The Facts

Maria, a woman originally from Colombia, decided to purchase a home in the U.S. She contacted a real estate broker and entered into a buyer-agent agreement. Maria was extremely excited to have a broker working on her behalf and agreed to pay a $200 fee and as well as a 3% commission. The agreement stated: 

• The seller's deposit would be credited toward the commission
• Commission would be payable upon transfer of title
• Commission would be payable if the title didn't transfer based on any action or default of the buyer
  

Shortly after signing the buyer-agent agreement, Maria found a home under construction and entered into a contract.

Maria was pre-qualified by a mortgage company for which an associate broker, working in the same firm as her agent, was the president. A few days before closing Maria received a call from the mortgage company informing her that due to her legal residency status she was unable to obtain a conventional loan and that the contract would be terminated as a result.

When Maria called her realtor asking for the return of her commission, the realtor refused. He told Maria that the commission was for services rendered and that all fees paid were non-refundable. However, when Maria reviewed the agreement she found no language to that effect.

Maria contacted the State’s Fair Housing Office to file a complaint and they decided to review other buyer-broker agreements of the Mortgage Company and Real Estate Firm. They found that no other buyers of Hispanic or Colombian origin were requested to pay commission prior to closing. However, the Real Estate Board determined that the investigation of the complaint established prima facie evidence of discrimination under State code and therefore reasonable cause existed to believe there was unlawful discriminatory housing practices.

The Result

This case was eventually settled for $17,500 and Maria subsequently obtained an FHA loan and purchased a home.

Real estate professionals have an obligation to treat every buyer with the same standards and each buyer has the right to equal housing opportunity. It is unethical and illegal to discriminate because of a person’s race, color, national origin, religion, sex (including gender identity and sexual orientation), familial status, and disability.

Risk Factors

Risk Factor #1

Your fiduciary duty as a real estate professional is to be absolute and undivided in your loyalty; there should be no hint of any conflict of interest. This requires diligence, faithful service, integrity, utmost care, honesty, good faith and full disclosure. 

Risk Factor #2

No real estate professional ever expects to be sued. But the unexpected does happen so it’s important to be prepared. And the key to being prepared is to document everything! Documentation is crucial when facing an angry homeowner.