Growing up

Some things get easier with age (like what?).

As with wine, we may lose the exuberance, only to have replaced it with a sophistication that . . . (if you are reading this on a flight, there is an airline sickness bag in front of you).

To the point, “aging” has hopefully imbued us with a security and wisdom that allows us to own our mistakes and keeps us from panic attacks. It also brings the understanding that our clients’ problems need not be ours.

An expensive home came under agreement. Like most agreements these days, the deposit was to have been paid within so many days of execution. The deposit, a rather handsome sum for what we typically see in Pennsylvania, was never paid. No one noticed, save perhaps the buyer! Seller, assuming the transaction was a done deal, moved from the property, pre-settlement, into a new place. He spent money customizing the new place, and was about to put a deposit on an expensive sailboat, when he heard that his buyer was backing out of the transaction.

It was at this point that the listing agent checked with his office administrator and learned that the deposit had never been paid. What to do? He actually contemplated placing his own money in an escrow account as substitution.

While this won’t answer the question of what to do, it is a factor that the buyer had a legitimate basis for terminating the agreement. If so, it means that the failure to pay the deposit is of no consequence as the buyer would have a right to its reimbursement. But, would the seller have moved had he known that the deposit was not in-hand? Would he have made the renovations and bought (or almost so) a new boat?

Whatever the answer, it begins with a confession. And this is where maturation helps. While there’s no doubt that a mistake was made, get a grip. It happens. It shouldn’t happen and we don’t want it to happen, but mistakes are made. And the first thing that need be done is to inform the victim of that mistake; number two is to call your E&O carrier. This is why you have the coverage.

How difficult is it to tell a client that we erred?  It may be the most difficult thing to do in your professional career, but with a history of good work behind you, it will be something you can handle.

Study after study shows that the victims of medical malpractice are far less likely to sue when a doctor owns up to a mistake at the first opportunity. Owning up to the problem doesn’t correct it, nor does it assure that you won’t be sued for malpractice. But again, it’s why you have the coverage. Owning up is the right thing to do and doing the right thing will make it easier to sleep. Plus, how many times has the cover-up turned out to be far worse than the truth?

A related problem that will also test your fortitude involves being asked to “cheat” for a client.  Perhaps the lender is not aware of the septic problem that would otherwise impact its decision to finance the transaction. To keep the problem from the lender’s knowledge, the parties agree that seller will escrow substantial funds for repair following settlement. The parties and maybe the other licensee involved, all believe this should be “off-the-record” and not appear on the closing disclosure. (How can it appear when the intent is to keep this information from the lender?)

In such a situation, what position do you take? Will you allow your client to sign a disclosure statement knowing that it does not represent the true financial picture? Do you recognize that you would be participating in a fraud? Further, what benefit do you obtain from allowing the transaction to go forward under false pretenses? Is it worth the commission?

Recognizing the responsibility to advise your clients to act honestly is difficult given the pressure to “help” the buyer and seller. It’s easy to forget the lender whose security (the property) may be compromised by the condition the parties are keeping secret. Yet, we know what’s right and for the sake of integrity itself we must do what is right. The maturity it takes to be guided by integrity and not the expedient comes to some at an early age. Where do you fall in the scheme of things?