Source: https://www.berkleysp.com/

A buyer purchased residential property and alleged that their real estate agent failed to adequately advise them regarding recommended  inspections and/or protect him with modifications to the purchase agreement when defects were discovered prior to closing.

Inspections before closing revealed drainage and HVAC issues and the seller was requested to address them. The transaction proceeded to closing and the buyer discovered afterward that the seller had not addressed or had not adequately addressed the issues that needed to be  fixed. The buyer alleged that their real estate agent failed to modify the purchase contract to reflect the seller’s obligations prior to closing to ensure that the required repairs had been undertaken.

The buyer’s real estate agent, however, maintains that the buyer was told to have the property re-inspected before closing to ensure the repairs were done. The agent assumed the buyer would do so and because of this did not modify the purchase agreement. Unfortunately, this was not documented in writing and the buyer denies they ever received this instruction.

As a result, the buyer paid more than $75,000 to undertake the repairs and then sought reimbursement from their real estate agent, as well  as the seller and the seller’s real estate agent. Since the defense had to rely on a jury believing the real estate agent over the buyer because  communications weren’t documented in writing, Berkley Service Professionals negotiated a settlement for our policyholder for $45,000. Defense costs of $50,000 were incurred before settlement was achieved.

Lessons learned: Detailed documentation is necessary for disclosures and interactions among all parties to have a verifiable record of these communications.