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Bishop v. ReMax Millenium Realty, Inc.

A-5801-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

BROKERS; DUAL AGENCY—Although a real estate broker may have violated its duties to a prospective buyer under a dual agency agreement by advising the seller to seek and accept another offer, the disappointed buyer may not claim against the broker when it had, in the first place, refused to sign a contract based on its own offer.

A property owner hired a real estate agency to sell his property at an asking price of $35,000. The agent then contacted the holder of a tax sale certificate for the property, and the holder offered to buy the property for $27,500. The agent then prepared an “Informed Consent to Dual Agency” form, which established that the agent would work equally for both the holder and the seller. According to the Court, even though the holder never signed the form, the agent was nonetheless acting as a dual agent.

In addition to the holder’s oral offer, the seller received other offers, each for less than the holder’s. Therefore, the agent asked the holder come to her office to sign a written contract and to pay the deposit. The certificate holder never showed up. Consequently, the agent suggested that the seller accept the next highest offer. That offer, however, was withdrawn. Shortly thereafter, the certificate holder contacted the seller’s attorney in an attempt to make another offer.

The seller then received a third-party offer for $26,300. When the agent told the certificate holder that this offer had been received, the holder faxed a written proposal for $25,000. The holder’s proposal was ambiguous, and possibly meant that the “net” to be paid would be $14,500. Therefore, the holder’s new proposal was rejected, and the property was sold to the third-party offeror.

In addition to buying the tax sale certificate, the holder had also paid additional real estate taxes and water charges for the property. Further, the certificate holder made various improvements on the property even before buying the tax certificate. After her offer was rejected, the holder sued the agency and its agent, alleging fraud, misrepresentation, and negligence in the handling of the transaction. A few months later, after the sale, she received a reimbursement for the tax, water, and sewer payments she had made on the property.

The lower court ruled that although the agent had violated the dual agency agreement by advising the seller to seek and accept another offer, any damages the holder may have suffered were not proximately caused by that transgression. It emphasized that the certificate holder did not have a legal right to enter the property to make improvements. Nonetheless, she had already been reimbursed for her tax and water charges. Further, she failed to prove that the buyer benefitted from the repairs she made.

The lower court also rejected her claim against the agent because she failed to sign a written contract to confirm her original verbal offer. Her second offer was ambiguous because it wasn’t clear if it was gross or net. As stated by the agent, once the original verbal offer was accepted, it meant that both sides would move onto the next step, which was a written contract, and “[the holder] never moved to that critical step.”

The holder claimed that since she was new to this type of transaction she did not know what was meant by “the next step.” The lower court did not believe her. Further, there was evidence that she was experiencing personal problems at the relevant time, and that was the reason for the hesitancy. The lower court felt the agent was more credible because she was motivated by a desire to finish the sale, and that her commission would have been higher had the sale been to the holder. Therefore, it concluded that the agent’s breach of the dual agency was not the proximate cause of any damage to the holder.

The Appellate Division affirmed. Appellate courts gives deference to lower courts “when the evidence is largely testimonial and involves questions of credibility.” In this case, the lower court credited the agent’s testimony and rejected the certificate holder’s explanation. On that basis, the Court held that the factual findings below, and the legal conclusions based on them, were fully supported by credible evidence in the record.

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