This happened to a friend of mine from out of state.
Property buyer calls the surveyor and tell him to give him a price on a survey. The surveyor does so and the buyer tells him that he will get to do it when he gets everything lined out.
Property seller calls the same surveyor and tells him he wants him to survey this property, the same property the buyer has already called out. At this point, the surveyor is feeling pretty good about himself.
A week or so later the buyer calls back and says he can't use the surveyor? Why? The lender is telling him that unless he uses Surveyor X, they will not loan him the money. Now, an interesting note about all this is that the lending agent's brother works for Surveyor X.
Now, assuming that everyone here is telling the truth and this isn't a case of the client telling lies to avoid telling the surveyor he wants someone else, is this legal?
NO
I would say yes. A lot of government entities and business entities have what is called "short lists". A short list lists contractors that have been approved by the entity. If you are not on their list, you can't work for them. For example, the DOT has a short list of subcontractors for survey work. I once tried to get on that list, but no deal. The list, by policy, is limited to a few firms. Lending institutions are the same.
Is it fair? Hell no!
The CIA has a "short list" of approved contractors. Anybody in the U.S. can get onto the list once they pass the security check. (You also get a phone number to call if someone starts asking lots of questions about what you're doing.)
I heard it was actually part of the financial reform bill that lenders can not stray from their "good faith estimate" by more than 10%, and part of that requirement was for lenders to provide the buyer with a "short list" of approved surveyors / appraisers / home inspectors / etc. who the banks have a relationship with (perhaps a standard fee). If the buyer does not use a contractor from that list, then the buyer is responsible to pay overruns in closing costs.
However, from what you are describing, it sounds like the buyer is not being given the option to chose his own surveyor. From what I understand (and I have 3 realtors as close relatives), the buyer ALWAYS has the option of choosing his/her own service providers, just that he may let the lender off the hook when it comes to closing costs.
Answer may depend on the state. In California, I believe it would be a No for multiple reasons.
1. Realtor / Broker would now be considered offering land surveying services.
2. Violation of laws and rules governing realters / brokers.
Report the realtor to the real estate board or possibly the land surveyors board.
YES
maybe
> A week or so later the buyer calls back and says he can't use the surveyor? Why? The lender is telling him that unless he uses Surveyor X, they will not loan him the money. Now, an interesting note about all this is that the lending agent's brother works for Surveyor X.
The surveyor has to use Surveyor "X" who his brother works for?
I can't buy in to the claim of a "short-list", there has to be a list of more than one I would think. (Not really a short list per se, but a prequalified list.)
I have trouble believing that this is legal at all. Maybe easy to get away with, but this is fraught with inappropriatness (made-up word?)
I would bet that dot's and most other agencies have a pre-qualifying list of over 100 consultants. not 1. A prequalifying list for land surveys should be the State's licensing board's list of licensed land surveyors.
(to be honest, I don't know if it's legal but it definitely shouldn't be)
They have a saying in Eastern Europe: Da Ne Mozda
Yes No Maybe
> This happened to a friend of mine from out of state.
>
> Property buyer calls the surveyor and tell him to give him a price on a survey. The surveyor does so and the buyer tells him that he will get to do it when he gets everything lined out.
>
> Property seller calls the same surveyor and tells him he wants him to survey this property, the same property the buyer has already called out. At this point, the surveyor is feeling pretty good about himself.
>
> A week or so later the buyer calls back and says he can't use the surveyor? Why? The lender is telling him that unless he uses Surveyor X, they will not loan him the money. Now, an interesting note about all this is that the lending agent's brother works for Surveyor X.
>
> Now, assuming that everyone here is telling the truth and this isn't a case of the client telling lies to avoid telling the surveyor he wants someone else, is this legal?
At first blush I would say Yes, quite OK.
If I (a real person) am lending My Money with land as collateral (as in "I could end up owning it") then I think I (a real person) would have the right to require that certain people/businesses checked it out first... I would consider it foolish to just take whatever jack leg somebody else chose.
Now, there may be (probably?) a ton of laws and regulations otherwise , federal and state... time to do a bit of home work.
I would think it is. Have you heard of prequalified vendors?
Can you provide Sherman Anti-Trust examples of how/why it would not be legal?
It most definitely sucks whether it is legal or not. Perhaps the lender should also dictate from whom you purchase your property insurance, plumber, electrician, carpenter, concrete contractor and so forth throughout the life of your loan. That would be ridiculous.
This clearly sounds like a case of 'good-ol-boyism'. Meanwhile, the relative can set virtually any price he wants as he will definitely be doing the survey. Smacks of kick-back-city.
The person that is paying for the survey probably has a lot to say about who surveys the land.
Every brother in the law agreement I've ever seen has bitten them both in the a.. in the end.
A surveyor would have to be in trouble with his BOR before any claims can be laid to exclude from having an opportunity to get the job if chosen by the one paying for the work.
I can understand a bank or lending institution having a recommended surveyor.
It is too far a reach to say that their surveyor is the only one they will accept to do the job.
That would be like a seller stipulating that a certain bank must be used to finance the purchase.
I would say there is a difference in a short list used to find a reputable surveyor, and a short list consisting of only 1 to funnel work to 1 particular firm.
Yes, I've heard of pre-qualified vendors. Mark Chain addresses that issue above.
The reason I brought up the restraint of trade thought is because of the Microsoft-Netscape fiasco several years ago. Microsoft was trying to force the computer companies to install Internet Explorer instead of Netscape and the feds sued Microsoft for it. I may be way off base here, but that is sticking in my head.
I told my buddy today to get a lawyer send the lender a letter. The lender is a rather large outfit and I can't imagine them putting up any fight at all to make sure one of their agents brother gets work.
I understand. My problem with this is that the lender didn't say, "we want a good surveyor". They said, "if you don't use Surveyor X, we won't loan you the money."
Are you suggesting that the bank in question has the same monopoly power as MicroSoft?
Title companies use approved lists especially for ALTA's.
They limit the list because the unapproved surveyors won't
pick up the responsibility for the title companies errors.
Similar to what Mr. Harris said above, if the individual is paying for the survey, then the lender cannot say that. A similar thing happened to me when I bought my new home in 2001. After I told the Title Company that I would have my colleague do the survey, they said that they already had a survey (it was done for a contract on the house that fell through before I bought it) and would be using that one. I told them that if I was paying for the survey at closing, it would be my choice who to use. They told me that they'd get back to me. They eventually told me that they would use the existing survey but not charge me anything for it at closing, which is exactly what happened.
