Listing or buyer agent: whose job is it?

A recently filed lawsuit raises the question of who, if anyone, must account for the appurtenances that are to be sold with the home. Appurtenances are those things that belong to or go with something else, like pool balls go with a pool table or a front door to a home. Central air is the subject of the suit that gives rise to this article.

The listing agent swears she got a "yes" from her elderly client when she asked whether the property was centrally cooled. Obviously the agent did not look closely enough for an outside condenser and fan, but these kind of mistakes happen.
The buyer was represented by the buyer's agent, and he too never noticed the MLS error that described the property as being cooled by central air conditioning. Either that, or he read it and thought it was accurate. Regardless, it did not take a 100-degree day to alert the buyer that oops, no a/c! So, who is at fault?

One repercussion is already evident. Suit has been filed. The buyer sued the listing agent and the listing agent has joined the buyer's agent (joinder is a process where a defendant in a lawsuit can bring in an additional defendant; the original defendant has the burden of proving a case against the additional defendant just like the plaintiff has the burden of proving a case against the original defendant).

To many, especially buyers, this seems like it would be an easy case. The MLS "promised" central air conditioning and it was not delivered. But it is hardly that simple. The MLS makes clear that the information is "not guaranteed." Further, the MLS is not a traditional advertisement. The MLS serves members as an index so that those working with buyers can find properties that generally meet their client's wish list.

Further, the agreement of sale says that only its contents control the agreement between the buyer and seller. This clause is found in the current version of the Standard Agreement of Sale ("ASR") at Paragraph 22, Representations. That is the paragraph that says:

All representations, claims, advertising, promotional activities, brochures or plans of any kind made by the seller, brokers, their licensees, employees, officers or partners are not part of this Agreement unless expressly incorporated or stated in this Agreement. This Agreement contains the whole agreement between the Seller and Buyer . . . (emphasis added).

With that clear language agreed to between buyer and seller, it is going to be very difficult to argue that what is in the MLS is part of the agreement of sale and the MLS description of central air means that the sellers has breached his agreement. This is not only the argument that the seller will use, it is also the argument that the listing agent will advance in her defense and what the buyer agent will advance in his defense. The buyer agent is going to have more trouble as you will see.

Four parties made a mistake: seller, buyer, listing agent and buyer agent, yet all are not equally culpable. While the seller thought she was selling a property with central air, or at least said she was, she never promised or agreed that it was included. Her agreement of sale is silent as to air conditioning. She described the property that she was selling and that includes all the appurtenances, but central air was not one because it was not there or mentioned. Had the agreement stated something to the effect that "central air is included" then the seller would be in breach of an agreement of sale and bear responsibility.

The listing agent, likewise, is able to escape liability. The Real Estate Licensing and Registration Act ("RELRA") specifically provides that a licensee does not have an obligation to undertake an inspection of the property nor need she verify the accuracy of her client's representations. As long as the listing agent reasonably believed her seller was telling the truth, she was not in error (or at least legally so) in describing the property as having central air. Further, since she represents the seller and not the buyer, she has no duty to assure that the buyer's wish list is being satisfied.

The buyer and buyer agent have problems. The buyer does have a duty to assess the property or at least determine that it includes what the buyer thinks she is getting. We all have responsibilities for ourselves and when we fall down on the job, we are said to be contributorily negligent. This buyer's contributory negligence could be a bar to her recovery. On the other hand, the buyer agent has a responsibility of coaching his buyer and helping the buyer understand the need for assessing the property to assure that it meets with the buyer's expectations. It is this failure on this buyer agent's part that is likely to lead to his culpability.

Take a moment to reflect: while mistakes on all parts are abundant, it is the buyer agent and buyer who get stuck holding the bag. It bears repeating that errors in the MLS do not generally lead to seller or listing agent culpability. They should be accurate; we expect them to be accurate, but do we have the legal right to demand accuracy? There is no doubt that if the same information is found in the agreement of sale, which is indeed a promise that is enforceable, then the listing agent and seller would have a greater problem.

Do buyer agents have to, then, verify all information found in the MLS? Do we have to verify that the taxes are described accurately, that the property has every feature promised, that the square footage of the lot is accurate? That depends! If our buyers are not properly admonished as to the fact that the MLS is not part of the Agreement, not a reliable promise and that it may contain inaccuracies, then maybe the listing agent has to verify all information. On the other hand, the buyer agent is better off telling the buyer of the information in the MLS and while we hope that it is accurate, and while it was intended to be accurate, it is not a promise one can rely on. With that in mind, a buyer can decide to gamble or can agree with the buyer agent how the information is going to be verified. The buyer and buyer agent also have the choice of including provisions in the Agreement of Sale that echo those found in the MLS. This may be a good choice, especially for those MLS "promises" that are difficult to verify.

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2012
All Rights Reserved