Note on Gate: Beware

Real Estate Brokers
Duty to Warn of Risks

A recent state Court of Appeal case has clarified a listing broker’s responsibility. In the case of Hall v. Aurora Loan Services, LLC, 2013 DJDAR 5460 (April 16, 2013), the court ruled that a jury can potentially hold the broker liable for negligence where the broker did not warn all persons about conditions in a listing property. In this situation there was a home inspection report which mentioned an attic ladder as being potentially dangerous. Home inspection reports typically list one hundred suggested repairs. The report did not spell out how or why, but image a fold down wooden ladder that opens from the ceiling and allows access to a finished attic. The ladder appeared sturdier than a tree fort ladder but proved to be unstable.

This particular case was filed by Real Estate agent Hall who when showing the property to potential buyers opened the ladder drop down. She proceeded to climb the stairs and a hinge gave way. The snapped hinge caused her to fall and break her leg. Hall sued the listing broker, the lender (as the property was a foreclosure where the owner of record was a bank), and just about everyone involved. She has prevailed on appeal.

In the past, when a property is an REO (real estate owned foreclosure) there were contracts that spelled out in legalese that the seller (often a bank or servicing agent) is in no way responsible for the condition of the property. Since the mortgage bank never resided in the home, they have little knowledge of the condition or maintenance of subject. Buyer beware, is the flag they once flew. This case however seems to overturn the responsibility to listing broker and sellers that a waiver of rights is not enforceable. A listing broker will be held to a higher standard of knowledge and due diligence to advise anyone who not only buys the property, but anyone who walks past the curb.

For example, a broker will have to post a list of possible health and safety hazards to open a property for broker preview or for other agents to access through lock box. Will posting on your entry door: Enter at your own peril be enough to advise the visitors? Probably not, as someone who is blind will claim the disclosure was not properly read to them. Anyone can sue over anything.

No language in the listing agreement will relieve the broker of responsibility on health and safety. Will every realtor who borrows the “feed” – uses the photographs and listing information also be held responsible? I think yes. The far reaching concept of this case is to spread any potential liability across all real estate agents and Realtors.

The buyer's agents may also have responsibility for incidents where parties are hurt or killed while viewing property listed for sale. I can see my beautiful friend Hillary Caston in her Lexus folding down the visor of the passenger seat.

“You want me to check my lipstick in the mirror?” Her buyer in front seat asks.

“No I need you to sign this agreement that if you trip and fall in this house you won’t sue.”

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