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

A real estate agent was accused of breach of fiduciary duty and damages in connection with the sale and purchase of a home. In this case, the agent represented both the buyer and the seller, which elevated their fiduciary duty.

In addition to being a dual agent on this transaction, the real estate agent had also handled a previous sale of the property. The buyer  alleged that the agent had prior knowledge of a foundation issue and had failed to obtain proper professionals to further investigate an  initial inspection report.

The agent and seller both contended that the sales price was below market value, reflecting the items flagged in the home investigation, but  this was not  documented. While the claim settled for $175,000, the majority was paid by the sellers. Berkley Service Professionals  negotiated a settlement for our policyholder for $50,000. Defense costs came to nearly $10,000 and the policyholder contributed $15,000 to the settlement and legal expenses through their deductible. In addition, the buyer agreed to withdraw their complaint filed with the department of real estate.

Lessons Learned: Inspections and related repairs are a frequent source of claims. In this matter, the real estate agent should have documented their discussions with the buyer regarding the home inspection results and obtained a signed agreement that the buyer  understood the defects and that the price of the home had been reduced accordingly. In general, agents should keep detailed notes of key discussions, recommendations provided, decisions made, and follow-up required. This advice is particularly important when an agent is representing both buyer and seller. Having good documentation is key in claim defense.