Did a listing agent commit fraud when he purchased his listing and immediately sold for a profit?
Case Summary: William E. Chisman, Jr., et al. v. E. B. Moylan, Jr., et al.
TL:DR The out-of-state-owners of a property in Lee County, Florida, hired a Miami broker to sell their real estate. The sellers agreed to a list price of $56,000 with a 10% commission paid at sale to the real estate broker. The sellers agreed to sell the property for $48,000. The buyer then quickly resold it for $80,000. The sellers were upset because they thought the broker bought the property himself without telling them. They took him to court for this perceived conflict of interest and for not being honest with and loyal to the sellers. After a review of the available evidence, the court dismissed the case. The court said that brokers should be honest and loyal; however, the owners did not have evidence to prove their suspicions. The trial court stated the sellers did not have solid proof. The appellate court agreed.
Cast of Actors:
ME: I am not a lawyer. Also, this case is super simplified for storytelling purposes. The legal details are always more complicated and boring. If you have legal questions, I work with many awesome lawyers and can make a recommendation. My interest in Realtors behaving badly comes from a background of research when working on my graduate degrees in Criminology at Florida State University.
SELLER: William E. Chisman, Jr and his sister owned 160 acres in Lee County, Florida. Mr. Chisman was a broker Realtor licensed in North Dakota. They brought a legal case against the Florida broker Realtor Moylan.
LISTING AGENT: E.B. Moylan, Jr., a Florida-licensed broker Realtor, was hired to sell the land. His offices were located in Miami, Florida. He was sued for fraud and breach of contract.
Background
The case of William E. Chisman, Jr., et al. v. E. B. Moylan, Jr., et al., reported in 105 So. 2d 186 and decided by the Florida Court of Appeals in 1958, revolves around a dispute over a real estate transaction. The appellants, William E. Chisman, Jr. and associated parties, sought to appeal a judgment that was in favor of the appellees (listing agent), E. B. Moylan, Jr. and his associates.
The Way I Heard the Story Go…
Let’s simplify this case:
Mr. Chisman wanted to sell the 160-acre property in Lee County. He hired Mr. Moylan, a licensed real estate broker in Miami, to find a buyer. They agreed to list the property for $56,000; if Moylan sold it, he would get a 10% commission. For those unfamiliar with Florida, Lee County is Cape Coral and Ft. Myers area on the southwest side of south Florida. On the other side of the state, Miami is the southeast tip of Florida. This property is a long trip across the Everglades from the listing agent’s office.
Chisman testified that Moylan called him and said Moylan had found a buyer offering $48,000 for the property. According to Chisman, Moylan also told him to make a decision right away. Chisman testified that when he asked Moylen if this was the best price possible, Moylen said it was. Chisman claimed that Moylan provided no information about the buyer’s identity. The seller, Chisman said he trusted his listing agent Moylan and agreed to the deal.
After the sale the seller felt cheated.
When Chisman found out that the property sold soon after for $80,000, he felt cheated. Chisman believed that his listing agent should have told him about the potential for a higher sale price so that he could earn more from the seller’s proceeds. He also claimed that the agent hid his involvement in the purchase. If he had been aware of the syndicate, Chisman testified that he would not have sold the property.
However, at the trial court, Moylen testified and presented evidence to the judge that, as the listing agent, he had told the seller of his interest in purchasing the property. Moylan provided written details to the seller regarding the syndicate’s purchase of the 160 acres in Lee County. As an outsider of the syndicate, his secretary, Patricia Myer, had written the receipt and held the deposit.
The trial judge, after hearing testimony and reviewing the evidence, sided with the listing agent, Moylan. The appellate court agreed in a rather lengthy discourse on real estate broker’s duty to the public.
This appellate case was in 1958, and a similar situation is unlikely to arise now. Besides having many ways to communicate (text messages, emails, etc.), all of these forms of communication can be saved and easily referred to during the sales process. The primary issue in this case was whether the seller had been adequately informed and protected. We even have forms available today to document the broker’s notification of his status as a licensee.
Real Estate Lessons Learned
- READ the Contract: Frankly, this never changes. Read everything. Make notes about unclear items, or things that have been omitted, or items you want to discuss in more detail. Always feel free to contact an attorney for clarification.
- Ask questions: Real estate is a large investment, and investigation is encouraged and expected. Write out your questions and get your answers in writing, too. This is one of those things an agent can advocate for on your behalf. Agents will often recognize what is missing before their customers will see it.
- The admonition to Brokers of our duties to the public: Due to their licensing and training, real estate Brokers have more experience and knowledge than the average real estate customer. Because of this, brokers must treat customers fairly and ensure informed consent in all dealings.
Best Quote
“The witnesses were all before the chancellor (lower court judge in this case) who personally heard the testimony and the argument of counsel. He found in favor of the [listing broker]. This court, therefore, is confronted with the old and long established rule of law that where the trial judge hears the testimony every presumption favors the correctness of his judgment, and he who complains of error must make it clearly appear since an appellate court will not overturn the judgment of the trial judge unless his findings are clearly against the weight of the evidence. Appellants have not met this test. The evidence is adequate to sustain the chancellor’s determination that the broker did not commit a breach of duty owed to his principals.”
As a real estate broker associate, I value openness and honesty. If you are thinking about making a move in Florida, I would love to chat with you.
Abbe Justus
Broker Associate
Ketcham Realty Group, Inc.
