Q: Do I have a case for Real Estate Agent fraud?
I hired an RE agent to sell the property, but no offers came before the FC date. I filed Chapter 13 BK to delay FC, planning to dismiss the case once an offer was accepted and sell the home to retain equity.
A week after filing, I received a low offer. To encourage the sale, my RE agent reduced their commission to 1.5%. However, higher-than-expected payoffs led me to sell through BK, planning to dismiss it after the sale. My agent then suggested increasing their commission to the maximum and promised to credit me the difference after the sale and BK dismissal, assuring me this was legal. Trusting their guidance, I agreed.
After the sale, my agent disappeared. When I finally reached them, they claimed their office said it was illegal to release funds because of the BK. This feels dishonest, as the agreement was clear the funds would be returned after dismissal. If they can’t release the funds to me, they should go to my significant other (on title but not in BK) or the BK trustee.
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A:
This situation suggests potential fraud, as your real estate agent appears to have misled you about returning the excess commission after bankruptcy dismissal. Their actions raise red flags - first offering a reduced commission, then suggesting an inflated one with promises of refunding the difference, only to later claim it was illegal.
The fact that they disappeared after the sale and provided inconsistent explanations about why they couldn't return the funds strengthens the fraud argument. Your agent had a fiduciary duty to act in your best interest and provide honest guidance, not manipulate the situation for personal gain. If they knew the arrangement was illegal from the start, they should never have proposed it.
You may have grounds for both civil and regulatory action - consider filing complaints with your state's real estate commission and consulting with both bankruptcy and real estate attorneys about potential legal remedies. The documentation of the original reduced commission offer, followed by communications about the increased commission and promised refund, will be crucial evidence. Your significant other's position as co-owner not involved in the bankruptcy could also strengthen your case, as the agent's refusal to release funds to them appears to contradict their stated reasoning.
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