My title company, Old Colonial Title & Closing Services, got a call from a mortgage broker to see if we could close a loan for a lady who had owned a property jointly with a friend of hers. The lady and her friend had taken out a loan jointly several years ago, but now the friend has passed away and the lady wants to refinance to a lower rate. Here is where the problem lies. When the two had originally purchased the property they had taken title as tenants in common.

• Taking the title as tenants in common was the first problem. They had intended for the property to pass to the other upon the death of the first to die.
• The second big issue was that the friend had passed away and did not leave a will. In legal jargon this is called dying intestate. For those of you who aren’t familiar with wills and and such this means that the property goes to her family in the following order; first to any children, if none then to the parents, if none then to the next closest kin (there is a legal formula that each state uses to determine the next closest kin). If it is determined that their are no legal heirs then the property escheats (big word for passes) to the state.
• The next problem was that when the friend died she supposedly had no living relatives, so noone probated her estate. The remaining lady had simply continued paying the mortgage.
• Next problem, although she “supposedly” had no relatives we now find out that she gave up a daughter for adoption many, many years ago. Noone knows where the daughter is today, or if she is still even alive.

Because of all of these things we can’t issue clear title to the property in order to refinance. The lady living in the house is forced to pay someone to attempt to hunt down any lost heirs and try to clear everything up, something that could be quite costly. In the meantime she has been paying on a house for over twenty years that she doesn’t even own outright. In it’s current state she can’t even sell the property to someone else. The most that she would be able to sell is one half of the property.

The moral of this story is that if you purchase property jointly always make sure that you are aware of how the deed is titled. If the previous attorney had asked or taken the time to explain the consequences of how the deed was titled this possibly never would have occured. If the property had been titled as joint tenants with rights of survivorship then upon the death of the first person the property would have been fully vested with the survivor. Also, a simple will that left the property to the surviving owner would have been extremely helpful and could have resolved this situation.

If you need the help of a Memphis real estate lawyer or Chattanooga real estate lawyer call us today.

1. Failure to Disclose a property defect. – Okay ladies and gentlemen, always, always, always, document everything! If there is anything at all that you are aware of (leak in kitchen, prior history of pests, anything) make sure to have it written down somewhere and have your clients sign a statement showing that they are aware of this issue. You also want to make sure that you have completed a thorough walk through of the property yourself to see if there are any visible issues. The old adage “Buyer Beware” should also state “Real Estate Agent Beware”, failure to adequately complete an inspection by the agent and disclose any issues can be grounds for a lawsuit against you. If there are make sure that you point them out. On the same note, if you’ve offered your client any type of advise and they decline your advice make sure that you have them sign a statement showing that you offered said advice and it was decline. KEEP THIS ON FILE! Unfortunately we live in a world where people will sue over anything, even if it isn’t your fault. Do everything you can to protect yourself.
2. Giving Legal or Tax Advice. – Okay, raise your hand if you’ve ever given advice to a client regarding how the sale of their home will not be taxed because they’ve lived in it for the past two years. Or how many of you have helped answer questions regarding the contract, almost everyone I bet. The simple fact of the matter is that most states consider this the illegal practice of law. I know, you’re thinking “but that’s my job”. The fact is that you are only allowed to to help in completing the forms that your local association has. You are not allowed to give advice regarding any of the legal ramnifications. So protect yourself and defer these types of questions to the attorney who will be representing your clients at closing.
3. Not Disclosing Dual Agency. – If you are involved in a transaction where you are representing the buyer and the seller make sure that you are “shouting from the mountaintop” to everyone that you are the agent of record for both parties. Again, document, document, document! I can’t believe the number of times that I’ve been to a closing and the parties where not aware of this. For those of you who are builder’s agents at model homes be especially aware of this. I probably see more issues from this type of agent than any other. A nice couple comes in, you’re there to help them and guide them through the process of picking a lot, a plan and all the fixtures. Before you know it you’ve forgotten to disclose to them the dual agency or you’ve waited until very late to do so. Either way the end result is usually a client who ends up feeling a little betrayed and has a bad taste left in their mouth. At worst this results in a lawsuit and at best their never going to use you again or give referrals. Be aware.
4. Breach of Fiduciary Duty. – This is probably the hottest thing going these days and I could (and have) written and given entire speeches on the issue. What types of duty are the agents breaching you ask? Well the biggest thing is for pushing certain companies involved in the settlement process. Do not, I repeat Do not simply tell your clients about only one appraiser, pest control company, home warranty company, attorney/title company. My advice is to put together a small portfolio listing at least three different companies for each service. Give this to your client and let them look through it and compare prices and choose which company they won’t to work with. If you don’t do this and you refer a company who is not either A)the best company (which can be impossible to determine from a legal standpoint) or B) the lowest price you have breached your fiduciary duty to your client. I’m willing to bet that 90% of agents are guilty of this. And up until 2007 noone was even paying attention. But we’ve entered a whole new era. Consider this your warning.