Time For A Quiz

by James L. Goldsmith
November 2023

Every now and again I like to see who’s reading these missives. Answer this quiz and if you are correct it is because: a) you read the article where I addressed this…what I’m hoping for, b) you’re smart…also good, or c) you looked on the paper of the quiz-taker beside you. No, this is not the quiz, you’ve got to keep reading as this is just the teaser.

So here’s the quiz. While enjoying a buttery, oak-aged chardonnay and taking in the lovely sunset (since the loss of daylights savings time you must be starting early) your evening is interrupted by a call from a client. The client, Barbara Beyer, had purchased a home nearly a year ago. Barbara had been a picky buyer and you accompanied her to over 20 properties before she wrote her offer on this one. To be kind, let’s just say that you were relieved to have concluded the relationship!

Because it was a resale property that Barbara had purchased, it came with a seller disclosure. Barbara was also permitted to have a home inspection, which she did via one of the inspectors your recommended. The disclosure made no reference to any plumbing problem though Barbara later found credible evidence that the seller had been aware of a serious one. Likewise, the inspector noted no problem though Barbara insists it was there to be seen.

The problem was manifest by a substantial leak from an exposed pipe in the basement. Barbara found it when she went to do laundry, by which time there was an inch of water over the floor. The plumber Barbara called arrived quickly and was able to put a temporary band aid on the pipe but declared that a permanent fix would be invasive and expensive as it involved some excavation. Along with the bad news, the plumber also surprised Barbara when he told her that he had been to the property not too long before her purchase. The problem then was similar, as was his advice to then owner. He also showed Barbara some of the tell-tale signs that a “good inspector should have seen” that would have contradicted the disclosure where seller denied knowledge of any plumbing problems. The plumber had not been hired by the seller to do more than a triage and figured that the seller had some other plumber do the work.

A furious Barbara wants your help. What to do? I’m sorry, but as you can see, this is not a multiple choice quiz.

Most of you will think that you shouldn’t have answered the phone after pouring the wine. But you will also think that your first task is to call the listing agent to relate what you have learned. I don’t fully understand what a buyer agent expects from the listing agent other than to have the seller alerted to the problem. Reality we know…….no way is the seller going to pony-up the estimated cost of repair based on a call. But, you’re right; you’ve got to give the listing agent the news so it can be passed to the seller.

What else do you do as Barbara’s agent? Is there any advice you should give her? The agreement Barbara and the seller signed requires the mediation of a dispute. Should you mention this to Barbara? Do you tell her how to initiate the process by contacting the local association? Do you offer to attend and help her at mediation? How about having her get a written estimate of repair and while she’s asking for that, have Barbara get a statement from the plumber as to his history with the seller. And when Barbara gets these things, are you the one to forward them to the seller’s side?

Some of you may question your role here. I know because I got these questions from buyer agents facing similar situations when I took calls on the Hotline. So let me give you the answer that I gave on the Hotline and in an earlier article you may have read.

My answer comes with some preliminary questions. How much are you being paid to put down your wine glass and solve Barbara’s problem? Nada, zip.  Yes, you were paid but that was for doing your job as Barbara’s agent in her quest for a home and for the ancillary tasks involved. You are not getting paid, nor were you paid, to handle Barbara’s post settlement problems, claims, disputes and legal matters. That is not to say you are not permitted to sympathize or even offer suggestions about mediation and the other things I mentioned above. But you must (and here’s the answer to the quiz folks) emphasize your limitations in this arena of post-settlement issues and must advise the client to consult legal counsel….a lawyer.

Here’s just one example of how your failure to do the above (read the last sentence again, please) can make Barbara’s problem your problem. You give Barbara all of the advice I mentioned above, except for the part about getting a lawyer. You forward the repair estimate (or bill, should Barbara have had the repairs performed) and the plumber’s statement that he had been to the property for the same issue when seller owned it. You go back and forth with the listing agent who tells you her seller may be willing to offer something. Maybe you help Barbara with the mediation process and maybe you’ve contacted the inspector to bring him in to the mediation since he missed the problem.

But when all your seemingly good advice does not resolve Barbara’s issue, and assuming the repair cost is significant enough, Barbara will go to a lawyer. And from her lawyer Barbara learns that her case, good or bad, against the inspector is a no go: “An action to recover damages arising from a home inspection report must be commenced within one year after the date the report is delivered.” (Section 7512 Pa. Home Inspection Law) Had you, buyer agent, sent Barbara to an attorney when you first took her call, the case against the inspector could have been preserved. The year had not yet passed when Barbara first complained to you. You are now working for free, are the subject of a suit claiming you lost Barbara’s opportunity to make the claim against her inspector who is insured against such claims, and therefore the demand for payment is made to you!!!

Fortunately there is still the case against the seller and that too may be complicated by credible defenses (not suggested in this scenario) or by recent events that could have been avoided had you initially advised Barbara to see her attorney.

The answer to the quiz makes perfect sense. You are expert in marketing real estate. You know values and markets. As a lawyer I’d never dare advise a client as to what to demand or pay for real estate. You are paid for what you do and not paid for what you don’t, so don’t do it. Ok, that’s confusing so go with this: don’t do for free something you are not expert in, no matter how obvious to you the path may be (or….a smart person knows what he/she doesn’t know). Its far easier to say “I like you, I value your trust, but as much as I want to help you, you must consult your attorney; I’d feel terrible if I failed to advise on matters for which a law license is required…    this is my best advice to you. I’ll be available to help your attorney by providing information and will cooperate in all ways.”

Did you all pass the quiz?

Mr. Goldsmith is an attorney with Mette, Evans & Woodside and serves as outside legal counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends Realtors® in disciplinary hearings conducted by the Real Estate Commission. Jim was one of the voices of the PAR Legal Hotline for the first 27 years following its inception in 1992.

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