While I’m not an attorney (blatant disclaimer!) and I don’t practice law, I think it’s important as a professional practitioner and part-time professor (have you ever seen so many P’s?!) to keep up on current events that might affect my business and my clients. So here’s a recent legal issues in the real estate industry:
Court Holds that the Statute of Limitation for Breach of Fiduciary Duty is Four Years
In case you are not aware, “Fiduciary Duty” is what I pound into my real estate student’s heads as often as possible. It simply means that our client comes first under any and all legal & ethical circumstances (i.e, I don’t have to help my home owner cover up a murder 
. Among other things, full disclosure, honesty and complete ethics must be practiced with all parties involved in a real estate transaction, but the term “Fiduciary” just means that you go that extra mile for your own client.
Well, according to Thompson v Canyon (2011) 198 Cal.App.4th 594 there is a limit to how long this Fiduciary Duty is required.
In this case, a San Francisco homeowner was facing foreclosure and listed her home for sale with a licensed real estate agent. The buyer said he’d buy the house and sell it back to the homeowner (which was not yet illegal in 2004), however, once the buyer got the house, he did not sell it back to the homeowner as he said he would. The homeowner then sued the buyer and lost. Then the homeowner sued the broker, at which point the Court determined that the four-year period of fiduciary duty was expired.
This case is precedence-setting because the statute has never been exercised before. It’s also important for real estate professionals who are only obligated to keep files for 3 years, recognize that they should now keep them for four years. In my opinion, if the buyer had made an oral commitment to sell back the house to the homeowner, and the agent was aware of that fact, then the agent should have included that as a contract contingency. Again, this is just my opinion, but the agent DID have a fiduciary interest to protect his home owner-client so if he WAS aware that the buyer had made that promise, his due diligence would have been to make it a part of the contract.
What’s important to remember if you are buying or selling a house, is that your agent owes you, legally, the most honest, fair and ethical treatment possible, and that if you feel that the duty was somehow failing, you have the right to file a claim (within the four year period). I am not a big fan of law suits and feel that California courtrooms are replete with frivolous lawsuits. However, in the instance where someone has been clearly mistreated or dealt with in a manner that was anything less than honest and ethical, then vengeance is mine, sayeth the Tambo.
If you’re thinking of buying or selling a home in the Sacramento or Carmichael Areas, just give me a call.
Tamara
