NEW MEXICO REAL ESTATE COMMISSION
NMREC CASE # 09-03-02-023
On March 4, 2009, a complaint was initiated by a Buyer (hereinafter “Mr. and Mrs. Complainant”), against a
licensed real estate broker representing the Seller and Buyer as a transaction broker and her qualifying broker
(hereinafter “Respondent” and “Respondent QB”), alleging failure to disclose, misrepresentation, escrow
violation and a failure to properly supervise.
On January 6, 2009, Mr. and Mrs. Complainant entered into a purchase agreement to purchase a home on a real
estate contract and offered $7,500 as their deposit. Mr. and Mrs. Complainant were instructed by Respondent to
make the check payable to the Seller and the Respondent advised the Seller that he could not cash the check until
closing. The Settlement/Signing Date was scheduled “on or before 1-30-09.” Addendum No. 1 to the Purchase
Agreement was the Real Estate Contract addendum.
There was also a second Addendum No. 1 which stated that: Respondent, her brokerage office and the lender
were “working as a limited service and will be held harmless” and that this sale was “contingent upon buyer &
seller’s ability to bring mortgage current with down payment and or additional funds at closing.” (Emphasis added).
January 30, 2009 came and the transaction failed to close. However, the Seller cashed Mr. and Mrs.
Complainant’s $7,500 deposit check.
Mr. and Mrs. Complainant stated that throughout “the month of January we felt we were not being told the
entire truth regarding the unbelievable daily delays that were taking place. We began losing confidence in both [the
Seller] and [Respondent].”
On February 2, 2009, an Extension Agreement was prepared by Respondent and Mr. and Mrs. Complainant
agreed to an extension of the Settlement/Signing Date to “on or before 2/10/09” to give the Seller and Respondent
more time to get the necessary documents to the title company.
On February 5, 2009, Mr. and Mrs. Complainant sent an email to the Seller expressing concern about not
having heard from Respondent regarding the status of the purchase and missing documentation (Seller’s
Disclosures and the Real Estate Contract).
On February 6, 2009, Mr. and Mrs. Complainant sent an email to Respondent expressing concern over the
continued delays and advised that they would not travel back to New Mexico unless they had “a bona fide contract
and a rental agreement.” Mr. and Mrs. Complainant also inquired “Do we need to do another extension? Is so
let us know.”
February 10, 2009 came and the transaction, once again, failed to close. Mr. and Mrs. Complainant received an
email from Respondent at 3:53 pm advising that the title search was “mostly clear” and that she had to find a new
attorney to prepare the Real Estate Contract. Respondent did not offer another extension agreement for signature.
Frustrated by the continued delays and Respondent’s lack of responsiveness, at 5:04 p.m. that same day, Mr. and
Mrs. Complainant sent Respondent an email withdrawing their offer to purchase based on Respondent’s failure
to perform her duties and requested the return of their $7,500 earnest money deposit.
On February 11, 2009, Respondent sent an email to Mr. and Mrs. Complainant advising that she had been sick
with the flu for the past three days and apologized for not sending the extension agreement. She further stated: “I
am so sorry for everything and will do anything to make it up to you. I’m even happy to pay for you[sic] move.
I’m not offering to do this because there is any type of financial compensation to me but because (I am doing this as
BROKER “B” – Case No. 09-03-02-023 (Moise)
a favor for free) but [Seller] is my friend and it would kill me if see[sic] was punished because of my negligence.”
Mr. and Mrs. Complainant stated that Respondent and/or Respondent QB:
1. Failed to place their $7,500 earnest money deposit in a trust account to be retained until closing;
2. Failed to provide Mr. and Mrs. Complainant with a copy of the Seller’s Disclosures,
3. Failed to facilitate the execution of a rental agreement for the time period prior to closing;
4. Failed to insure that the real estate contract was prepared by an attorney prior to the 2-10-09 closing date;
5. Failed to timely confirm that Seller had clear title; and
6. Failed to offer and execute an Extension Agreement prior to the February 10, 2009 Settlement/Signing Date to
prevent the expiration of the contract.
In their joint response, Respondents stated that it was “abundantly evident that the purchaser understood that this
down payment was to be given directly to the seller to bring his mortgage current” which they felt was supported
by the fact that the check was made out to the Seller and not a title company. Respondents further stated that this
was supported by the language found in Addendum No. 1 cited above and underlined. Respondents also stated
that Mr. and Mrs. Complainant knew exactly what was happening when they wrote in an email dated 2/11/09:
“…when we agreed to ‘up’ our initial down payment from $5000 to $7500 to save [Seller] from having to get a
loan and, also, when we signed the $7500 to [Seller] instead of the escrow company.” Respondents believe that
the dispute over the down payment is between the Seller and Mr. and Mrs. Complainant.
Respondents further stated that Mr. and Mrs. Complainant were fully aware that Respondent was a close
friend of the Seller, as disclosed on Cover Page II, and that she was “helping with the paperwork as a favor to the
seller with zero compensation to [the brokerage office].” Respondents advised that the only role Respondent
played was “to prepare the paperwork and follow up on the closing process i.e. explain the delay on the payoffs . . .
and to get extensions on the purchase agreement to bring this negotiation to a favorable conclusion.”
With regard to escrow violations, Respondents believe that the money given was a “down payment” that was to
be “spent to bring the mortgage current.” With regard to failure to properly supervise, Respondent QB advised
that he meets with Respondent for one on one training every other week in person and on the off week for a phone
Respondents believe that the claims made by Mr. and Mrs. Complainant are “without factual merit” and have
mistakenly placed blame of them for the failed transaction.
I reviewed the purchase documents herein to understand if there was a distinction made between the “down
payment” and the “earnest money” deposit and came to the conclusion that they were one and the same. The
“2. PURCHASE PRICE. $261.000
A. APPROXIMATE CASH DOWN PAYMENT. $7,500
3. EARNEST MONEY. Buyer will deliver $7,500 Earnest Money in the form of check . . . dated upon
acceptance, to be escrowed upon mutual acceptance of this Agreement by Buyer and Seller with seller’s choice
[Seller’s name was written here], in accordance with New Mexico law. Earnest Money will be applied to Purchase
Price and/or closing costs upon Funding Date.”
I have attached a redacted copy for your review. Please note that the Offer Date was December 15, 2008, but the
actual contract was not executed until January 6, 2009. Also, according to the contract, delivery of Seller’s
Property Disclosure Statement was due on December 15, 2008, which was never modified when the contract was
finally executed on January 6, 2009.
BROKER “B” – Case No. 09-03-02-023 (Moise)
Based on the facts and testimony presented in this case, there may be a violation of the following New Mexico Real
Estate License Law and Rules of the Commission:
With regard to Respondent:
H. remit all funds received from others related to real estate transactions to the qualifying broker or their designee
as soon as possible after receipt of those funds, and after securing signatures of all parties to the transaction;
220.127.116.11. Broker duties; disclosure.
A. honesty and reasonable care;
C. performance of any and all oral or written agreements made with the customer or client;
D. assistance to the broker’s customer or client in completing the transaction, unless otherwise agreed to in writing
by the customer or client, including; . . .
(2) assistance in complying with the terms and conditions of the contract and with the closing of the transaction;
F. prompt accounting for all monies or property received by the broker;
18.104.22.168 Delivery of documents.
Except as otherwise provided by law, in all circumstances it shall be the responsibility of each broker engaged in a
transaction to assure that all parties to the transaction receive legible copies of any and all documents they have
signed and any documents that pertain to their respective interest in the transaction as soon as practicably possible,
and copies of all fully executed documents thereafter.
With regard to Respondent QB:
D. supervise all real estate related activities . . . conducted on behalf of others by associate brokers affiliated with
the brokerage . . .
F. deposit all money received on behalf of others in the proper trust account as soon after receipt as is practicably
possible after securing signatures of all parties to the transaction;
Walter Mullen, Chief Investigator Date ____________________
New Mexico Real Estate Commission
BROKER “B” – Case No. 09-03-02-023 (Moise)