Wednesday, February 27, 2008

A Little Afternoon Reading

Our lovely and crack research maven B.S. Beaverman sent us a link to New York property website The Real Deal which details a fascinating story about the tawdry circumstances surrounding the sale of a 12-room pre-war Park Avenue apartment in New York City.

The story is far too complicated for Your Mama to encapsulate in just a few words, but here are a few teasers to entice the curious to read the whole saga: Lord Conrad Black, the FBI and Sotheby's International Realty.

Go!

20 comments:

Anonymous said...

While Lord Black is no angel, Sotheby's still had a fiduciary duty to operate in his best interest. It appears that Sotheby's "took sides" with the buyer and the FBI, and set up Lord Black to swing. Then they had the gall to sue for a commission check!! The judge is right to let this case proceed, and it is the best interest of all buyers and sellers to have Sotheby's held accountable for their unethical behaviour.

Anonymous said...

incroyable

:)

Alessandra said...

It doesn't look good for Sotheby's. Dual agency situations are fraught with peril for this very reason. Since the Blacks were the original client of Sotheby's and the one footing the bill, it seems like they were definitely owed a more stringent fiduciary duty.

Delicious and chewy good fun! Please keep us apprised, Mama!

Big Ed said...

2 illumati/masons of equal power battling it out, how entertaining....

and sothebys got left holding the bag.

they might as well kiss their comission goodbye, this will all go away in a year or two I am sure.

Anonymous said...

An amazing and interesting story. But it's somewhat amusing that Sotheby's is being blamed for not telling the Blacks that law enforcement "was onto the deal." Billionaire criminals are still criminals and their assets can be legally seized under the right circumstances, and I don't think anyone should be legally responsible for telling a suspect that the law is about to pounce, except for that person's lawyer. Certainly anyone's first duty is to cooperate with law enforcement?

But! It's a fascinating legal question and I look forward to the final ruling. Sounds like the judge is already inclined toward the Blacks.

I wonder if Lord Black still thinks it's a good practice to yell at his associates? :-)

NY Realtor said...

I know all about fiduciary duties and what not. But like above, I also would have thought the the FBI's ongoing investigation and prosecution of a CONVICTED felon (out on bail for appeal) trumped MY fiduciary duties.

But, then again, maybe I'm wrong.

I'll have to watch this because I don't want to get myself into a pickle like this with one of my rich but sorta shady clients.

Alessandra said...

I think the fiduciary duty angle is being played out more on the dual agency side, ny realtor. And in that case, one would have a duty to inform one's clients of all the ramifications thereof.

I agree that cooperating with law enforcement and a legal investigation muddies the other waters in regards to duties to one's clients and it will be interesting to see how it plays out.

NY Realtor said...

There are def. special responsibilities with dual agency, and I agree that's the angle the lawsuit is going after.

But given my experience, it's highly improbable that Mister Black would not have known the buyer's agent was also from Sotheby's.

And in the end that will come down to his word against theirs...unless there's something in writing besides the fine print that was mentioned.

lil' gay boy said...

Alessandra, NY realtor,

Is it not true that dual representation is not legal in every state (only in 38 of them I believe) simply because this is the type of fiduciary conflict that can arise?

Whether or not Lord Black is as guilty as sin, the law is the law, and if dual representation was not adequately exposed, Sotheby's is in hot water.

Alessandra said...

LGB, you're correct. And the issue that arises in a dual agency situation is how informed a client is. Having them sign a disclosure certainly means that they know the same broker is representing both sides, but an argument can be made that the broker did not properly explain what that means to the client.

I'm sure NY is just as stringent as CA for dual agency disclosure, but the question that seems to have arisen is where did the loyalties of Mr. Black's listing agent lie and from the report, it sounds as if towards the end of the transaction, her sympathies were more with the buyer than with her own client. And that? Is tricky.

I'm not trying to defend Mr. Black here, btw. Just noting the standards of practice to which Realtors need to adhere...

lil' gay boy said...

Alessandra,

And I'm sure the old playground rules of "first come, first served," do not apply in these situations.

To which party does the agent owe primary fiduciary responsibility to? The one with the bigger commission, or the one who signed first? Surely there must be some legal guidelines, if only on a state level, as to who the primary and secondary parties are.

This is going to turn out to be one bloody mess.

Anonymous said...

wa wa they didn't ezplain it when i wasn't yelling. too bad. Do you think buyers in subprime mkt were informed so that they understand that ARM means their payment will keep going up?
Go to jail criminal. I hope he's murdered.

Anonymous said...

murederd, like dead?

Anonymous said...

^ sp

luke220 said...

LGB, there is no such thing as primary and secondary fiduciary responsibility. In dual agency, the loyalties are equal, with equal limitations as well.

The legal obligation is mandatory disclosure. The agent has no obligation to protect illegal activity.

luke220 said...

I'm not sure why Sotheby's didn't take their commission out of the proceeds of the sale. Guess they weren't holding the escrow.

lil" gay boy said...

Luke,

Thanks for the info. Law is NOT my specially (at least when it comes to being on the right side of it!)

When responsibilities are equal, how does one make a judgment call as to which party is more "deserving"?

luke220 said...

One doesn't. Both are equally deserving of fair treatment.

NY Realtor said...

Never took LGB for a law breaker.

Just answering what Luke 220 did also...

when fiduciary duties are "equal" as you say, that's when full disclosure comes into play. All parties must be knowledgeable about what is happening so there's not sense of impropriety or favortism. that's not the legal language for the situation, but that's what's supposed to happen.

lil' gay boy said...

NY Realtor,

Sorry to burst your bubble, but there are still sodomy laws on the books.

;-)

There might have been one or two other incidents . . .