Yesterday the Boston Globe reported on a controversial lawsuit by a Alyssa Burrage, a condominium buyer, against a realtor over the disclosure of second hand smoke emitting from downstairs neighbors. Click for the story: Suit Over Second Hand Smoke Targets Real Estate Broker. As the hundreds of comments to the story indicates, this lawsuit raises a host of legal and public policy issues. I’ll focus on the legal issues.
Under Massachusetts consumer protection regulations governing real estate brokers, a broker must disclose to a buyer “any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.” This is somewhat of a subjective standard; what may matter to one buyer may not matter to another. If a broker is asked a direct question about the property, she must answer truthfully, accurately, and completely to the best of her knowledge. Further, a broker cannot actively avoid discovering the details of a suspected problem or tell half-truths.
With that legal backdrop, let’s review the facts of this case. Ms. Burrage, who suffers from asthma, claimed that her broker failed to disclose the existence of the heavy smokers downstairs—despite the fact that she admittedly smelled “the unmistakable stench” of cigarette smoke at several visits to the unit. The broker – who worked for the same company as the listing broker (which may raise some thorny conflict of interest/agency issues) – assured her that the smell would dissipate once she painted and renovated the unit, the suit claims. Ms. Burrage claims that she wouldn’t have purchased the unit in the first place if she had known about the smoke problem.
The case boils down to the appropriate scope of a broker’s duty to disclose potentially adverse property conditions, not only within the property itself, but off-site. The Massachusetts Supreme Judicial Court has held that off-site physical conditions may require disclosure if the conditions are “unknown and not readily observable by the buyer [and] if the existence of those conditions is of sufficient materiality to affect the habitability, use, or enjoyment of the property and, therefore, render the property substantially less desirable or valuable to the objectively reasonable buyer.”
This case has all the makings of a very slippery — and dangerous — slope for real estate brokers. If Ms. Burrage’s claim is accepted, realtors would be conceivably obligated to investigate every neighbor to determine whether their smoking (or other bad habits) will negatively affect the particular buyer’s use or enjoyment of the property. That’s patently unrealistic. Where then does the law draw the line? If it’s not smoking, it’s smelly food preparation (don’t laugh, I’ve dealt with those cases), marijuana smoking, loud parties, floor stomping, or other “noxious” behaviors. Buyers of condominiums have to accept that they aren’t buying into a pristine, sanitary bubble.
I’m not unsympathetic to Ms. Burrage’s plight. I’m not a smoker, and I cannot stand the smell of cigarette smoke. But to me, this is really a neighbor-to-neighbor issue. The realtor should have no liability in this type of case.
A very interesting case indeed…