A real estate expert witness provides feedback on a case involving sellers of a home in Oklahoma who failed to disclose several events that occurred prior to the sale, including sewage backups in the basement, toxic mold, defects in the pool, toilet leaks, a termite and cockroach infestation, and burst pipes that caused thousands of dollars in damage. The buyers withdrew their bid and when they later rebid on the house, the sellers still failed to disclose the items discovered following the initial bid. The broker later reported that all of the defects were fixed. The buyers ultimately made a fourth offer to buy the house, at a higher price, more than $3 million. They also agreed with the sellers’ demand that there be no further inspections. A rain storm on the night of closing showed multiple water leaks. The buyers then found numerous defects over the course of the next few months, including damage they said was intentionally concealed, not repaired.
The buyers filed suit against the sellers who then filed a third-party action against their real estate broker. Additionally, the buyers filed suit against their insurer for failing to cover damages.
Question(s) For Expert Witness
1. What duties did the real estate broker have?
2. Were those duties breached? In what way?
Expert Witness Response
The real estate brokers had a duty to provide brokerage services honestly and fairly, with reasonable skill and care and to timely disclose in writing any material adverse facts that contradict any information included in the written inspection report on the property that a buyer does not know or cannot discover through reasonably vigilant observation. The listing agent should obtain from the sellers all prior real estate condition reports, inspection reports and related documents and ask the seller if repairs were made. Repair documentation must be obtained. Real estate condition reports must be filled out by the sellers, and the agent must instruct them to fill them out honestly, without concealing problems.
In varying degrees, each of the brokers did not meet the standard of care for real estate agents, breached their fiduciary duties to their principals and violated state statutes. The main agent had a copy of a report stating that the property was in a flood plain, but she did not make certain the property owners listed this on their real estate report. She also advised the sellers that if they repaired windows, they did not have to indicate the repair on the report, in violation of state statute. A sump pump failure flooded the basement and resulted in an insurance claim. The agent failed to discuss with the sellers whether this was a defect that should be listed. She failed to collect receipts for repairs to numerous defects. The agent filled out the real estate condition report for the sellers before listing the property.
About the author
Michael Morgenstern
Michael is Senior Vice President of Marketing at The Expert Institute. Michael oversees every aspect of The Expert Institute’s marketing strategy including SEO, PPC, marketing automation, email marketing, content development, analytics, and branding.
