- August 29, 2018
- Posted by: Mike Kelly
- Categories: DRE, E&O Coverage, Insurance Claims, Real Estate
Abby Agent was hired by Samuel Seller to list his commercial property on Industrial Way. Happy to get a big dollar listing, Abby got all the paperwork signed, put up a sign, started dialing potential buyers and working it. Hard.
Barry Buyer bit at the chance to buy the warehouse, and emailed the offer to Abby. She called Sam to talk it through; and being a busy guy, Sam wasn’t in the office. Abby left a message. And got one back in return. So long as he was going to net $500,000, it was OK with Sam for Abby to sign off on an acceptance on Sam’s behalf. Abby double checked, say that Sam would make more than the $500k, so she did just that – signed off on Sam’s behalf.
Then things got wonky. Turns out that Sam’s tenant Lenny Leasee had a “right of first refusal” to buy the property. Abby hadn’t seen the lease. Oops. Lenny matched Barry’s offer. Oh, crap, now what?
Sam Seller said Lenny didn’t have a “right” to buy, only a “right” to be notified of an offer. Disputes followed. BOTH buyers backed out. That’s when Sam Seller sued Abby Agent – for negligence, the loss of the sales, and attorney fees. Sam claimed he never gave Abby permission to sign the offer on his behalf with Barry. Remember, there was no “written” authority to do so.
Did the telephone call count?
Only if Abby could prove it. And, she did – because she kept the recorded voice message.
Sam tried to claim she didn’t have his authority to record him. But Abby pointed out (duh) that the outgoing message said to “leave one” for her. When Sam did, he “consented” to being recorded.
The moral of the story?
Read the Leases! Get written confirmation of authority.