disclosure Statement is required for the sale of real estate.

In 2007, Hartley entered into a written agreement with Richman to purchase Richman’s property, consisting of a residential duplex and a commercial building. A paragraph of the written agreement required that the seller make all disclosures required by law and that the property would be sold “as-is.” At the same time, Hartley leased the property from Richman for two years.

In 2009, escrow was scheduled to close, but Hartley failed to close escrow citing that Richman did not provide Hartley with a Transfer Disclosure Statement required by Civil Code Section 1102. Richman sued Hartley for breach of contract. Hartley moved for summary judgment because Richman failed to provide the Transfer Disclosure Statement. The trial court granted Hartley’s Motion for Summary Judgment, and Richman appealed.

The Court interpreted Section 1102 to require a Transfer Disclosure Statement for the sale of a mixed use property that contains four or fewer residential units because Section 1102(a) requires the Transfer Disclosure Statement for all sales of properties within four or fewer residential units, regardless of whether there are other non-residential structures on the property.

The Court found that other laws addressing residential real estate disclosures also contain the phrase “residential real property;” however Section 1102 requiring a Transfer Disclosure Statement does not make that distinction.

This case is important for real estate investors, brokers, real estate salespersons and others involved in a real estate transaction particularly those for mixed use properties when it is confusing whether or not the property is “residential” or “commercial.”