Everyone has a story about a terrible real estate agent. But here’s one that tops them all.
It involves a man who was facing foreclosure and a real estate broker who was willing to resort to forgery to make a sale. It’s a lesson in “buyer beware” when choosing a real estate professional.
In the case of In re Washington, Mr. Washington was behind in his mortgage payments and hired a real estate broker to help him sell his property. He signed some paperwork, including, possibly, a power of attorney that would allow the broker to sign certain documents on his behalf.
Meanwhile, Mr. Washington’s lender scheduled a foreclosure sale. After the sale date had passed, Mr. Washington was surprised to learn that he had filed Chapter 13 bankruptcy on the date the sale was scheduled to happen.
The bankruptcy petition bore Mr. Washington’s signature and was filed by his real estate broker and the broker’s lawyer. Mr. Washington asked the bankruptcy court for the Southern District of Florida to dismiss the case because his signature on the bankruptcy petition had been forged by his broker. He had never authorized anyone to file bankruptcy for him.
Why would a broker want to file a homeowner’s bankruptcy case? A bankruptcy filing is a common way to slow down a foreclosure. Bankruptcy halts, or “stays” any lawsuits or other collection actions by the borrower’s creditors until the bankruptcy case is resolved. Borrowers sometimes file bankruptcy in hopes of working out a payment arrangement with their lender. For a real estate broker, a bankruptcy filing would buy some additional time to try to sell the house and earn a commission.
Mr. Washington testified that he didn’t want to stop the foreclosure sale because he didn’t think the property could be sold for more than he owed on his mortgage. He didn’t stand to gain anything by filing bankruptcy, but the broker did.
Mr. Washington did get justice. The court found that the broker forged his signature, and that the lawyer who filed the bankruptcy petition knew that the signature was forged.
The court dismissed the case and tried to make amends to Mr. Washington. The broker and his lawyer were ordered to pay Mr. Washington’s travel costs and attorney’s fees. The court file was sealed and Mr. Washington’s lawyer was directed to notify the credit reporting agencies. And professional licensing boards were notified of the broker’s and lawyer’s conduct.
Most real estate brokers are honest and do a good job for their clients. But if you are behind in your mortgage payments and trying to sell your home, it pays to be careful who you deal with. Look for a real estate broker who is recommended by friends, family or co-workers. Beware of people who solicit you over the phone. And if you are asked to sign a power of attorney, consult a lawyer so you understand exactly what you are authorizing.