Disclosure: What Not to Say When Asked "What's That Musky Smell?"
When asked by the buyer "What is that musky smell?", the dual agent told the buyer that it was "sea air" and could be fixed by "changing things like sheet rock." Fong v. Sheridan, No. A144286 (Cal. Ct. App. April 21, 2016), an unpublished appellate decision which cannot be cited as binding legal precedent, reinforces the admonition that agents should not speculate when making statements regarding the condition of the property - just the facts please.
Relying on the agent's statement, the buyer closed on this Tiburon, California property, but kept smelling something odd in one of the bedrooms. Continuing to investigate, the buyer found a buried septic tank and a buried oil tank. Compounding the problem, there was an inadvertent spill when removing the oil tank. The buyer moved from the property due to the chemical smell and eventually the house was torn down.
After settling with the agent and broker for $275,000, the buyer sued the seller for vicarious liability for the statement that the smell was "sea air." While the trial court found that the agent was liable for negligent misrepresentation, the agent was not liable for intentional fraud, which limited the seller's liability for damages to the buyer's out of pocket expenses of $91,635. Because the $275,000 settlement the buyer received from the agent and broker exceeded the seller's liability, the trial court awarded $456,000 in attorney's fees to the seller as the prevailing party.
The buyer appealed the measure of damages and the attorney's fees award with the Appellate Court partially affirming, partially vacating, and then sending the case back to the trial court for further proceedings. Even though the appellate case is largely about procedural matters, the correct measure of damages, and attorney's fees, and cannot be cited as legal precedent, the bottom line for licensees is clear: As the FormsTutor® instructions for the AVID (Agent's Visual Inspection Disclosure) make clear, provide factual information, do not use adjectives, and do not speculate about the cause. Again - Just the Facts.
- Sunil Sethi
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