The Limited Practice Officer Rules of Professional Conduct provide that “an LPO shall not knowingly fail to disclose all material facts to clients or any parties to the transaction or make false statements of material facts to clients or any such party.” However, we have uncovered several claims in which an LPO or closing agent has withheld important information from buyers, sellers or lenders and, in some cases, misled clients or parties to a transaction by falsifying information on a HUD-1 settlement statement. This is almost always done intentionally to benefit one party to a transaction to the detriment of others, although the Limited Practice Rule requires that an LPO cannot act as the advocate or representative of any party.

These claims have often been disastrous for the LPOs and closing agents involved. In addition to a judgment for damages that may be assessed by a court, disciplinary proceedings may be commenced by the Limited Practice Board or the Department of Financial Institutions and criminal charges may be filed as well, resulting in fines, restitution and prison.

Sadly, the LPOs and closing agents in these questionable transactions have never been innocent victims of circumstances beyond their control. They knew what they were doing was illegal, unethical or just plain wrong.

Remember - If you can’t disclose it, don’t close it. If you know it’s wrong, DON’T DO IT!

Original Program Date: February 15, 2023
Product Code: 23864-3VIDEO