One, Two, Three – A Checklist to Avoid Lawsuits for You and Me

When you secure a new listing in today’s real estate market, there is significant pressure to get the home listed ASAP with eye-grabbing MLS verbiage to entice buyers to bid the best and highest offers in a short period. Unfortunately, in haste, sometimes certain due diligence information is missed, or an inadvertent property condition misstatement is made that might warrant a closing dispute, delays, or threats of litigation from the buyer against you, your broker, or your seller. Consequently, I offer below a “checklist” of common closing pitfalls. This list will help you and your seller avoids capitulating to a lower sales price demand (and lower commission), terminating the agreement with the hope of a quick relist to secure a similar offer, or threatening litigation to close.

The Drafting of the Seller’s Stellar MLS Listing (“MLS”)

 The MLS has disclaimers as well as FAR/BAR purchase and sale contracts that protect agents and sellers; however, these disclaimers will not keep an aggrieved buyer from trying to make an E&O insurance claim or filing a lawsuit. Therefore, I recommended the below “BPE Double MLS Listing Checklist.”

  1. Double-check the listed square footage of the property. Many Florida builders use model home plans, and sellers rely on a model plan handout for square footage. These handouts may not reflect the property’s actual square footage because of different setback requirements, irregular lots, or custom change orders. Double-check the property’s survey or the property appraiser’s website to be safe.
  2. Verify beach access easements or access agreements. If “beach access” is advertised and the subsequent purchaser determines no access exists, the buyer has been damaged and will likely file a lawsuit against all the parties to determine who is liable for damages.
  3. Research the zoning requirements. Don’t advertise that the property is suitable for a particular purpose unless you are sure.
  4. Verify upgrades and permits. Look to see if the dates of upgrades are accurate AND if a proper permit was pulled/closed. For example, you cannot put a new roof on without a permit, and if you advertised a “new roof in 2018,” you might expose yourself and your seller to litigation if 1) the roof job was just a repair or 2) the roof was not properly permitted/closed. A simple online check on the local permitting office can easily avoid this mistake.
  5. Check if the property has a septic system or is attached to a sewer. If a buyer mistakenly believes the property is sewer and later discovers the septic system and drain field need to be replaced, it will be a costly mistake.
  6. Be careful about how you advertise “maintenance-free” communities. It is best practice to verify what those “maintenance-free” benefits include.   

What to do with Contractual Property Condition Disclosures

These two actions are critical when filling out the disclosure forms:

  1. Ensure the proper association disclosure form is completed and given to the buyer. The distinction between Fla. Stat. Chaps. 718 (condominium) and 720 (homeowner) is paramount. The disclosures cannot substitute for one another. If a seller fills out the wrong form, the buyer could unilaterally cancel the contract and be entitled to the return of the earnest money deposit.
  2. Disclose all property conditions that are both known or should have been known by the listing agent. If the seller is your long-term client and you were once a buyer’s agent in the purchase transaction for the property to be sold, dig out that prior seller’s disclosure to remind your seller of issues previously disclosed in the purchase. Disclosure transparency protects not only the seller but you, the listing agent/broker, from any potential lawsuit and Florida Real Estate Commission claims!

This list is not exhaustive, and you should be mindful new issues arise each and every day in our complicated real estate world. If you have any questions, I strongly suggest you contact your local real estate attorney to assist you and your seller dodge, duck, dip, dive and dodge unwanted surprises and potential lawsuits. So till next time, Berlin Patten Ebling is saying to take care of your initial listing checklist, and it will take care of your sale.

Sincerely,
Michael E. Schuchat, Esq.  mschuchat@berlinpatten.com

Michael E. Schuchat has been practicing in civil litigation, creditor bankruptcy, real estate, and personal injury since 2010. He has a wide range of civil litigation experience, including contract disputes, real property disputes, landlord-tenant litigation, residential and commercial foreclosure, plaintiff personal injury cases, premises liability, slip & fall, dog bite, and motor vehicle accident litigation.

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