This weeks question comes from Sheila P. in San Francisco who asks, “Amy, my best girlfriend, just confided in me that she and her therapist had sex. She went to see this therapist because of sexual trauma she suffered as a child. She’s really freaked out and confused. On one hand she doesn’t want to get the therapist in trouble but on the other hand she feels like she’s being taken advantage of. I can see that it’s tearing her apart. Isn’t this illegal? What can be done about it?”
This week’s question comes from Hal in Berkeley, who asks: “I went to a personal injury lawyer because I was in an accident. My lawyer told me that he had opened a claim with the other side’s insurance carrier. I got medical treatment and when it was done he told me he made a demand for settlement. He then told me he had settled my case, but he never asked me if that amount was OK. Then he never gave me any of the money, saying that it all went to pay him and my medical bills. I asked him for my file and a breakdown of where the money went. Now he won’t answer my emails or calls. What are my rights?”
This week’s question comes John K from South City who asks: “I recently bought my first home with my wife. We saw the ad for the house on line and went to an open house. We liked the house and asked the broker about the neighborhood because we wanted a safe, quiet, place to raise a family.
The broker said that it was a quiet neighborhood with older, retired neighbors. The agent acted as a “dual agent” which he said meant he could represent us both. We went through a lot of paperwork, got the loan, and then closed on the house.
After we moved in we started seeing a lot of traffic coming and going from next door. It turns out that they are selling drugs and may be running a meth lab. I spoke to the other neighbor next door and he said that this had been going on a long time and he had spoken with the broker about it. I feel ripped off, what can I do?”
John, this is a tragedy. You work your whole life, save your money, and try to make a home for your family and get lied to.
You probably won’t be surprised to learn that this isn’t the first time this has happened. The law in the area of disclosures is fairly well developed. The relationship between a real estate agent and their client is one which involves great trust: indeed, a home purchase is the largest financial transaction in most people’s lives.
It is referred to as a fiduciary relationship, one in which special duties are created. The realtor is referred to as the fiduciary and you are his/her principal.
Given the fact that the broker represented both of you in the transaction, he owed each of you a fiduciary duty to disclose to you, his principals, all ‘material facts‑‑that is, all facts which might affect the principal’s willingness to enter into or complete a transaction.
Material facts are those which a fiduciary knows are important to the principal and which might affect their decision making process. In your case, you had made it clear that you wanted a safe and quiet place to live.
These were facts of material importance to you in making your decision. Your agent owed you a duty to disclose material facts which were known to him and to disclose reasonably obtainable material information, which would require the agent to investigate facts not known to the agent.
In this case it appears that the agent didn’t need to investigate anything: he knew the facts. He had an obligation to disclose them to you. His failure to disclose material facts which he knew or should have known would have affected your decision making is often referred to as constructive fraud.
If you can prove that he knew this and withheld it from you, you may be able to sue him for fraud and concealment and seek to recover damages for the harms you have suffered as set forth below.
In addition to the broker owing you an obligation to disclose material information, the seller had a statutory obligation to truthfully complete a transfer disclosure statement.
California Civil Code Section 1102.6 sets forth the statutory disclosures which you were entitled to receive from the seller. Look at Section II (C)(11): it requires the seller to answer the following question yes or no – are you aware of “neighborhood noise or nuisance problems?”
The owner can’t get out of the responsibility to disclose based on the fact that the question didn’t specifically ask about drugs. Section 1102.8 states that “the specification of items for disclosure in this article does not limit or abridge any obligation for disclosure created by any other provision of law or which may exist in order to avoid fraud, misrepresentation, or deceit in the transfer transaction.”
If the seller knew, the seller had to disclose this information to you. Civil Code Section 1102.13 sets forth the damages which you may be allowed to recover it says: “no transfer subject to this article shall be invalidated solely because of the failure of any person to comply with any provision of this article. However, any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of this article shall be liable in the amount of actual damages suffered by a transferee.”
Civil Code Section 3343 sets forth the kinds of damages which you may be entitled to: the difference between the actual value of that which you paid and the actual value of which you received together with any additional damage arising from the particular transaction, including your loss of use and enjoyment of the property to the extent that it was caused by the fraud.
This week’s question comes from Tara P. in Hayward, who writes: “The weirdest thing happened recently. I had just bought a house out of foreclosure. I was working on the interior while living there. I went away for the night to a friend’s house. When I came home the next day after work, there was a circus tent covering my house. Seriously, a circus tent. Not only that, there were signs saying “stay back, toxic gasses in use.” My house had been fumigated while I was out! I didn’t ask for my house to be fumigated. I called the company and they said that it was my house that was supposed to be fumigated. I said no, and they read the address. They fumigated my house on an avenue when they were supposed to fumigate a house, with the same number, a couple blocks away on a court. They said that a real estate agent had paid for the fumigation. I am against the use of pesticides and chemicals. I told them to take the tent off my house but they said they couldn’t for three days until the chemicals dissipated. Thank God I had dropped my kitten off at the vet’s for boarding. They said that they didn’t have signed paperwork as the job was phoned in by a Realtor they have worked for before. I had to go to a hotel until my house was untarped three days later. I had to buy some work clothes and a pair of shoes as my clothes were all sealed up inside the tent. Since then I have thrown away all of the food in my pantry, sent my clothes to the cleaners and I am having a green company come in and do a top to bottom cleaning. I told the fumigators that I wanted to be compensated for this inconvenience and expense, they said that they were going to give me the fumigation for free. This is not acceptable. What rights do I have?”
This week’s question comes from Jenny V. in Berkeley who asks, “My best girlfriend just confided in me that she and her therapist had sex. She went to see this therapist because of sexual trauma she suffered as a child. She’s really freaked out and confused. On one hand she doesn’t want to get the therapist in trouble but on the other hand she feels like she’s being taken advantage of. I can see that it’s tearing her apart. Isn’t this illegal? What can be done about it?”