Not that long ago our state passed a law concerning distressed properties. We real estate agents were not happy with the law because nearly everyone was “exempt” from being considered “distressed home consultants” (DHC) except for us! Our office made the decision to NOT work with distressed homes because of the heavy liability problems. Not only the listing agent, but the selling agent and even the buyer could find themselves suddenly a DHC. It is too easy to inadvertently become a DHC, and the consequences too big.
The law says:
A DHC must enter into a special form of contract with the Distressed Homeowner. A DHC owes the homeowner common law fiduciary duties, the most notable of which is the duty of loyalty, which requires the DHC to act in the best interests of the homeowner and to put the homeowner’s interests ahead of all others, including the DHC’s own interest. There are also other significant obligations of a DHC which put the DHC at substantially greater risk of liability to a Distressed Homeowner; a violation of the Law also violates the Consumer Protection Act and the seller can recover double or treble their actual damages up to $100,000, and attorneys’ fees and costs.
The part of the law that concerned us the most was that the DHC, which could be the selling agent and the buyer, had to act in the best interests of the homeowner! I am glad to report that the law is going to be changed. There was a report from REIA on the potential changes:
The Brief Summary of HB 1132, from the Washington State Legislature website:
Exempts licensed real estate brokers and salespersons from the definition of “distressed home consultant” when the broker or salesperson is providing services governed under the real estate brokerage laws and the services do not result in a distressed home conveyance.
- Specifies that offering certain services does not make a person a distressed home consultant when the homeowner is represented by an attorney or a licensed real estate broker or salesperson in the transaction.
- Changes the definitions of “dwelling” and “homeowner.”
Updated March 03, 2009. HB 1132 PASSED the House with 97 yeas and no opposition on February 23, 2009. The Bill was referred to Labor, Commerce & Consumer Protection on February 25, 2009. The companion Bill, SB 5221, PASSED the Senate with 48 yeas and no opposition on February 25, 2009. The Bill was referred to Judiciary on February 26, 2009.
The above is good news for us. We have been avoiding sellers who need to sell their homes, and right now that includes many of the sellers who are putting their homes on the market. Once the law is passed, we will review it and I’m guessing our broker will open the door to working with “distressed” homes again.
Tags: dhc, distressed homes, law
