In a courtroom scene likely to be repeated numerous times, a Southern California Realtor is being sued because neighborhood prices have fallen. Did he neglect his duty to disclose to his clients or is this just a case of bad timing with the Buyers hoping to find a scapegoat.
In the case of a Carlsbad Realtor, a couple bought a home in 2005 for $1.2 million.Their subsequent claim is that other homes in that same neighborhood were selling for $100,000 to $175,000 less and that their agent didn't disclose that to them at the time. They claim he didn't give them the appropriate information, was only in it to protect his $30,000 commissionand, even though the apraisal came in at $1.2 million, they were not told about homes that had sold for less. They only found out later when they received flyers on other homes for sale in their neighborhood for less and started researching recent sales.
On the flip side, these buyers had looked at 60 homes in the area, many of those with the agent they used in this transaction. If you had looked at 60 homes in an area, wouldn't you think you would have a pretty good idea of relative value? Especially if you're looking at plunking down $1.2 million of your hard earned cash. Wouldn't you want to see what else is for sale in the neighborhood while you were at it to see if the place you liked was the best value? I mean, if you've looked at 60 homes already, what's another 3 or 4 or 7?
Hell, I've got buyers of $200,000 homes researching every nuance of the deal on Redfin and Trulia and Zillow. They're holding my feet to the fire over nickels and dimes, questioning every aspect of the neighborhood, schools, tax rates, last sale of the house, recent sales in the area and putting a plus or minus on every feature of the home compared to every other home they've ever seen.
I realize the old days of Buyer Beware are long gone and good riddance to them. But don't the Buyers have some responsibility to the transaction? Especially in California, where we don't have attorneys involved in the real estate transaction or the big sit-down at close of escrow, we have more legal duties and disclosures than you can shake a stick at, including a Buyers Inspection Advisory. This document specifically notes that Buyers have the 'affirmative duty to exercise reasonable care to protect yourself...including the investigation of information of facts that are within your attention or observation.' Paragraph 16 advises the Buyer to investigate 'the neighborhood, area, subdivision conditions and personal factors for all issues that may be of significance to the Buyer but that may not be known to either the Listing or Selling Agent.'
Well, we'll be following this one closely. The Realtor has one of the top RE attorneys in the area representing him and we can only hope for the best. If the plaintiff prevails, look for a wave of Buyers remorse lawsuits to follow as buyers reluctant to take responsibility for their own actions look for somebody to pin the blame on. In this market, nearly everybody who bought in the past 3 years can claim the agent should have known the market was headed down and shouldn't have let them buy when they did.
Hold on to your seats, Ladies & Gentlemen, This bumpy ride ain't over yet.
Source: http://www.nctimes.com/articles/2008/04/03/news/sandiego/c6251ca54333f28b8825741f006b375f.txt
Updated Through CARLegal 4-11-08
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|  REALTOR® WINS HIGH PROFILE JURY TRIAL
After only two hours of deliberation yesterday, the jury unanimously vindicated a buyer's agent accused by his clients of failing to disclose that two other homes in the neighborhood sold for less than what they paid. As a trial court case, this decision in Ummel v. Little is binding on the parties to the case, but has no binding authority for other cases. Moreover, the buyers may file an appeal.
This case involved a couple who bought a home in a coastal Carlsbad community in 2005 for $1.2 million. They regretted their purchase when they discovered that two other homes sold for about $150,000 less than theirs. They sued their real estate agent for negligent misrepresentation and breach of fiduciary duty. Their lawsuit grabbed national attention, given the recent downturn in the real estate market.
At the trial, the agent's attorney argued that there were valid reasons these two other properties sold for less. One home, for example, had a lap pool which was unappealing to many buyers, and the sellers wanted to rent back the home for two years.
The agent's attorney is David Bright of White and Bright LLP in Escondido, California. Mr. Bright is a member of C.A.R.'s Strategic Defense Attorney Referral Panel. C.A.R.'s Strategic Defense Program is a collective effort by C.A.R. and panel participants to assist in the defense of claims against REALTORS®. For more information about C.A.R.'s Strategic Defense Program, go to http://www.car.org/index.php?id=MzUzMTg.
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Gene Wunderlich - Selling Southwest California Homes including Murrieta, Temecula and the Southern California Wine Country.
