Seen and Unseen


A home buyer alleged that a real estate agent failed to disclose issues with the garage drainage, lack of foundation and unpermitted construction on a residential property they purchased. Most of the alleged deficiencies were identified in a pre-closing inspection report and the purchase price was negotiated accordingly. However, other alleged deficiencies were concealed and unforeseen.

The real estate agent only had an obligation to disclose known facts and those evident by visual inspection. The buyer allegations included  potential fraud because of the failure to disclose and breach of fiduciary duty. In the sale, the real estate agent represented both buyer and seller, which enhanced their fiduciary duty.

The buyer sought more than $200,000 in damages. In order to avoid the cost of further litigation, the matter settled in mediation without  admission of fault by the real estate agency. The home purchaser received a total settlement of $57,000. Berkley Service Professionals paid  25,000, the policyholder/real estate agency paid $15,000 of the settlement through their deductible and an individual agent contributed $17,000. In addition, Berkley Service Professionals paid $20,000 in defense costs.

Lessons learned: There is an enhanced duty with dual representation by agents. Make sure the dual nature is disclosed and acknowledged by all parties. Keep detailed notes of all conversations and disclosures

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