Avoiding Realtor Liability in Property Inspections

The inspection period under a purchase contract is one of the most important parts of a property purchase, and as such, is often one of the most stressful periods in any real estate transaction. Mismanaging the inspection process can be disastrous to a transaction, which can result in disputes and, ultimately, litigation between the parties and the realtors. Sometimes, zealousness to close a deal causes parties and their realtors to unwittingly expose themselves to tremendous liability. For instance, that minor roof leak from two years ago was completely fixed, has never leaked since, and there is no need to jeopardize the sale and alarm the buyers with such a seemingly minor detail. However, if the new owners find mold in the walls three years later, the sellers and their realtor can find themselves in the middle of a nasty and expensive lawsuit.

Failing to disclose a material defect is one of the most common and expensive mistakes sellers make in real estate transactions. Realtors can expose themselves to liability if they are aware of a defect and hand the buyer a seller’s disclosure which fails to disclose that defect. When in doubt, disclose! It is much easier to locate a new buyer than spend years defending a lawsuit.

Another common pitfall we encounter: deadlines. It is critical to properly calendar and meet all inspection deadlines, and triple check the dates to make sure you calculated them properly. If the buyer elects to pay for a formal inspection, make sure that the inspector is fully licensed and bonded. Recommending a particular inspector can cause problems in the future if a dispute arises over an inspection report or the buyer questions the qualifications of the inspector. Therefore, if you make recommendations, it is a good idea to provide several names and let the buyer choose.

Also, it is advised not to opine on an inspection report. Any questions regarding specific details of an inspection report should be directed back to the inspector or to an alternate inspector for an additional opinion. If your opinion ends up being incorrect, it could cause serious problems for you in the future. The moral of the story is to never neglect or underestimate the importance of disclosures and inspection periods. Mistakes in this particular area of a transaction can come back to haunt you many years later. As always, our real estate attorneys are happy to assist you with any questions you may have regarding your responsibilities in the inspection process.

Sincerely,
Berlin-Patten, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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