Identifying Proper Parties to Avoid Forgery

By Lisa Scoble posted 09-16-2019 12:50 PM


Identifying Proper Parties to Avoid Forgery

Throughout your career, you may be involved in transactions on properties that have more than one owner. Though it may be easier to deal with only one person, it’s imperative to make sure everyone with a legal stake in the property is included in the negotiations.

Here’s a real-world scenario where working with only one of two owners on a property sale resulted in a lawsuit.


A real estate broker listed a commercial property on behalf of its owner, who planned to relocate his manufacturing business across town to accommodate future growth. 

Several months passed before a buyer emerged and submitted an offer through his own broker. Following extensive negotiations, the parties decided to move forward and enter into a contractual agreement.


The owner had a silent partner who was unaware the property was about to be sold.


The broker allowed the owner to sign both the listing agreement and the purchase agreement on behalf of the partner.


Following the execution of the sale agreement, the owner informed his partner that he sold the property and asked him to attend the closing in order to sign the necessary document. The partner refused to do so and notified the real estate brokers that the sale would not go forward.

After the buyers were notified, they sued the sellers for specific performance under the contract. The silent partner then sued the listing broker, alleging that he acted negligently by accepting the forged signatures.

The case was ultimately settled when the owner and listing broker paid a settlement to the buyer to walk away from what was otherwise an invalid contract. Without this resolution, the buyer would have lost a significant amount of money paid to an architect for retrofitting the building’s interior.


Many real estate errors and omissions claims can be avoided simply by exercising ordinary care to your clients. Know who your clients are and properly communicate to each one of them, including information like what the comparative market values are, what to expect during the listing period, and what happens after the property goes under contract.

Obviously, getting the proper signatures or initials on all documents will help protect you and your clients while ensuring the transaction will proceed in a straightforward and legally binding fashion. Good communication skills combined with other risk reduction methods will help avoid the need to pay costly attorney fees and settlements.