Netted $63k Settlement For Clients Harmed By Real Estate Broker’s Malpractice

Home sellers trust real estate brokers to represent their interests and honor their wishes. After all, these state-licensed professionals adhere to strict regulations that uniquely qualify them to fulfill their fiduciary duties to sellers. 

Unfortunately, this couldn’t have been further from the case for our clients. 

Our clients are a veteran household. Their Department of Veterans Affairs (VA) benefits package includes a home loan certificate of eligibility. This home loan certificate guarantees veterans lower-than-average interest rates and little-to-no closing costs compared to a standard mortgage. 

But here’s the catch: If a nonveteran takes over a VA loan, the veteran forfeits their eligibility for future VA loans. 

In this case, our clients were interested in selling their home and contacted a Colorado real estate broker for support. The broker suggested our clients consider a VA loan assumption, in which another VA-eligible buyer agrees to assume responsibility for the loan with the home’s purchase. Our clients agreed on the condition that the broker evaluate potential buyers for VA eligibility. Our clients’ broker never indicated they weren’t interested in honoring the request.

Soon after listing their home on the market, the broker contacted our clients with seemingly good news: A buyer was interested, and they had a VA certificate of eligibility. 

The potential buyers loved the home and made an offer. Our clients accepted the offer after a brief negotiation and assurance from the broker that the buyer met the sellers’ VA-eligible criteria. 

When our clients unknowingly were about to forfeit their VA eligibility, their broker came clean. The buyers were not VA-eligible. The broker had fabricated everything about the buyer’s military service. To make matters worse, the broker told our clients they needed to go through with the sale, regardless of whether the buyers granted a release of the VA home loan. Our clients contacted the broker’s employer, who blamed their broker for the lapse in judgment but insisted the closing had to proceed to address the dispute.

The buyers threatened to sue our clients, so they felt pressure to transfer the VA loan. 

The real estate brokers abandoned our clients and refused to assist them in negotiating a loan agreement with the buyers. Eventually, the buyers agreed to either pay off or refinance the loan in seven years, by which point our clients would be reeligible for a VA home loan. Our clients turned to Robinson & Henry to find out if they had any legal recourse against the real estate brokers.  

Our real estate litigation attorneys sent the brokers a demand for accountability and compensation for breach of contract and professional negligence. The brokers accepted our invitation to enter mediation to save them from costly litigation. We negotiated a settlement of more than $63,000 in damages for our clients to cushion the financial blow while they wait for their VA eligibility to be restored.