Realtor double ended and commited fraud?

OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Mike Cumbie:

Have they moved out?

"On or before Move out Date"

"On or before Yellowstone volcano explosion"

If they are now out and the closing is ready to go, there is a fair argument. If they are still there, it's much more cloudy.

Yes, one unit is out and got a bounced check from realtor. I was suppose to compensate the realtor at close for that.

2nd unit I'm suppose to pay directly to tenant which was going happen this week. Upon confronting realtor about lying where my funds were use for, she now is willing to pay both tenants out of own pocket. She probably sense she got busted and knows she is in deep Doo Doo.

Matt Greer

Real Estate Agent · Mesa, AZ · Member since 2017 · 231 posts · 169 votes

WOW! The easiest way to lose you license is mishandling trust money aka other people's money. I would call her broker and I bet the broker would step in so incredibly fast to right the situation it wouldn't even be funny. If I were her broker she would be fired on the spot. There's literally multiple valid reasons to do so. If I were the broker I'd even report the agent to the department of real estate along with what I did to remedy the situation. I would also consider terminating the listing with the seller because of their blatant misconduct as well. Once again, mishandling trust money (security deposits). Now, since you want to buy the property I would complete the sale, but if you backed out as the buyer I would immediately terminate the firm's listing agreement with the seller. Even then though I would be terrified of closing the deal as an agent, because who knows what else they could be possibly hiding. I tell my clients the quickest way to lose me as their agent is to lie. They don't pay my errors and omissions insurance.

Also these addendums and amendments that you speak of... Did an attorney write them or did the agent, because once again practicing law without a license is a no-go

2 Reply

OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Matt Greer:

WOW! The easiest way to lose you license is mishandling trust money aka other people's money. I would call her broker and I bet the broker would step in so incredibly fast to right the situation it wouldn't even be funny. If I were her broker she would be fired on the spot. There's literally multiple valid reasons to do so. If I were the broker I'd even report the agent to the department of real estate along with what I did to remedy the situation. I would also consider terminating the listing with the seller because of their blatant misconduct as well. Once again, mishandling trust money (security deposits). Now, since you want to buy the property I would complete the sale, but if you backed out as the buyer I would immediately terminate the firm's listing agreement with the seller. Even then though I would be terrified of closing the deal as an agent, because who knows what else they could be possibly hiding. I tell my clients the quickest way to lose me as their agent is to lie. They don't pay my errors and omissions insurance.

Also these addendums and amendments that you speak of... Did an attorney write them or did the agent, because once again practicing law without a license is a no-go

The agent drafted everything up and had me DocuSign. I do want to complete the sale but I'm debating if I should talk to the broker and see if I can get a different agent. One because the trust dishonest issue and two I feel she doesn't deserve the commission at least from the buyer end. Since you are a broker how would you handle this? The listing and my current purchase contract will still be valid even if the agent is taken off? Do we need to start over a whole new contract? Current contract has her name all over it.

Matthew Mazur

Real Estate Broker · Los Angeles, CA · Member since 2020 · 46 posts · 18 votes

@David Pai

Get all your documentation together / write a similar summary with references to items in writing (if you just spoke to them verbally, get emails from the tenants) / speak to an attorney / then approach the broker. At a minimum, this should go to the CA DRE, if this is not isolated misconduct they will identify it.

As for the deal - if it pencils, close it, see if someone else from the brokerage can step in and bring the transaction to a close.

Todd Pultz

Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes

@David Pai that’s correct the brokerage controls it.

Just out of curiosity and playing devils advocate......how much were the security deposits? The only reason I ask is if it’s the 2500 just like your cash for keys addendum, I can see where this will become slippery road of word mincing if they tell tenant they are getting deposit back and tell you they need cash for keys to get them out. Both are the same thing. Cash for keys could simply be giving deposits back early. I would not think twice about the tenants never hearing the phrase cash for keys though, as I would never talk like that with my tenants.

Having multiple addendums like this create these issues and things are always easier when the purchase agreement is straight forward and few contingencies. But sometimes I get it, you need a quirky deal.

Gail W.

Investor · IL · Member since 2019 · 151 posts · 135 votes

In my own mind I would question how much the managing broker knew about the situation. If it were me and I wanted to move forward I would have my attorney review every document and detail of the situation, out of an abundance of caution.

Jarrod Kohl

Boston, MA · Member since 2017 · 209 posts · 126 votes

Originally posted by @David P.:

Originally posted by @Matt Greer:

WOW! The easiest way to lose you license is mishandling trust money aka other people's money. I would call her broker and I bet the broker would step in so incredibly fast to right the situation it wouldn't even be funny. If I were her broker she would be fired on the spot. There's literally multiple valid reasons to do so. If I were the broker I'd even report the agent to the department of real estate along with what I did to remedy the situation. I would also consider terminating the listing with the seller because of their blatant misconduct as well. Once again, mishandling trust money (security deposits). Now, since you want to buy the property I would complete the sale, but if you backed out as the buyer I would immediately terminate the firm's listing agreement with the seller. Even then though I would be terrified of closing the deal as an agent, because who knows what else they could be possibly hiding. I tell my clients the quickest way to lose me as their agent is to lie. They don't pay my errors and omissions insurance.

Also these addendums and amendments that you speak of... Did an attorney write them or did the agent, because once again practicing law without a license is a no-go

The agent drafted everything up and had me DocuSign. I do want to complete the sale but I'm debating if I should talk to the broker and see if I can get a different agent. One because the trust dishonest issue and two I feel she doesn't deserve the commission at least from the buyer end. Since you are a broker how would you handle this? The listing and my current purchase contract will still be valid even if the agent is taken off? Do we need to start over a whole new contract? Current contract has her name all over it.

Why would you go to that same broker for an agent, that is a terrible idea.

Second, is this agent/office also the property manager or owner is the agent the owner? That should be known, and a big reason that I would use a local buyers agent if buying out of town.

The security deposit doesn't make sense, "paying out of her own pocket" is not how security deposits work. If they funds are intermingled then she is in serious trouble (the broker too). You 100% would be responsible for the security deposit if the lease is still in force when you take over ownership. Typically, you would have the previous owner/manager transfer you the deposit (with some documentation) otherwise it would end up with you (the new owner) being responsible for paying the deposit back.

I would be REALLY careful about completing this deal. If she is being this shady to get it sold, what else is she shoving under the rug? With her double ending the deal she certainly does not have your interests in mind, she has hers first and seems desperate to make a buck. If you got numbers from her, I would double check them. There are plenty of deals out there to be found....personally I would back out at this point, or at the very least make sure you get your own agent and/or really good RE attorney involved so that you can protect yourself.

Mike B.Pro Member

Developer · Chicago, IL · Member since 2013 · 437 posts · 359 votes

I agree with everyone that the agent acted dishonestly, but "cash for keys" is an awfully broad term. If she spent the tenant's security deposit then this is a different conversation. If the owner spent the security deposit and she knows that the tenants need that deposit back to move, cash for keys kinda plays. Personally, I would have never used that wording. Honesty and communication have proven to give me a much smoother route to the closing table.

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

First lesson, 99% of the time cash for keys is not necessary. I wish the BP community would stop promoting the idea. Lesson to be learned here. Next time someone says "cash for keys" just say no.

Second lesson is do not let the selling agent "represent" you. Bring your own realtor next time so you have someone looking out for your interests.

Third lesson, there was no reason for the realtor to lie. She could have told you the truth, that the sellers had no money for security deposit return to get the tenants to leave. They could have still asked you for the money or the realtor could have given up part of her commission to front half of it. Lying is not a creative solution. This applies to ANY situation. Lying is not creative, it is fraud.

As far as how to handle this, the realtor could get in big trouble and could loose their career. You have a lot of power, but you also have the opportunity to show compassion and forgiveness. Showing compassion is harder than seeking revenge. I may consider the realtors age in how I handled the situation. If the realtor was very young, the mistake could be youth and inexperience. If the realtor is older, that indicates lying is their way to deal with issues. They did admit the mistake and are offering to make it right. You like the deal, so I would try to close it before taking any action. I would make sure the realtor didn't make anything at all. In other words if the total commission is $9,000 then I would ask them to refund the other $4000 to me too. Assuming they made nothing or lost money on the deal, I would consider that an acceptable lesson to be learned. You are within your rights to report her. Maybe after closing, request a sit down meeting with her and her broker. Walk through what happened and see if they understand it was wrong and say it will never happen again.

I know many people just immediately say "report them", but often times good people make mistakes. This is someone's daughter, maybe someone's mother and maybe the primary income in the household. If it was your child that made a mistake, would you want to throw the book at them or would you want someone to show compassion? It is a tough call and only you can decide.

7 Reply

OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Todd Pultz:

@David Pai that’s correct the brokerage controls it.

Just out of curiosity and playing devils advocate......how much were the security deposits? The only reason I ask is if it’s the 2500 just like your cash for keys addendum, I can see where this will become slippery road of word mincing if they tell tenant they are getting deposit back and tell you they need cash for keys to get them out. Both are the same thing. Cash for keys could simply be giving deposits back early. I would not think twice about the tenants never hearing the phrase cash for keys though, as I would never talk like that with my tenants.

Having multiple addendums like this create these issues and things are always easier when the purchase agreement is straight forward and few contingencies. But sometimes I get it, you need a quirky deal.

The security deposits were actually $2800 so the tenant that has moved out already received two checks. A bounced check of $2500 from realtor and a $300 from seller. The $300 check went through. The realtor asked me this same question and at that point she acknowledge that I had a point and I shouldn't be responsible to pay there security deposits.

OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Joe Splitrock:

First lesson, 99% of the time cash for keys is not necessary. I wish the BP community would stop promoting the idea. Lesson to be learned here. Next time someone says "cash for keys" just say no.

Second lesson is do not let the selling agent "represent" you. Bring your own realtor next time so you have someone looking out for your interests.

Third lesson, there was no reason for the realtor to lie. She could have told you the truth, that the sellers had no money for security deposit return to get the tenants to leave. They could have still asked you for the money or the realtor could have given up part of her commission to front half of it. Lying is not a creative solution. This applies to ANY situation. Lying is not creative, it is fraud.

As far as how to handle this, the realtor could get in big trouble and could loose their career. You have a lot of power, but you also have the opportunity to show compassion and forgiveness. Showing compassion is harder than seeking revenge. I may consider the realtors age in how I handled the situation. If the realtor was very young, the mistake could be youth and inexperience. If the realtor is older, that indicates lying is their way to deal with issues. They did admit the mistake and are offering to make it right. You like the deal, so I would try to close it before taking any action. I would make sure the realtor didn't make anything at all. In other words if the total commission is $9,000 then I would ask them to refund the other $4000 to me too. Assuming they made nothing or lost money on the deal, I would consider that an acceptable lesson to be learned. You are within your rights to report her. Maybe after closing, request a sit down meeting with her and her broker. Walk through what happened and see if they understand it was wrong and say it will never happen again.

I know many people just immediately say "report them", but often times good people make mistakes. This is someone's daughter, maybe someone's mother and maybe the primary income in the household. If it was your child that made a mistake, would you want to throw the book at them or would you want someone to show compassion? It is a tough call and only you can decide.

Good post. I been going back and forth. During entire process she has been helpful but she did create a ton of stress on me on the cash for keys part and now looking back she basically passed the sellers problem on to me and lied on the principle. She is in her upper 50s I would say and has done a ton of sales for her client. They were wealthy restaurant owners back in the 70s till present and recently closed all. This year alone she sold 2 properties for the same client and this will be the 3rd.

The tenants do not like her as well. They described her as someone who is ruthless and dishonest. She apparently introduced herself as an insurance agent at first to take pictures of the interior of the homes and then the tenants found out later the homes got put for sale and all their personal items were shown online. Along with stories of other encounters. So she has a history of just not being a good honest person. I do get she's trying make it right now and I do feel bad about causing her trouble in her career so I am still deciding what's right thing to do if I want to proceed with this purchase.

Todd Pultz

Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes

@David Pai your answer does change my view a bit to be honest. My comment does not take away from the shady behavior of the agent but here is the pitfall.........I agree with @Joe Splitrock and also hate the term cash for keys! I’ve never paid someone cash to get them to move. I get it, maybe it works for some.

However, your mistake is believing that a term like that has the same meaning to everyone when it never does. The realtor or landlord could very easily say that cash for keys meant giving deposits back. There’s absolutely nothing wrong with them asking you to pay the deposits if you were the one stipulating they had to vacate the property. SURE, the landlord is responsible for returning deposits, but he would not have had to do that if you didn’t ask him to vacate the property.

The realtor has some issues with the bounced check, but not because it was for a deposit. She was not property manager and had no responsibility to have a trust account for deposits. The landlord does. I also don’t believe the realtor lied by saying they needed cash for keys! They did, you just didn’t clarify what the cash for keys was covering and it doesn’t matter! It doesn’t matter because you agreed to do it. It doesn’t matter if they spent it all or gave a portion to the tennant to move as long as they got tenant to move. Reason, you agreed to give a set amount to assist in getting the tenant out and you have no stipulation in the addendum I read about money being returned if they didn’t use it all.

Now, the better option would have been for you to take the property with tenants in it. Collect some rent until you got them out, but you would have been credited at closing for the deposit amount in the leases and could have used that to get them out. You actually would have made $600 by doing it that way based on the numbers you provided.

I know this next statement is not what you want to hear, but we all need kicked in the butt from time to time....you were out negotiated and now your upset about that! That’s understandable.

The realtor obviously has her own issues, but you need to focus on how to avoid this next time. Best of luck on this deal

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

Originally posted by @David P.:

Originally posted by @Joe Splitrock:

First lesson, 99% of the time cash for keys is not necessary. I wish the BP community would stop promoting the idea. Lesson to be learned here. Next time someone says "cash for keys" just say no.

Second lesson is do not let the selling agent "represent" you. Bring your own realtor next time so you have someone looking out for your interests.

Third lesson, there was no reason for the realtor to lie. She could have told you the truth, that the sellers had no money for security deposit return to get the tenants to leave. They could have still asked you for the money or the realtor could have given up part of her commission to front half of it. Lying is not a creative solution. This applies to ANY situation. Lying is not creative, it is fraud.

As far as how to handle this, the realtor could get in big trouble and could loose their career. You have a lot of power, but you also have the opportunity to show compassion and forgiveness. Showing compassion is harder than seeking revenge. I may consider the realtors age in how I handled the situation. If the realtor was very young, the mistake could be youth and inexperience. If the realtor is older, that indicates lying is their way to deal with issues. They did admit the mistake and are offering to make it right. You like the deal, so I would try to close it before taking any action. I would make sure the realtor didn't make anything at all. In other words if the total commission is $9,000 then I would ask them to refund the other $4000 to me too. Assuming they made nothing or lost money on the deal, I would consider that an acceptable lesson to be learned. You are within your rights to report her. Maybe after closing, request a sit down meeting with her and her broker. Walk through what happened and see if they understand it was wrong and say it will never happen again.

I know many people just immediately say "report them", but often times good people make mistakes. This is someone's daughter, maybe someone's mother and maybe the primary income in the household. If it was your child that made a mistake, would you want to throw the book at them or would you want someone to show compassion? It is a tough call and only you can decide.

Good post. I been going back and forth. During entire process she has been helpful but she did create a ton of stress on me on the cash for keys part and now looking back she basically passed the sellers problem on to me and lied on the principle. She is in her upper 50s I would say and has done a ton of sales for her client. They were wealthy restaurant owners back in the 70s till present and recently closed all. This year alone she sold 2 properties for the same client and this will be the 3rd.

The tenants do not like her as well. They described her as someone who is ruthless and dishonest. She apparently introduced herself as an insurance agent at first to take pictures of the interior of the homes and then the tenants found out later the homes got put for sale and all their personal items were shown online. Along with stories of other encounters. So she has a history of just not being a good honest person. I do get she's trying make it right now and I do feel bad about causing her trouble in her career so I am still deciding what's right thing to do if I want to proceed with this purchase.

At that age, with that experience level, she should know better. Not that lying is ok when you are in your 20's. She is trying to make it right, but only because she was caught. It is like catching a bank thief and they say "my bad, here is your money back".

This is a very tough situation. If you do report her, do it to protect future people, not out of revenge. She is likely to keep lying if she is not stopped, so I think taking some action after closing is the right thing to do.

5 Reply

OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Mike B.:

I agree with everyone that the agent acted dishonestly, but "cash for keys" is an awfully broad term. If she spent the tenant's security deposit then this is a different conversation. If the owner spent the security deposit and she knows that the tenants need that deposit back to move, cash for keys kinda plays. Personally, I would have never used that wording. Honesty and communication have proven to give me a much smoother route to the closing table.

From my understanding she done a ton of real estate deals over over the decades for these clients who were wealthy restaurant owners with chains up and down coast of LA to SD. The clients are in there upper 70s and are fighting in court to liquidate all the family assets. In a way they are putting her in charge and the clients from what I understand just want to be left alone and not have to deal with the tenants or to very minimal degree. So when people on here ask if the agent is the property manager...she is not but the landlord(sellers) are so hands off they are putting the realtor in the driver's seat on handling the situation.

OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Todd Pultz:

@David Pai your answer does change my view a bit to be honest. My comment does not take away from the shady behavior of the agent but here is the pitfall.........I agree with @Joe Splitrock and also hate the term cash for keys! I’ve never paid someone cash to get them to move. I get it, maybe it works for some.

However, your mistake is believing that a term like that has the same meaning to everyone when it never does. The realtor or landlord could very easily say that cash for keys meant giving deposits back. There’s absolutely nothing wrong with them asking you to pay the deposits if you were the one stipulating they had to vacate the property. SURE, the landlord is responsible for returning deposits, but he would not have had to do that if you didn’t ask him to vacate the property.

The realtor has some issues with the bounced check, but not because it was for a deposit. She was not property manager and had no responsibility to have a trust account for deposits. The landlord does. I also don’t believe the realtor lied by saying they needed cash for keys! They did, you just didn’t clarify what the cash for keys was covering and it doesn’t matter! It doesn’t matter because you agreed to do it. It doesn’t matter if they spent it all or gave a portion to the tennant to move as long as they got tenant to move. Reason, you agreed to give a set amount to assist in getting the tenant out and you have no stipulation in the addendum I read about money being returned if they didn’t use it all.

Now, the better option would have been for you to take the property with tenants in it. Collect some rent until you got them out, but you would have been credited at closing for the deposit amount in the leases and could have used that to get them out. You actually would have made $600 by doing it that way based on the numbers you provided.

I know this next statement is not what you want to hear, but we all need kicked in the butt from time to time....you were out negotiated and now your upset about that! That’s understandable.

The realtor obviously has her own issues, but you need to focus on how to avoid this next time. Best of luck on this deal

I was trying to move my parents into the units so that was that. Plus the units rent were way under valued. I think everyone know what cash for keys terminology mean. From the get go I asked the realtor to just check if no cash for keys was needed and just 60 days notice. That is when she came back and said no and that the tenants wanted the incentive. The tenants now after finding out never heard of such incentive so that is the problem now that she acted dishonest. Of course from very start I tried asking if tenants would just move out with notice and I was willing to give as much time needed to move out.

I brought up to the realtor that even if I kept the tenants I would of needed their security deposits from the sellers and the realtor had no answer for that. Basically all along she's has been pushing the sellers or (family in fighting) got their hands tied and have no funds to go out. I even mentioned what about the rent money they receive monthly. I checked with the tenants and they paid till very end. The agent still said no and that no out going money can be made. I later found out the sellers did write a legitimate $300 check out so that was a lie too.

Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

[email protected]301-893-4635 Podcast Guest on Show #192

The addendum says "cash for keys/refund." A security deposit refund seems to fall in this description.

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OP

Member since 2020 · 404 posts · 235 votes

Originally posted by @Russell Brazil:

The addendum says "cash for keys/refund." A security deposit refund seems to fall in this description.

This text message from the beginning of escrow showed that she first offered a 60 day notice to vacate to me and later came back that was not possible. That should be sufficient proof that she lied because in the end that's all that was needed from the tenants and no cash for keys should of ever got started in first place.

Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

Originally posted by @David P.:

Here are the details. I been in escrow for the last 5 months on a duplex in Los Angeles where I used the listing agent to represent me. I wanted the units delivered vacant and the realtor expressed to me that the seller would only be able to do that if I came up with Cash for keys incentive money. I agreed to the terms and offered to compensate the sellers at end of escrow for $5k that would of been used for the cash for keys agreement.

Now here is the part where the realtor got busted. I knew the tenants name and I found a post on the Nextdoor Website from the tenant basically asking for advice because he received a bounce check for their security deposit from the realtor and was asking for advice on what to do. I contacted the tenant over phone and we talked over a hour and he never once heard of a cash for keys offer. All he expected back was his security deposit when he moved out. I therefore contacted the 2nd tenant and she told me the same thing that no cash for keys were ever mentioned. Basically the seller did not want to return the security deposit money and the realtor came up with the idea of hustling it out of me calling it cash for keys. I approached the realtor afterwards about this and she admitted she lied because that is what she said was required to get the deal done. She said the sellers are going through a court order sale and had no money to provide up front. She has now agreed to pay out of her own pocket the security deposit money to each tenant to move out and I no longer need to pay any of it.

As you can imagine I have a hard time trusting her and I still have all my contingencies. I am getting a good deal on the property so I would like to see it through. My question is can the realtor get in trouble if i report all this to her broker? The tenants can vounch for all the details and the cash for keys was specifically written in detail in the addedums. In my eyes she basically did a whole lot of unethical things

1. Lied to client

2. Mishandled clients money

3. Extorted money from buyer that was not his responsibility.

4. Gave tenants a bounced check.

Awesome detective work recognizing there was a tenant conversation on Nextdoor👍

Maybe stir it up with her broker after closing. Until closing I wouldn't open a new matter if she agreed to make it right with the tenants, but get your $5k back out of escrow since no c4k needed.

4 Reply

Roberto Filice

Investor · Bay Area, CA · Member since 2020 · 35 posts · 9 votes

@David P. - My 2 cents. Talk to her broker and have them settle the situation asap. Aside from fraud, she has also committed embezzlement (since she was entrusted with your money). They are both felonies in the State of CA. I would certainly report her so she does not do the same to somebody else. You might want to consider pressing charges if the broker gives you any grief (which I doubt he/she would). If the broker has knowledge of what is going on, there is a possibility that he/she is a conspirator of the fraud/embezzlement (anther felony).

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

@David P. your addendum does Not say the money is for “reimbursement of cash for keys”.....it says for “cash for keys/refund”...as in “refund of security deposit”.

Aaron Gordy

Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes

Reach out to her broker. The broker is legally responsible for the actions of the realtors. The broker has a vested interest in making things right.

2 Reply

Charlie MacPherson

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

@David P. I'm still taking a very hard line on this. If this agent isn't reported to the state, she'll not only go unpunished, but she'll be free to keep screwing others.

If you report her and it's a first offense, maybe it won't cost her career. She might just be hit with a fine and temporary suspension to teach her a lesson.

However, if this isn't her first ethics/fraud complaint, I suspect that the RE commission will yank her license and burn it and they bloody well should.

As to her suddenly being cooperative, sure she is. She got caught. Like the politician that gets caught red-handed in bed with a campaign aide and is suddenly so repentant and crying crocodile tears over the damage done to his family.

Bull crap. Too little, too late.

She tried to make the fact that the sellers didn't have cash for a refund of the security deposits into your problem. She could have done that honestly by simply explaining the situation and setting the deal up so that part of the proceeds paid off the deposits. If the deal's numbers still worked, maybe that would be reasonable.

Instead she tried setting up an elaborate lie to get you to cough up cash for something that was never your responsibility. And no, I'm not buying the idea that "cash for keys" means the same thing as "returning deposits".

If she had come to you before being found out and confessed, I'd be a lot more interested in forgiveness - but that's not what happened.

This is pure, unadulterated fraud and it needs to be dealt with severely. This kind of garbage is exactly why real estate laws are put in place.

I'd go to her broker right away. Tell the broker that the trust is broken and you want to stay in the deal but with a buyer's broker from a completely different agency and that the dirtbag agent will release all claims to a buyer-side commission. Get an agreement from the broker in writing as you may have to fend off a "procuring cause" claim later.

In real estate school, ethics are pounded into your head. There is NO wiggle room. It is a non-negotiable value that rides above everything else that a Realtor does.

5 Reply

Jarrod Kohl

Boston, MA · Member since 2017 · 209 posts · 126 votes

Originally posted by @Charlie MacPherson:

@David P. I'm still taking a very hard line on this. If this agent isn't reported to the state, she'll not only go unpunished, but she'll be free to keep screwing others.

If you report her and it's a first offense, maybe it won't cost her career. She might just be hit with a fine and temporary suspension to teach her a lesson.

However, if this isn't her first ethics/fraud complaint, I suspect that the RE commission will yank her license and burn it and they bloody well should.

As to her suddenly being cooperative, sure she is. She got caught. Like the politician that gets caught red-handed in bed with a campaign aide and is suddenly so repentant and crying crocodile tears over the damage done to his family.

Bull crap. Too little, too late.

She tried to make the fact that the sellers didn't have cash for a refund of the security deposits into your problem. She could have done that honestly by simply explaining the situation and setting the deal up so that part of the proceeds paid off the deposits. If the deal's numbers still worked, maybe that would be reasonable.

Instead she tried setting up an elaborate lie to get you to cough up cash for something that was never your responsibility. And no, I'm not buying the idea that "cash for keys" means the same thing as "returning deposits".

If she had come to you before being found out and confessed, I'd be a lot more interested in forgiveness - but that's not what happened.

This is pure, unadulterated fraud and it needs to be dealt with severely. This kind of garbage is exactly why real estate laws are put in place.

I'd go to her broker right away. Tell the broker that the trust is broken and you want to stay in the deal but with a buyer's broker from a completely different agency and that the dirtbag agent will release all claims to a buyer-side commission. Get an agreement from the broker in writing as you may have to fend off a "procuring cause" claim later.

In real estate school, ethics are pounded into your head. There is NO wiggle room. It is a non-negotiable value that rides above everything else that a Realtor does.

This is still the answer. It is not up to you to decide if she is X or Y and therfore deserves a 'second chance" make a report to the proper association and let them handle it.

I would also strongly suggest getting a good real estate attorney (nobody that the seller is working with) to go over the deal and make sure all things like deposits and money is where it is supposed to be. If she is being this shady expect things to pop up after closing if it is not done cleanly. AKA the tenants could come back in a few months and say they never got their security deposit back and often the current owner (you) would be responsible for that payment. A good real estate attorney will mitigate a lot of this and will be well worth their costs.

3 Reply

Mary CroninPro Member

Real Estate Investor · Crescent Mills, CA · Member since 2010 · 128 posts · 74 votes

I sometimes have a great ability to ask dumb questions, so here goes ...

1 Why did you want it vacant?

2 Why did an escrow that should have taken 30 days (45 at most) take 5 months (so far)?

3 Why did you pay the realtor anything? And if it was payable at close of escrow why did you pay it ahead and presumably outside of the escrow process?

4 Were the tenants on leases? Or were they month-to-month?

5 Did the COVID situation play a role in delaying the Close?

It would seem that if you had closed, you could have negotiated a buy out of the leases in far less time than 5 months (and maybe for less than $5k). Or if M-M, then even with a 60 day notice to quit, you would have been ahead of where you are now.

If the sellers didn't have the security money, then you would have been out that amount - though you could have gotten a credit for the amount at close.

Re the realtor - I can't even count the number of crimes she committed. The DRE at very least would pull her license (and they might well refer her to local District attorney), so I second someone else's comment - when she mentioned "cash for keys" - a term I've rarely seen used except for tenant holdovers after foreclosure of the property - you should have immediately gotten your own broker to represent you - who'd get paid from the CB agent's commission.

I would also guess that any CB agents/brokers here on Bigger Pockets would pass the problem on to CB bigwigs.

Anyway, my 2 cents worth.