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Price negotiations and a fine line

Q: " I am a Right of Way agent and my client has provided me with their internal "Guidelines" for price negotiations. This is a topic that comes up in discussions all the time...when does "negotiation" cross the line and become "fraud"? Can you provide me with some guidance? "

A: This is a thin line to walk but there is some case law that gives us an idea of how Judges might interpret some of what is typically said by a Right of Way agent during negotiations. If you were to say that your client’s offer is “non-negotiable” or that this is the “best” or “highest” offer you have been authorized to make, most courts would interpret such statements as bargaining posture. The landowner could test the limits of your negotiating ploys by making a counteroffer. If the owner chooses not to test your words, and agrees to accept the offer, that does not mean your offers rose to the level of being fraudulently made.

On the other hand, there was a situation where a Right of Way agent stated that his client had “never” paid more than a certain price for other property acquired in connection with a certain project. Those statements were blatantly false, and the Right of Way agent knew this. The court found that these statements of fact could be found to be fraudulent and the Judge indicated it was a question for a jury to decide after evaluating all of the evidence.

This is a question many professionals have to confront...when does mere “puffing” cross the line and become a misrepresentation. You want to make the best deal for the client, but the bottom line is that you have to engage in ethical conduct and always negotiate in good faith. You also need to make sure that you carefully record every discussion with the land owner in your negotiation log, or diary. Even if the owner disputes what you say occurred, your well documented records will support your credibility if it is called into question.

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LIA began providing professional liability insurance in 1978.

Since then, we have grown into one of the largest broker/administrators in the country specializing in meeting the insurance needs of multi-disciplined real estate professionals such as asset managers, acquisition agents, engineers, project managers, relocation assistance agents, title experts and others involved in Right of Way work.

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