California Broker says: “Disclosure Source (DS) is the Most Unprofessional Company in Real Estate”

Bob Stickney, a Century 21 broker, made this comment “DS is the most unprofessional company in real estate”, on our site when we covered the ongoing litigation between a Century 21 agent and Fidelity’s Disclosure Source. We’ve had many readers ask if there has been a resolution to this situation. Apparently the parties are now settling.
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For those of you that missed this story, in May 2012 buyers of a home in Palmdale, California sued Century 21 agent, Kirk Swirczynski, when they discovered that the Mello-Roos assessment on their home was almost $1,700 more per year than had been disclosed by Fidelity’s wholly-owned subsidiary Disclosure Source. Bob Stickney is the broker for Century 21 who ended up having to defend his agent in this suit.

Rather than accepting responsibility for the incorrect Mello-Roos disclosures ordered by Swirczynski for the seller, Disclosure Source responded to Swirczynski’s cross-complaint with 29 affirmative defenses accusing Swirczynski of negligence for relying on their inaccurate report.

You can read the full story here.

FYI – the lawsuit is entitled Thomas and Alexandria Massari, and Randall Hayes vs. Kirk Swirczynski, in the Superior Court of the State of California, Los Angeles County – CASE NO: MC 023500.

As we all know, there are always two sides to any legal battle and we’d like to share some additional insight we uncovered about this suit following our initial story.

Recently, we received a letter signed by Billy Jensen, President and CEO of Disclosure Source, from one of our readers. You can read that letter in its entirety here:

Jensen of Disclosure Source claims that the Century 21 agent, “chose to hire a lawyer and sue us rather than call us to discuss the problem.” Bob Stickney of Century 21 says that just isn’t so.

Further, Bob Stickney added, “An agent expects to be protected and defended for using a company’s data should any complaint develop into legal action. The costs of having to personally provide legal defense can be catastrophic to an agent and/or his company.”

“After being named in the lawsuit and contrary to what Mr. Jensen states in his letter, I had tried numerous times to contact any attorney at D/S without success. DRE or the insurance commissioner didn’t seem to have any oversight with NHD companies and pretty much said I was on my own.”

“So, in addition to my own frustrating efforts, I enlisted the help of anyone who would listen to me: Fidelity HPP and Chicago Title & Escrow. I got no help through Fidelity. I did get Mr. Jensen’s name and phone number from Chicago Title. I was able to talk with Mr. Jensen twice over about 5 weeks and did not receive any worthwhile help or commitment to protect us.”

“Because the court required a response and none was going to be forthcoming from D/S on our behalf, I had no choice but to hire my own attorney.”

“My attorney needed to represent us in all of our required responses over the next 9 months because D/S would not even indicate that they were going to cover our legal expenses or indemnify us. My attorney ran into the exact same communication problems with Mr. Jensen as I had previously during this period.”

Jensen of Disclosure Source also claims that, “Once we understood the problem we offered to indemnify the Realtor from any loss.” Again, Bob Stickney of Century 21 says that just wasn’t the case.

According to Bob Stickney of Century 21, “After about 9 months of having to deal with this and over $14,000 in attorney’s fees, Mr. Jensen stepped up to the plate and signed an indemnification letter and is in the process of reimbursing our attorney’s fees.” Now, over two years since the lawsuit began, most of Stickney’s attorney’s fees have been recovered.

“Although this turned out as it should have, I am very disappointed that it wasn’t handled properly from the beginning. My time and risk to my company are very real concerns and I will not knowingly put myself in this situation again.”

“An agent expects to be protected and defended for using a company’s data should any complaint develop into legal action. The costs of having to personally provide legal defense can be catastrophic to an agent and/or his company.”

As Bob Stickney points out — neither the California Insurance Commissioner nor the DRE were able to help him with this dispute – ergo a lawsuit. Does this mean you’re on your own here?

What are your thoughts on this issue? How was it handled by Disclosure Source and the agent & broker? We’d like to hear from you!

  • Kathleen L. Guillaume

    RE: Disclosure Source article. I believe it is the agents responsibility to review all documents with their buyers. Mello-Roos and “Lighting District Bonds” which are builders new name for M-R, are disclosed in the PreLim as they are bond liens against the property. They are also in the Assessors tax data available on my MLS. If documents are reviewed discrepancies would be caught. I realize a lot of companies do not want their agent to review documents or even understand them, thinking ignorance is the best defense in a dispute. I have never had a Title Company fail to give me further information on anything in the PreLim, whether on liens or easements. I think it is important for all agents to know how to read documents so they can highlight anything that may be of concern to their client, so that the client can get either additional information or clarifications. Handing buyers stacks of paperwork asking only for their signature to prove delivery seems unprofessional to me. I have client who complain because they don’t ant to be bothered reading through pages and pages of document, I just tell them that they have to man up, because they need to be aware of the liabilities they are taking on, and we are going to sit down and review everything that could impact them…and somehow they always get through it. Our MLS has classes in how to read a PreLim and other documents so agents can learn how to understand those things that can have a material impact on a property. Classes are not just to accumulate course work for license renewal; they are offered to help us become more professional.

  • Martin Delgado

    I’m truly shocked by the way Disclosure Source handled this situation. I hadn’t read the original article until just now, but I’m my opinion when someone pays for a product or service like this, they can and should expect to receive a quality product or service, and if a problem arises the provider should be willing to accommodate for this. Business practices like this truly concern me and the welfare of our industry.

  • Insane Assylum Escapee

    There’s no excuse for DS’s actions! In my opinion they just wanted to CYA and get away with a minimal amount of liability exposure and costs. They were hoping the agent would just go away and cover the buyer’s loss out of the agent’s pocket.

    This is the typical response of someone who has never ran a business before and had to deal with customer complaints and resolve it.

    In our business, you only get one chance to prove your ability. Would any agent use DS ever again?

    “Screw me once, shame on you, screw me twice, shame on me”

  • RE_Insider

    We’d like to share a comment sent to us via email, which reads:

    I feel it is the agent’s responsibility to confirm mello roos from the tax assessors prior to taking a listing. As a matter of fact, our MLS listing input requires it to be filled in. That does not mean that Disclosure Source did not act negligently in this case, but in my opinion, the agent should not have relied solely on a second party to verify this very crucial bit of information. Just my 2 cents. Thnx

    Deborah Aragon, Realtor

  • Jory Blake

    I can’t imagine submitting a purchase offer without first reviewing the tax roll and calculating the buyers monthly payment. Isn’t that what we as Realtors get paid to do?

  • Dan Scott

    What about the Preliminary Title Report? It should have had information on the Mello Roos as well even if the amount was incorrect on the NHD documents. Mello Roos showing up on a Preliminary Report should have been a clue to the buyer to find out what it was. Buyers should not be excluded from responsibility either. They are supposed to do their due diligence.

    It would also seem reasonable that the lender would have verified the
    entire tax bill amount including any Mello Roos assessment. To quality the buyer for the financing in the transaction they would have needed to know all the facts. If they did not, then they misled the buyer as to what PITI would be.

    It would
    not have been hard for the agent to go online to the assessor’s offce as
    well. This all does not excuse DS from giving incorrect information.
    It also seems that the buyer should have gone after DS if they relied
    upon the information provided in DS’s report.

    It seems that several parties bear some responsibility for the misinformation.