Anyone who goes to city hall to ask a question about permit status, tree removal or a lot’s development potential–questions potential buyers often ask–runs the risk of getting contradictory or even just-plain-wrong answers. The best legal thinking these days is that buyers should get their right, wrong or just confusing answers directly from the city (or county) rather than second-hand from their agent.
Back in the day I’d go to city hall for my clients, because that’s what agents did. California civil code doesn’t require agents to do “off-site” investigations, but that’s never kept agents from going what they think is the extra mile for their clients. After all, buyers are busy, and agents are uniquely qualified to interact with building and planning departments, because agents know everything about everything because they’re agents.
That’s their value proposition, or at least some agents thought so back then and may still today. But the reality is that agents can’t know everything about everything–there’s far too much to know. However, a good agent knows specialists who know everything about their specialty, and knows when to get them involved. A good agent also knows the limits of his or her expertise, and isn’t afraid to acknowledge them.
I’m reminded of the agent, with no construction background, who crawled underneath a house to reassure a client about its condition. Not only did she give her client a false sense of assurance, she increased her liability exposure by representing herself as an expert in an area she knew little or nothing about.
Not exactly a win-win. Except for one of California’s 170,000 practicing attorneys.
Then several years ago, at one of Coldwell Banker’s regular legal updates–a big reason I’ve been with CB virtually my entire career–our head in-house counsel told us that under no circumstances were we to speak to building and planning personnel on behalf of our clients. Because, far from being helpful, we could be passing on bad information to our clients–the city personnel we’d spoken to might have misunderstood the question, given the codes their own spin, been having a bad day or just not known the answer.
Or the information they’d given us agents might be correct, but we’d only gotten a portion of what our client needed to know, and the missing part was a “material fact” that might matter a great deal to our client. Or the information was correct, but we’d misinterpreted it because we’re agents, not planners or building inspectors, or we’d presented information to our clients in a way that couldn’t stand up to the zealous scrutiny of a plaintiff’s attorney.
Who knew it could be so complicated?
But, mostly, the problem was that agents going to city hall were setting themselves up for a losing game of “he said, she said”. They were acting as a conduit for potentially bogus, incomplete or misunderstood information, while they couldn’t prove what their source had told them. And as one government attorney says online, “government agencies and employees are immune from many types of claims”.
Sound like a case of real estate industry paranoia, or maybe an excuse for agent laziness? Shortly after the legal update I had clients interested in a house for sale in Los Altos. The sellers’ disclosures showed that permits had been pulled for an expansion done years before by a previous owner, but that those permits hadn’t been “finaled”–which meant that, despite the existence of permits, the expansion wasn’t legally permitted. This isn’t uncommon, but it’s still a big deal.
In the past I would have steamed down to city hall to get this sorted out, but this time I asked my clients to go to the city’s building and planning department.
The first person the husband talks to, Grumpy, tells him that the city has no permit records for the expansion and that it’ll have to be completely torn out and redone. I’ve seen copies of the permits, presumably obtained from the city, so I encourage him to go back in and point this out. He does, and speaks to another city employee, Happy, who tells him that not only does the city have a permit record, but that the permits were “probably” finaled–and if they weren’t, it’s “no big deal” to get them finaled.
Two official responses, different as night and day, from the same building and planning department, within a fifteen minute period. And a great example of the agent advising and coaching clients doing their own due diligence.
Do other brokerages prohibit their agents from dealing with the city on behalf of their clients? I don’t know, although I do occasionally run across agents who understand that doing off-site investigations for their clients isn’t in anyone’s best interest. The chance is too great that it’ll all end in tears.
copyright © John Fyten 2017