Various Issues Surrounding Sale of Estate Land

Here, a son was appointed executor of his father’s estate and was also the sole heir. He contacted a real estate agent regarding the sale of 40-acre tracts of land the estate owned. In order to avoid capital gains taxes, the son wanted to sell the land for $2000/acre (the value listed in the estate’s inventory). The agent facilitated the sale of four tracts to the defendants. In 2005, an attorney discovered some oddities in the executor’s financial records, including checks payable to individuals, totaling more than $200,000. This seemed out of the ordinary and the attorney began doubting the executor’s mental capacity, worrying that people were taking advantage of the executor. The attorney sought to have his office manager appointed as conservator for the executor. The court granted his petition in 2005. In 2006, the conservator filed suit against the buyers of the four parcels, their realty company, and the attorney for his father’s estate. The suit alleged fraud and conspiracy to divest the executor of his assets through the real estate purchases. 

The buyers of the land all responded, attempting to ascertain the factual basis for the claims. One buyer even offered to sell his tract back to the executor for the purchase price. The executor refused the offer and refused to offer an explanation for why he was suing the buyers. The trial court finally granted the buyers’ motion for summary judgment, as the executor offered no evidence of conspiracy or fraud against the buyers. The trial court did sanction the executor’s attorney for bringing so many parties into the suit (pinning him with a $1000 fine), but did say that they believed he was zealously representing his client. On appeal, the Iowa Court of Appeals cited the Iowa Rules of Civil Procedure which require an attorney to act with a proper purpose. Attorneys are not to cause harassment, unnecessary delay, or needless increase in the cost of litigating a claim. The purpose of imposing monetary sanctions is to deter attorneys from filing frivolous lawsuits. Here, the attorney did exhibit good faith and lacked the requisite vindictiveness to call for a larger sanction. Here, “making things right for his client” may have clouded his judgment as an attorney. 

Next, the buyers and seller moved for sanctions against the realty company and the agent, arguing that they breached a fiduciary duty to the parties and committed professional negligence. The jury found that the realty company and agent did not breach any fiduciary duty to the parties, but were negligent in sales to two of the buyers. The jury went so far as to award one of the buyers $15,400 in damages. On appeal, the realty company and agent argued that they did not breach any duty to the sellers. In Iowa, a real estate agent’s duty is to advise the client to seek legal advice when the interest of any party to the transaction requires it. The appellate court affirmed the trial court, holding that the realty company did commit professional negligence with respect to the sale of the parcels and knew that the executor may have been taken advantage of and should have been referred to an attorney. Rowedder v. Anderson, et al., No. 1-417/10-1172 (Iowa Ct. App. Aug. 10, 2011)