Transferred Responsiblity Lands Real Estate Agent in Court
Sometimes the past is one of the best learning tools around! Use the following Real-Life Errors & Omissions Claim Situation involving transfer of responsibility and lack of documentation to avoid a similar legal showdown happening to you in your everyday real estate career. And be sure to have a good Real Estate E&O Insurance policy in place to protect you in case you find yourself in the middle of a court battle over giving incorrect property information.
A Real Estate agent listed a high-end residential property for sale. The property was constructed prior to 1979, and because of its age, it was presumed to contain lead-based paint. The property eventually went under contract with the seller, who was an attorney, advising the agent that he would handle the negotiations directly with the buyers and would take care of the lead paint disclosure responsibilities.
Problem
The seller met with the buyers, who were also represented by the agent, and entered into the Purchase Agreement without the agent knowing its details until after execution. It was then brought to his attention that during the course of finalizing the Purchase Agreement, the seller never provided the buyers with the legally required lead paint disclosure.
Mistake
Unfortunately, the agent relied on the seller of the property to negotiate the terms of the contract and to produce the lead paint disclosure instead of handling the details himself. After the buyers signed the Purchase Agreement, they realized that they would have to incur thousands of dollars for lead abatement.
Result
The buyers, who were expecting their first child and wanted the home free of lead-based paint, attempted to terminate the contract, but ultimately purchased the property at a significantly reduced price. The seller, being a lawyer, knew that it was truly the agent’s responsibility to assure proper disclosure and then filed suit against him and the broker alleging that they violated both disclosure requirements and the state consumer protection statute. The state’s consumer protection statute called for an award of treble damages in the event the jury determined a violation existed.
The matter was resolved following a failed summary judgment motion (which would have dismissed the broker and agent from the litigation). The seller’s attorney argued that the agent misunderstood the instructions by the seller and that there was no evidentiary documentation from the agent on a transfer of responsibility.
Prevention
The agent would have avoided litigation if he had not allowed his client to assume his responsibilities during the course
of the transaction.
Do you have a similar story involving transfer of responsibility and documentation to share with us? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!
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