I have been saying it for nearly 40 years and it remains true: most law suits involving the sale of residential real property claim that the seller failed to disclose material defects. The seller is usually not the only defendant. The listing and selling licensees and the home inspector are frequently sued as well. The path to suit follows a familiar pattern. The buyer finds a problem and calls the buyer agent. The buyer wants to know what the sellers knew and why they failed to disclose what “evidently” they were aware of. The buyer may ask questions about the listing broker’s culpability and whether the home inspector should also share in the blame.
The wise buyer agent understands that she has no role to play at this point. In addition to offering what comfort she may, the buyer agent should be sending the buyer to an attorney experienced in litigating failure to disclose cases. The attorney will cover the mediation process as well as the cost and benefit analysis of the various paths that lay ahead.
Too often the buyer agent feels compelled to insert herself into the situation. This generally comes from a good place. The agent was involved in helping the buyer select the home, inspectors, lenders and perhaps in many other ways. The agent really does want to make it right. All the more reason to back out and put the matter into the hands of the lawyers who are expert in the process of securing a remedy. Tell your client that you are an expert in marketing real estate, but that seeking redress belongs to a different discipline.
Those who offer advice to their ailing client can exacerbate the harm. The likely beginning of the agent’s advice is to reference the mediation clause and explain how easily the mediation process is initiated. The big problem, however, is what the agent fails to state: any claim against a home inspector must be filed in court within one year of delivery of the inspection report. The one-year limitation is not extended by late discovery of the problem that the inspector allegedly missed. It is one year from receipt of the report, period.
All too often a request for mediation or lawsuit has been initiated after the one-year limitation has run. I have had buyers claim that they were unaware of this limitation and that they were following the guidance given by their real estate agent. When this happens the agent may be liable for the unauthorized practice of law or for negligence in failing to advise the buyer to see a lawyer in the first instance.
The lesson here is fairly obvious.