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REALTORS!! Don't Assume NWMLS Form 51 (Rescission) Protects You!
 Just this month, the Washington State Court of Appeals issued a decision involving the standard NWMLS Form 51 used to rescind a Purchase and Sale Agreement. The form includes this provision:
"RELEASE. The parties agree that the Agreement between them and all other agreements or undertakings between them in respect to the Property are hereby rescinded; and each releases the other and all real estate firms and brokers involved with this sale from any and all present or future liability . . .."
In the transaction that led to the court case, an agent representing both buyer and seller wrote up a deal contingent upon the sale of buyers' home. Three months later, after the buyers were not able to sell their home, the agent decided to buy the home himself. They rescinded the prior PSA with Form 51.
The agent couldn't complete the purchase either. Seller eventually sold the home two years later for $158k less than the amount of the original offer. Seller thought that the agent had attempted to conceal the contingent nature of the original offer, and discovered that a second interested buyer had expressed an interest in making a full price, non-contingent offer at the same time as the original buyers--the listing agent had never informed the seller!
The trial court ruled that the release provision of Form 51 was void and unenforceable as a violation of public policy. Otherwise, by having seller sign the rescission necessary for a new contract, the agent would have shielded himself from all liability to the seller arising out of his negligent representation. The agent was found liable and the seller was awarded $365,000 in damages!
The Court of Appeals agreed that the release violates public policy, in part given the role of real estate agents in the purchase and sale of property. Given this decision, real estate agents shouldn't rely on the release language of Form 51 to protect them from liability if the rescinded deal involved negligence by the agent.
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Who's that man in uniform (at right)? Why, it's our own Eric Zilm (Customer Service and Title Officer, pictured in his modern look, at left) in his previous life
Cascade Title is proud of our membership in, and support of, the State and local Realtor Associations, RPAC (the Realtor Political Action Committee) and BOTH the BIA of Southwest Washington AND the Southwest Contractors Association. We're a strong believer in the roles that Realtors, builders and lenders play in our local economy, and want to partner with you for our mutual success! Try Cascade Title, and find out how supportive a title company can be to your business!