BEST OF THE HOTLINE: Everything looks good

By James L. Goldsmith, Esquire

Those three words "everything looks good" have been costly to more than a few licensees. What brought this to mind most recently was my assignment to defend a buyer agent who had the misfortune of uttering these three words in a situation when it seemed most appropriate for him to do so.

This buyer's agent, met his clients after they had already toured the home that they later purchased and which is the subject of the lawsuit. On a summer evening the buyers were driving through a neighborhood in which they had interest. There they saw an eligible home with a for-sale sign and a man, apparently the seller, who was pulling trash cans to the street. The buyers stopped and engaged the owner in a brief conversation. The owner, saying he would probably get scolded by his listing agent, invited the would-be buyers into the home.

While in the basement, the seller pointed to a sump pump. He claimed that the sump pump handled all water infiltration and that no water ever entered the finished portion of the basement. He also acknowledged that the unfinished portion had as much as ¼ inch of water after extremely heavy storms.

The buyers eventually brought their agent into the picture. Negotiations ensued and a deal made. Prior to signing the agreement, the buyers were presented with a seller's property disclosure statement. Now, these buyers were not savvy or experienced purchasers. To them, the papers they examined were voluminous and almost nonsensical. Like so many buyers turned Plaintiffs, their testimony became that they completely relied on the explanations of their buyer's agent who never gave them the opportunity to fully read the documents.

One of the explanations offered by the buyer agent, and the one at the heart of the suit, was that "everything looks good" on the seller disclosure form. Because everything looked good, the buyers did not read the seller's disclosure statement! They claim that had they read the seller disclosure they would have seen the seller's representation that there was never any water infiltration in the basement. This, the buyers claim, would have immediately struck a discordant note inasmuch as the seller had told them that he did in fact get water in the unfinished portion of the basement and they would: a) not have purchased the home, or b) have had a more exhaustive examination of the basement, or c) questioned the neighbors who now all say that the seller had prior infiltration.

The buyers, of course, had substantial water in their home after the purchase and they sued! And who did they sue? In addition to the seller, they named the buyer agent claiming that the buyer agent told them "everything looked good" when in fact it did not!

I want you to imagine being in the position of that buyer agent who was not present when the buyers initially toured the property. He did not know that the seller told the buyers that he got water in the unfinished portion of the basement. Thus, when he looked at the seller disclosure that made mention of not a single defect, he naturally concluded that "everything looks good."

Yes, everything may look good to you. And if you say that everything looks good, chances are that you are right and will have no problem. But the fact of the matter is that you add nothing to the mix by making an interpretation that the buyers are capable of making on their own. "Everything looks good" is not a substitute for the buyers reading or thoroughly reviewing with your assistance, each and every form. Tedious? Absolutely! But when you cease to be thorough the opportunity to claim your shortcomings grows exponentially and even if your liability is limited to a $5,000 deductible . . . $5,000 is $5,000, win or lose!

P.S. The agent sued in case has a $10,000 deductible!

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2013

All Rights Reserved

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general 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. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.