A prestigious law firm has signaled that real estate agents should avoid participating in joint ventures. McGuireWoods’ guidance follows a recent Consumer Financial Protection Bureau (CFPB) issuance in the Federal Register regarding misconduct around the Consumer Financial Protection Act, which was enacted by Congress in 2010.
Beyond banks and credit unions, attorneys at McGuireWoods note that the policy statement is also applicable to real estate agents who participate in joint ventures with title or mortgage firms.
“None of these state laws makes an exception for when real-estate agents disclose their conflicts, and it is unlikely that an agent’s disclosure of a conflict would dissuade the Bureau from enforcing the CFPA. This is particularly true when the purported disclosure is made, as it often is, after the referral—for example, when it is buried among the dozens of pages that the parties must sign when ratifying the purchase agreement—and in language that is impenetrable to the average consumer.”
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