Who is responsible?
Safe showings are always a REALTOR® concern

REALTOR® Smith is acting as an agent for Mr. and Mrs. Green. The Greens are interested in purchasing a “fixer-upper” property to own as a rental property. REALTOR® Smith takes the Greens to 123 Elm Street to show them a property listed with another REALTOR® firm.

The property is obviously in need of great repair. Mr. Green, while strolling around the inside of 123 Elm Street, suddenly falls through the first floor and lands in the basement, breaking his leg. Unbeknownst to REALTOR® Smith, the Greens make their living as professional ballroom dancers, and Mr. Green is unable to compete in a lucrative international competition which is scheduled the week after his fall. The Greens sue REALTOR® Smith, claiming he had a duty as their agent to inspect 123 Elm Street prior to their visit in order to assure their safety. Does REALTOR® Smith have liability to the Greens as their buyer’s agent for failing to make certain that the property at 123 Elm Street was safe for their viewing?

Fortunately, the answer to this question is a resounding “no.” I am aware of no court in Michigan, or anywhere else in the United States, which has imposed a duty on a buyer’s agent to make certain that premises owned by someone else and listed by another REALTOR® firm are safe for showing to their buyers.

A good example of the law on this subject is a recent decision rendered in Delaware. In this case, the Johnsons were purchasing an undeveloped parcel of land owned by Andrew Cuhupp. The property was approximately 1.3 acres in size. There was no question that the property was unkempt and overgrown and had a dilapidated structure on it. The Johnsons’ agent, REALTOR® Scott Venables, was walking the property with the Johnsons. Unfortunately, while they were walking the property, Mrs. Johnson fell partly into an open, unmarked well which was hidden by the underbrush. In addition, Mr. Johnson contended that he was holding hands with Mrs. Johnson at the time of the fall; thus, he was also injured. The Johnsons sought damages for physical injuries, pain and suffering, loss of enjoyment of life, medical and travel expenses, and loss of consortium.

The Delaware court summarily dismissed the Johnsons’ claims. The Delaware court accepted the fact that there was no dispute that the property was overgrown with weeds and was generally unkempt. However, the Delaware court refused to find that a buyer’s agent has a duty to inspect property, or to warn prospective buyers of any dangers on the property. The court noted that, while there were states which imposed a duty on a seller’s agent to inspect a listed property for safety (fortunately, Michigan is not one of those states), it could not locate a single state in the United States which required a buyer’s agent to inspect property for safety, or to warn buyers of any dangers.

The Johnsons contended that Scott Venables and the firm with which he was associated should have a duty to inspect because of the economic benefit Venables and his firm would derive from the relationship with the Johnsons. The Delaware court found that, while it was true that where a real estate firm has agreed to act as an agent for a buyer, the real estate brokers and salespeople are fiduciaries. The court went on to find that, while that results in the duty of full disclosure of all material facts, it does not include a duty to buyers regarding dangerous conditions on a seller’s property. The court found that the buyer’s agent had no more control over the property and its condition than the buyer. Without control of the property, the court held that the buyer’s agent could have no duty to warn or otherwise make the property safe for the buyer.

Again, the law in Michigan is the same as the law in Delaware. Buyers’ agents do not have any duty to buyer-clients to either inspect or warn of dangers on property they are showing to their buyer-clients. Obviously, if a REALTOR® acting as a buyer’s agent observes a danger, it is good common sense to preserve the health of his clients and warn them of the danger.

Under Michigan law, there is essentially only one situation in which REALTORS® have a duty to discover dangers and warn persons viewing a property. This situation arises when a REALTOR® is holding an open house and has exclusive control of the property during the open house (i.e., the sellers are not present on the property). This duty arose from a case decided by the Michigan Court of Appeals a couple of years ago. In that case, the listing REALTOR® was going to hold an open house on a Sunday. It snowed on Saturday night. The sellers cleared the snow from the sidewalk and driveway, and then, acting under instructions from the REALTOR®, left town on Sunday. It was warm on Sunday morning and there was a slight thaw. As the day progressed, it became colder. The thawed areas that were in shade turned to ice. A person attending the open house was walking up the drive and slipped and fell on the ice.

The Michigan Court of Appeals found that, since the REALTOR® was in exclusive possession and control of the property during the open house, and had specifically invited the public to come onto the property, the REALTOR® had a duty to inspect and warn of dangers from the ice. This has resulted in many Michigan REALTOR®s making great use of rock salt or its equivalent while holding open houses in Michigan during the winter. No problems Imagine that you are handling a listing in which a prospective buyer asks your seller about the condition of the home. The seller responds by stating there are “no problems” with the home. You know there is going to be trouble, as there is simply no home in existence that has “no problems.”

This scenario actually occurred in a case that was decided by the Michigan Court of Appeals in July, 2004. Thomas McGrath actually asked Corey Webber if there were any problems with his home, and Webber replied there were “no problems.” Obviously, upon taking possession of the property, it would appear that the McGraths went in search of problems with the home and sued Webber.

Miraculously, with one exception, Webber was able to escape liability.

First, the McGraths claimed that Webber had to have been lying when he said there were “no problems,” as Webber had received a notice of a class action lawsuit concerning acetyl fittings for polybutylene plumbing systems. Thus, Webber had to know that there was at least one problem with his house. Fortunately for Webber, there were no acetyl fittings used in the plumbing in his house. Further, there had never been any problems with the plumbing in his house. Thus, the notice he received of the class action lawsuit proved nothing.

Second, the McGraths claimed that Webber lied about the condition of the plumbing in his home by writing “copper and PVC” on the seller’s disclosure statement. This information was incorrect, as there was a polybutylene plumbing system in Webber’s house. However, the McGraths had had their home inspected before the purchase, and the plumbing system was visible. The inspector could have discovered that the home had a polybutylene plumbing system. Therefore, the McGraths’ fraud claim against Webber was not viable, since the McGraths had the means of discovering the untruthfulness of the representation that the home’s plumbing was “copper and PVC.”

This decision reinforces the law of Michigan that plaintiffs cannot maintain an action for fraud based upon a seller’s failure to disclose a condition of the property if the condition was readily discoverable by the plaintiff buyers or their inspector.

Third, the McGraths tried to rely upon the Seller’s Disclosure Act as imposing a duty upon Webber to disclose known conditions affecting the property. The Court of Appeals acknowledged that the Seller’s Disclosure Act requires disclosure of the condition and information concerning the property “known by the seller.” The McGraths could certainly prove that Webber had received notice of a class action lawsuit concerning the failure of acetyl fittings, but, again, Webber’s home did not have these fittings. Further, Webber testified he never had any problems with his plumbing and that it was in perfect working order.

While the McGraths had an expert licensed builder testify that a polybutylene plumbing system reduces the value of a home and should be disclosed to a purchaser, it could not be proved that Webber had any knowledge about the polybutylene plumbing system, or that such system causes a decline in the value of a home. Instead, he essentially testified that the toilet flushed when it was supposed to, and water came out of the faucet when you turned the handle, and the jury believed him. A master plumber also apparently testified that even home inspectors are not generally knowledgeable about problems with polybutylene plumbing.

Fourth, the McGraths included evidence indicating that the plumbing work in the bathroom had been done by an unlicensed person, the plumbing itself was substandard and would not pass a code inspection, and submitted evidence of costs they had incurred in fixing the plumbing. Again, the McGraths could not prove that Webber had any knowledge at the time of the sale that the work was done by an unlicensed individual without the necessary permit.

Finally, the McGraths claimed that there were problems with the foundation inasmuch as there were visible cracks in the crawl space that resulted in leaks in the crawl space. A jury refused to award them any damages for the problems with the foundation, again apparently finding that Webber had no knowledge of the cracks and leakage in the crawl space. The McGraths testified that the leakage was discovered after a “torrential” rainfall which apparently caused flash flooding in the area. Further, evidence was introduced to show that Webber used this crawl space extensively for storing his personal belongings, including “a velour couch, photographs, clothing and wedding gifts.”