I always tell my clients that I am here to help. I am here to make their transactions easy. I am here to help relieve stress and pressure. I am here to answer questions. It is a familiar refrain. So why do clients wait until it is almost too late, if not actually too late, to call when they need help?

Just the other day, a friend stopped me and asked me if she needed a title search for the new house she was buying and closing on in a few days. I had done a closing for her several years before and she had referred other people to me, so she knew how I practice. My eyes grew very wide as I told her “of course you need a title search and title insurance”. “Will it take long? Will it cost much” she asked. After a lengthy discussion, my friend e-mailed her contract to me so that I could jump in and handle the closing for her.

What I learned what that, because the house was in Martin County, the seller was to provide the title and had selected the title company. The title commitment had already been issued but because my new client had no attorney, the title company didn’t bother to send it to anyone. When we called to ask for the commitment and copies of the closing documents, we set off all kinds of alarms. The client’s real estate agent became defensive. She said that the title company was handling title and we weren’t needed. Perhaps we had been hired to handle the sale of the client’s house. UH OH! I thought we were working with another real estate agent who doesn’t want to work with the client’s attorney. What is she hiding? Likewise, the title company was uncooperative. Once they knew that we were involved, they should have automatically sent us everything. However, we had to ask for every piece of paper, document by document, page by page.

At this point, it occurred to me that I needed to write this post. I’ve written about the need for real estate attorneys for residential closings before (see post HERE). Obviously, this closing is another example of that need. Your agent should protect you, but an agent is not an attorney and some agents, to this day, believe that attorneys only screw up deals. Good agents don’t think that way. If an agent steers you away from an attorney, you have a bad agent. Relying solely on a title company is also a bad idea. Title companies close title. They are responsible to follow bank instructions and escrow instructions only. They are responsible to the underwriter. If you don’t have an attorney, you likely aren’t providing sufficient instructions to the title company and therefore, aren’t getting adequate protections.

But this post isn’t just about using an attorney. It’s about answering the question, when should you call your attorney. Answer: not 10 days before closing! Here, we were able to clean up messes and prevent the client from accepting title with improper and unacceptable title exceptions. However, we did not have enough time to obtain a survey. The real estate agent told her she didn’t need once since she wasn’t getting a loan. (See prior post on need for surveys HERE).

Certainly, don’t wait until 3 days before closing. This same client got totally freaked out when the closing agent for the sale of her house contacted her real estate agent (a different one) to ask where the closing documents were. The closing agent also scheduled closing for 2:00 in the afternoon. The purchase of the new house was scheduled for 3:30 the same day. Funds from the sale were needed for the purchase. No one told the client how she was to provide the closing documents, how she was to get from Broward to Martin County in an hour with the closing funds or how all this was to work. She was a wreck. I now had 3 days to work it out with the buyer’s closing agent, do the documents, solve any title issues and coordinate 2 closings instead of 1. Both contracts had been signed 7 or 8 weeks prior.

And, finally, 2 days before closing is definitely not enough! My partner, Eric Assouline was with his client 2 weeks ago at a summary judgment hearing. After the hearing, the client casually mentioned that he was closing on an “investment property” in 2 days and needed to “protect” that property in case they lost in the litigation. Eric came back to the office to discuss with me. I asked Eric why we were just hearing of this now. Eric shrugged. Had the client talked to us at the time he signed the contract, we could have devised asset protection strategies and properly closed on the property. 48 hours prior to closing? The client had to proceed.

Like I said, I am here to help. But don’t wait to call. Don’t wait until the last minute!

This is not meant to be an indictment on all house flippers. Most are hard working and honest.  But like any profession, there are bad apples and this tale shows the worst.  But on closer look, it wasn’t just the purchasing house flippers who were bad guys.  They turned out to be real estate agents as well, giving a black eye to that profession.  And, the title company they selected carried on the unscrupulous acts.  This is the story of a pair of house flippers looking for deals who tried to take advantage of a senior citizen.  Exploitation of an elderly person is a felony in Florida.

The story began one Saturday afternoon in August. Mrs. Gonzales (not her real name), an 80 something widow living alone in a small condominium in a gated community in Palm Beach County, returned home to find 2 nice young women knocking on a door down the hall from her unit.  Mrs. G said good afternoon to the women as she unlocked her door.  The women approached her and explained that they had an appointment with the neighbor but she wasn’t home.  They were supposed to look at the unit and hoped to buy it.  Mrs. G. was surprised because the neighbor had never indicated that she had planned to sell her condo or move.

The women asked Mrs. G if she might like to sell her condo. Mrs. G said she had never thought about selling, but she was getting older and lived alone and she had been very ill lately.  The women told Mrs. G that they could pay top dollar and that she could use that money to find a nice retirement facility that could take care of her.  Mrs. G invited the women into her condo and the women put on the hard sell.

Within less than an hour, Mrs. G had signed a contract to sell her condo where she had lived for over 30 years for $40,000. She agreed to close in 60 days.  Mrs. G did not tell her only daughter about the contract for more than a week as she immediately began to have anxiety, anxiety that she didn’t know where she would move to.  When she told her daughter, who lived in Massachusetts, both the mother and the daughter had second and third thoughts about this contract.  How could Mrs. G find a new apartment and move in less than 60 days?  During that time, Hurricane Irma hit South Florida and, after 45 days, the women granted Mrs. G a 30 day closing extension.  Closing would be November 15, but Mrs. G and her daughter could not find an affordable apartment.  Mrs. G lived on a fixed income.  She had physical disabilities and was beginning to experience some cognitive issues. The sale proceeds of the condo would not allow her to purchase another unit nor would they last long enough to cover her needs.  Rental units were hard to find within Mrs. G’s budget.

Mrs. G sought another extension. The title company told Mrs. G to move into a hotel and confirmed the November 15 closing date.    That is when Mrs. G’s daughter called me and asked for help getting out of contract.  My reaction was “Wow”!  It didn’t take me long to figure out that these women did not intend to occupy the property so there was no need for an expedited closing.  They were not 55, so they couldn’t occupy the property.  Their actions made it clear that they intended to flip.  It was not clear how they were able to gain access to the community in the first place.  No one knew, but they had been knocking on many doors prospecting.  We found some deeds of record confirming that they were flippers.

We did more digging and discovered that one of the women was a licensed real estate agent in New York and the other was licensed in Louisiana. Though neither was licensed in Florida, neither disclosed their status as real estate licenses to Mrs. G.  They did, however, use their experience as real estate agents to pressure Mrs. G into the contract and gave her no time to discuss it with her daughter.  When she said she wanted to cancel, they threatened to sue.

I immediately terminated the contract but several weeks later was threatened by a newly retained attorney. When I responded, outlining the facts, the attorney disappeared.

There are laws in Florida that protect the elderly from exploitation. Florida Statutes Section 825.103 defines the exploitation of an elderly person or disabled adult as:

“(a) Knowingly, by deception or intimidation, obtaining or using, or endeavoring to obtain or use, an elderly person’s or disabled adult’s funds, assets, or property with the intent to temporarily or permanently deprive the elderly person or disabled adult of the use, benefit, or possession of the funds, assets, or property, or to benefit someone other than the elderly person or disabled adult by a person who:

  1. Stands in a position of trust and confidence with the elderly person or disabled adult; or

  2. Has a business relationship with the elderly person or disabled adult;”.

The high pressure, coercive tactics the women used on Mrs. G to convince her to sign the contract should fit well within the definition of the statute. The business relationship would be established by the fact that the contract was signed.  Typically, this statute is used when a person close to the victim transfers money out of a bank or security account.  I am not aware of a prosecution for a real estate case like this.  But, I wouldn’t hesitate to discuss this case with the State Attorney’s Office for their opinion if the women continue to pressure Mrs. G as the contract, at $40,000, would make their actions a second degree felony.

In addition, F.S. Section 415.1111 provides for a civil remedy for a vulnerable adult who has been abused, neglected or exploited. So, while our home flippers are clearly bad apples, Mrs. G and her daughter have done the right thing and sought help.  Hopefully, the women have been advised to not only drop the case, but to change their methods.  Unsolicited, high pressure sales tactics used on the elderly is a focus of attention in Florida.  If it is widespread in the real estate industry, we need to collectively band against the bad apples.

That’s what the broker said to me a few weeks ago as I was negotiating the final points with the other attorney on a purchase money note for a small business deal. The broker wasn’t involved in the conversation.  It was a simple e-mail exchange between the other attorney and me.  At some point, the broker was copied in.  My final comment was a small one.  The attorney didn’t object.  But it offended the broker as it might cost his client, the buyer, a whopping $150 at some point in the future.  It was a technical point that the buyer had to pay, but, because the contract was silent, the broker was adamant.  “Are you really going to blow the deal over this” he e-mailed me, with multiple question marks and exclamation points.

Why is it that the smallest deals cause the most grief? And, why is it that this type of thing always happens when clients don’t think to hire an attorney until after the contract is signed and closing is imminent?  In this asset sale, the client called just 10 days before closing.  Given the timing and the size of the deal, I probably should have referred her out to someone else.  But, that’s a conversation for another day – I took the case.  Reviewing the contract, it was clear that this seller should have called before ever signing.  The broker did her no favors.  It was too late to renegotiate the deal.  I just had to make sure that she wasn’t taken advantage of any further.  Thanks to Hurricane Irma, the closing was delayed about a week.  Until this moment during the process to get to closing, there were no glitches.

Negotiations should not ever be construed by one side or the other as a ploy to blow a deal. Parties to a transaction should be free to seek out the best deal possible and to look for language in every document that best suits them.  When a request is made by one side, the other side should be free to accept, reject or counter propose.  Negotiation is give and take.  There is compromise and ultimately there comes a point when both sides have to make a decision.

When the broker asked me if I was trying to blow the deal, it would have been easy to tell him off. I could have easily thrown his comment back in his face and made the point that he was the one who was killing the deal.  But that would have served no purpose.  Litigators like to quote the old adage, “when the facts support you, argue the facts, when the law supports you, argue the law and if neither supports you, distract.”  I think that’s what this broker was trying to do – distract from the point as he had no argument to make.  I had the better argument and taking the high road would get the desired result while making it clear to both the buyer and seller who was hurting the deal.  By explaining to the broker that negotiating and requesting that provisions and language be inserted in a closing document is part of the closing process, I did not accept the premise of his comments.  I then offered to allow the buyer to pay the potential liability up front at a small discount as a debit/credit on the closing statement rather than as part of the note on the maturity date when the liability would be determined.  Clearly, I was willing to compromise and not kill the deal.  The broker quickly backed off and accepted my original change and I never heard from him again.

Interestingly, the buyer’s attorney, who had not objected to my request initially, disappeared during this rapid exchange of e-mails. I wondered why he hadn’t simply told the broker that my position was correct, or not unreasonable and that there was no reason to worry and that I was not out to kill the deal.  Did the attorney think he missed something and now was thinking he needed to save face?

Bullying in negotiations, which this broker clearly attempted to do, will get you no where. If you are bullied, don’t back down.  It only means that the other side is grasping at straws and is in a weaker position.  Use it to your advantage.

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