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Listing brokers not liable for failure to disclose property defects when defects were obvious to the buyer
A buyer unsuccessfully sued a listing broker and a seller for failing to disclose defects that were patently obvious, and that were disclosed in a home inspection report issued to the buyer. A buyer bought a house listed by the defendant real estate broker. The property had obvious water damage and standing water in the crawl space, all of which were known to the buyer. The property also had obvious drainage problems caused by a hill in the backyard. The buyer was further informed that despite efforts by the seller to correct the drainage problems, water continued to infiltrate the crawl space.
After closing, the plaintiff learned that the water problems were caused by an underground spring. The plaintiff sued the real estate broker alleging that the broker knew about the underground spring and failed to disclose it.
The appellate court reversed the trial court's refusal to grant summary judgment for the broker. The appellate court held that even if the broker knew of the underground spring, the buyer could not justifiably rely upon the broker's withheld information in the face of the overwhelming evidence that the house experienced water infiltration problems. The appellate court was particularly persuaded by the fact that the buyer's own home inspector had recommended that the buyer consult with a drainage expert to determine the extent of the water infiltration problems. The buyer did not follow this advice. According to the court, the plaintiff failed, in light of information available to him, to exercise his own due diligence. Having failed to do so, he cannot thereafter complain that he was deceived by others.
This case once again highlights the value of a competent home inspection as a means of minimizing a broker's liability for undisclosed defects. 469 S.E.2d 242 (Ga.App. 1996).
Please note that the comments and opinions contained herein are not to be construed to be legal advice by the author, Victor O. Schinnerer & Company, Inc., or the CNA/Schinnerer errors and omissions insurance program.
This information is made available to you for your risk management program. No action should be based on this information without appropriate advice from legal counsel and a review of currently applicable statutory and case law.
This article from the Risk Management Reporter, March 1997, was written by Robert D. Butters of the law firm of Arnstein & Lehr, which concentrates in the representation and defense of real estate brokers and agents.
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