Listing R/E Agent Conceals Purchase Offer To Client/Owner Of Bldg In F'closure, Then Buys Property At Auction, Flips It To Original Prospective Buyer
In Denver, Colorado, KUSA-TV Channel 9 reports:
- The Colorado Division of Real Estate is investigating a Jefferson County real estate agent following a 9Wants to Know investigation into a transaction where a Realtor didn't bring an offer to the seller and then turned around and bought the building at a foreclosure auction.
- 9Wants to Know discovered Realtor Mark Dyson bought a property he listed at foreclosure, turned around quickly and sold it to a buyer who had made two previous offers before the building went to foreclosure.
- One of those offers was not presented to the seller even though state law requires a seller's agent to present all offers. "I should have presented the offer, that was my mistake," Dyson told 9Wants to Know. "My mistake."
- Dyson signed a real estate contract to sell Carol Price's building which housed her dance clothing store at 1825 Youngfield St. in Golden. Her property, which also included 1819 and 1821 Youngfield St. was headed toward foreclosure. [...] Dyson agreed to be Price's real estate agent on Sept. 21, 2010.
- Weeks went by with no offers until Nov. 23, 2010 when Dustin Jansson made an offer for $250,000 though his Keller Williams real estate agent A.J. Stiffler. Dyson presented the offer to Price and she countered with $289,000, according to Price. Price said she never heard anything more about the deal and figured it was dead.
- A 9Wants to Know investigation discovered there was another offer Price didn't know about. Jansson made a second offer the day before Price's property went to the foreclosure auction for $268,000, but Price said her Realtor didn't tell her about that offer.
- Dyson admitted to 9NEWS he didn't present the offer because he didn't believe there was enough time to stop the property from going to the foreclosure auction. "It doesn't make any difference. It makes absolutely no difference at all in anything," Dyson said. "There was no way. She was losing her property the next morning."
***
- Dyson said he tried his best to sell Price's property, but it went to the foreclosure auction on Dec. 1, 2010. He said there was not enough time to stop the foreclosure. [...] Price said she learned later in the day that Dyson, the Realtor who she hired to sell her property before it went into foreclosure, had bought the property at the auction.
***
- The day Price's property went on the foreclosure auction block, Dustin Jansson - the same man who made the other two offers -- made an offer to buy the property from Dyson, according to Jansson's Realtor. The two eventually struck a deal and Dyson sold the property to Jansson for $265,000. "It just doesn't seem right," Price told 9Wants to Know about the whole
deal.(1)
For the story, see State investigation looks into real estate agent's deal with himself.
(1) An attempt to undo these transactions by the foreclosed homeowner may be viable if she can prove that there was a fiduciary relationship between her and the real estate broker. In such a case, she may have a strong basis for bringing a lawsuit against him and the subsequent purchaser for, among other things, the imposition of a constructive trust. The purpose here would be to have a court declare that, because of the real estate broker's fiduciary duty to his client (the property owner), the real estate broker took title to the foreclosed property as trustee for her benefit, and not for himself in his individual capacity. If this attempt to undo the deals are successful, the real estate broker would probably be entitled to a lien on the property (ie. an equitable lien / equitable mortgage,) for the amount he shelled out at the foreclosure sale.
With regard to the rights of the subsequent purchaser of the property, such a purchaser could defeat the finding of a constructive trust and equitable mortgage or lien as it applies to him, but only if he qualifies for status as a bona fide purchaser (ie. he lacked both: (a) actual knowledge of the prior dealings between the broker and the foreclosed homeowner, and (b) notice - either actual, constructive, or implied - of those earlier dealings or of any legal or equitable right the foreclosed owner may have in the property).
Since the foreclosed homeowner remained in possession of the property throughout the relevant period (go here for Colorado case law on the effect of persons in possession of real estate on the rights of bona fide purchasers), and because the subsequent purchaser would be hard-pressed to establish that he didn't know that the real estate broker had some existing business relationship with the foreclosed property owner prior to the foreclosure sale (he made purchase offers through the broker, then acting as listing broker for the subsequently-foreclosed owner, prior to the public auction), the subsequent purchaser may not be able to qualify as a bona fide purchaser, in which case he would be rendered unable to defeat the claims of constructive trust and equitable mortgage. In this event, his purchase from the real estate broker would be treated, not as a conveyance of title to the subject real estate, but rather, it could be recharacterized as an assignment of the equitable mortgage / lien.
Obviously, the foregoing is much easier said than done, and would probably require the services of an attorney experienced in litigation and real estate law, and be well-acquainted with the common law doctrines / equitable remedies under the law of:
Seeking legal assistance from the local, neighborhood attorney whose experience in real estate law may be limited to doing simple, single family home real estate closings would probably not be someone to seek counsel from on the above situation, other than to get a referral to someone who knows what she/he is doing by going into court to file a lawsuit challenging these transactions.
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