Three Little Understood Terms. Real estate has a languish all it's own, derived from the common jargon, but specific to real estate and contract law. Real estate, lending professionals and attorneys have a duty to use them properly, but often misuse them through ignorance or deliberate abuse.
Fiduciary: a duty to act in the best interest of your principal/client. It sounds simple, but many that claim or are required to act as Fiduciaries often use lengthy contracts disclaiming all fiduciary responsibilities. Still others ignore fiduciary duties. Then there are those who embellish their position, believing it requires them to be all things to their clients. This latter group often mistakenly believes a client can only have one fiduciary, them! Then we have the mortgage pro's that often have no idea and no clear cut guidance to whom they owe their fiduciary.
(Some states have ended the confusion with so called "transactional brokers." This is a lower level of service, but surprisingly is often a much more honest one! I believe only California mandates mortgage fiduciary, and only for those licensed by the DRE.)
"Attorney At Law", These professionals are licensed members of the Bar. Attorneys at law are like REALTORS assumed to have their clients fiduciary, but like REQLTORS you need to read your contract with them, they may be a fiduciary or they may not, or they may disclaim all responsibly. Depending on the state you're involved with REALTORS may often act like attorneys. Check very carefully and select advisedly, most/all states have strict limitations on non-attorneys giving legal advice, some are just less restive!
Just being licensed doesn't assure expertise in either field.
Our third term today is: "Attorney In Fact" This is the most misunderstood! Real estate people often act like their fiduciary duties make them the client's "attorney in fact" even though they never use the term, they mistakenly switch from advising a client to acting in-place of the client! "Attorney In Fact" is only established by executing, according to local law, a document called "power of a attorney" which can be either special (limited) or general (they can do anything in your name that you can do!). "Power of attorney" is the highest form of fiduciary! To be some ones "attorney in fact" requires no license of any kind only an executed "Power of attorney!"
If you are going to make decisions for your clients you're acting as an "attorney in fact" you'd best have the "Power of attorney!"
Turning down an offer is a decision!
Saying "NO!" even to a verbal inquiry is a decision requiring the "power of attorney"! Advising a client to say "NO" is a fiduciary function.
("A verbal inquiry is not an offer!)
Bill
William J Archambault Jr
The Real Estate Investment Institute
wja@reii.org 832-259-7078 or 702-516-1569
From my past: GRI 1975, FLI 1974, Catalyst from a client 1974 an agent that makes things happen, REII, The Real Estate Investment Institute 1995.
©William J Archambault Jr ©The Real Estate Investment Institute ©REII
Bill,
I actually thought that you become Attorney-in-Fact only when you act using the Power of Attorney. Then you sign your name on the documents as Attorney-in-fact
Jon,
I'm not sure of the difference, but once you have the document you're it! It's the difference between advising a client and acting for him.
Doing nothing is also an act.
Bill
Bill "Fiduciary" is a tough one. Like I have a Fiduciary responsibility to the Lender I work for, because I represent them, but in some ways I also have a Fiduciary responsibility to my Borrowers because they have trusted me with very private information and trusting me with it. It is hard to determine for me where that responsibility starts and ends some times.
I would love to be Power of Attorney giving me authority to impeach Barak Hussein Obama -
George,
"McCue Mortgage is a Connecticut based Mortgage Co" It doesn't sound like you work for a bank! If indeed "McCue" is a broker and if you were to read their contracts with their wholesale sources it states that you do not work for them, you do not represent them.
Not having a fiduicary relinship to the lenders does not in itsefl give you one with the buyer.
Brian Brady and I went back and fourth on this for about 18 months. In the end the only salutatory fiduciary we found, for sure were licensed by the CA DRE.
Bill
Nichols,
You've got it! But, you've got your terms wrong! It's not "power of attorney" but the "power of the ballot" you seek. >:)
Bill
Bill, we are not a Brokerage. McCue Mortgage is a direct Lender. Loan are Underwritten by us, Closed by us, and Funded by us. Also all of our Connecticut Housing Finance Authority (CHFA) loans are Serviced by us.
George,
Interesting!
Fiduciary is then a matter of your contract.
I'd like to know more about Connecticut Housing Finance Authority (CHFA) loans.
Bill
Bill, it is a State Bonded Program to subsidize Loans for First Time Home Buyers, all though is an existing Homeowner is purchasing a house in a Targeted Area they may also qualify. Their interest rate this week and up to next Thursday is 4.375% 30 year fixed loan with i point. We are their biggest lender and servicer.
These are three blogs that I wrote about the Program if you want to read about it.
New Tax Credit .................... Connecticut Housing Finace Authority (CHFA)
CHFA Not For Just First Time Homebuyers.
CHFA ................ Federal Recapture Tax
Thanks George!
I like the rate, lets hope I have other Connecticut readers.
Bill
Bill,
Insightful and timely! Today, you're my favorite blogger.
Mike in Tucson
Mike,
You've said the same thing to la grand.
But, today I needed to hear it!
Thanks!
Bill
Wow Bill, you brought the whole message to a conclusion, and tied everything up nice and tidy. Well done!
Evelyn,
Thank You!
It's always good to hear from readers.
Bill