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ctrmrz31

I found this court case!

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I found this article online, what does it mean? Any and all answers are welcome.

 

 

A District Court jury returned a verdict Wednesday for $1 million in punitive damages against Robert Brinton, a real estate broker, who sold land to real estate investors for more money than the sellers received.

 

The punitive award came on top of a verdict for $900,000 in compensatory damages, said John Netzorg, the attorney who represented plaintiffs. He filed the lawsuit on behalf of the Ernest Becker family and several other individuals and trusts.

 

Brinton and his attorney, Gus Flangas, didn't return calls Wednesday evening for comments.

 

The trial lasted 2 1/2 weeks and focused on six real estate transactions in which investors acquired land in the northern and northwestern areas of the valley between 1991 and 1994, Netzorg said.

 

The lawsuit involved so-called "double escrow" deals in which Brinton established two escrow accounts for the transactions, used investor funds to buy the real estate and sold it to the investors at higher prices, Netzorg said.

 

Real estate brokers "are perfectly at liberty to do that if they advise everybody of the fact," Netzorg said. In these transactions, the investors weren't told of the arrangement, he said.

 

The jury required Brinton and other plaintiffs to disgorge everything, including profits and interest earned, that came from the transactions, he said.

 

Netzorg alleged that the broker had a duty to disclose the arrangement and that the failure to disclose the arrangement was the fraudulent concealment. He claimed that the broker owed the investors the highest degrees of good faith, loyalty and integrity. As a trustee for trusts, Brinton was required to make a full accounting to the trusts' beneficiaries, he said.

 

"The jury was very conscientious and understood the issue," Netzorg said. District Judge Mark Denton presided.

 

Netzorg won another $435,000 judgment in another "double escrow" lawsuit in May 2000 against Mark Escoto, a retirement plan trustee, and real estate broker John Bayer. Netzorg represented plaintiff Daniel Ayala, a former women's basketball coach at the University of Nevada, Las Vegas.

 

 

Cruz or Brandon

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Hi Cruz or Brandon,

 

Ah those pesky court cases...where would we lawyers be without them? ;)

 

Here's the skinny...notice that the defendant in the case was a broker? agents and brokers are licensed by the state. The license is their state-issued "Good Housekeeping Seal of Approval" so to speak. Because of this, the legislatures and courts generally hold them to a higher standard of practice than investors.

 

This higher standard extends to many areas, including the duty to disclose information to the parties. That's why agents/brokers are always whining about how much they have to disclose during a transaction.

 

On the other hand, investors have some duty to disclose, but it is not as extensive as with agents/brokers. The problem for investors is that there are few clear rules...what are the duties and how extensive they are is usually decided by a judge or jury---with 20/20 hindsight! Our old friend Tort Law rearing its ugly head once again. :D

 

My perspective: When in doubt, disclose. ;)

 

Other points of view out there?

 

Mike P. :lol:

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I understand the point of full disclosure. And I understand that the law must be adhered to and obeyed. However, (and without knowing any details about the case other than what Cruz posted), I must tell you I think the verdict stinks.

It seems to me there were some folks angry because the Broker made a buck. So what? Were the plaintiffs happy when they signed on to do the deal? I must assume so since they did sign the papers. Then, their mood changes because they found out the Broker made a profit, and we're supposed to feel bad for them. Sheesh. I don't agree with that at all.

I've been in a few similar situations where a seller or a buyer has become angry with me because they discovered I was making a profit on the deal. They did their due diligence and were pleased enough with the terms to accept them. Suddenly, word gets out that I'm pocketing $25K and I'm a no good so and so and the deal is bad. I don't get it. When was real estate investing ever a not-for-profit venture?

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Say you go to a restaurant, order, eat and get a bill for $45 you give the waiter $53 (w/ tip). Come to find out the restaurant only charges $30. Wouldn't you be slightly agitated.

 

I think it comes down to HE WAS A BROKER. His job is to get the best price for the buyer or seller (Not himself).

 

another example:

 

you go to a mechanic can you fix my car I only have $100 it's going clunk, clunk, clunk. He comes back well Mr. MC it came to $112.58, I know you only have $100 so I will take a little off the labor. Boy you feel good about the Mechanic, until you find out all he did was plug the hole in your tire that was flat (a $10-20 value).

 

I guess this comes down to how you look at it....

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The above was me...I just wasn't logged in...duhhh.

 

Mike P. ;)

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This is absolutely bogus. Lease purchasing has been going on for such a long time. The sale price is the sales price. Period. They didn't have to buy the house. I don't think this has anything to do with what we are doing.

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All right, everybody to a neutral corner!

 

This is absolutely bogus.
I don't think this has anything to do with what we are doing.

 

Bottom line...right, wrong or somewhere in between, the courts have the last say in legal disputes. Soooo...if the person in the black robes says it has something to do with what we do, it does. End of story.

 

Seriously folks, we can all have our opinions about whether a law or its interpretation is correct, but no one can choose to ignore it without being exposed to potentially serious consequences...like loosing a ton of money in the legal case under discussion. Notice also that there is a higher standard placed on the licensed agent/broker as opposed to the investor.

 

The caveat is that this is serious business with potentially serious consequences...so look before you leap.

 

Mike P. ;)

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This topic does not worry me at all and really shouldn't anyone else. If there are any questions at all by the tenant buyer reveal to them that you are a principle in the deal and you got the home at such a terrific savings you were able to pass that terrific savings onto the ultimate tenant buyer. They will thank you for doing so!

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I agree with puls!

I am not worried and I will continue to do what I have set out to do Lease Purchase deals!

Cruz or Brandon

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Friends,

 

I'm the last person who would argue that lease purchase deals shouldn't be done. To the contrary, would argue strenuously that they serve a great purpose for all the parties when done properly.

 

I am, however, for a couple of things: 1) Doing things right so that they don't come back to bite you; and 2) Not killing the goose that laid the golden egg.

 

I've seen people in other businesses completely ruin a market because they refused to see the writing on the wall. None of us want to be sued or to contribute to investors having a bad reputation. Neither of these things are in our best interests--in the short or long run.

 

Reasonable people can disagree where the lines are...but its our responsibility, and in our best interests, to think about where are our personal lines are---and not cross them.

 

Peace My People, Peace!

 

Mike P. :o

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