Buyer Must Take Responsibility

Brokers aren't generally liable for failing to give buyers information they already know.

March 1, 2009

A buyer who learned from an inspection report that there were signs of water damage on the property can’t later hold a broker or seller liable for failing to disclose those problems, ruled a South Carolina court.

In the case (McLaughlin v. Williams, S.C. Court of Appeals, 2008), a home inspection report requested by a prospective buyer indicated high moisture levels and mold on the property, even though the seller’s disclosure did not indicate water damage. Despite the report, the buyer closed on the property.

After the purchase, the buyer learned that water damage had created structural problems on the property and he filed suit against the seller, the listing broker, and his own buyer’s representative for misrepresentation of the property.

Both the trial court and the appeals court dismissed the lawsuit. Misrepresentation presumes that the buyer reasonably relied on statements made by the defendants. However, since the buyer had received the home inspection report, he was informed of the potential water damage and did not rely solely on the disclosure statement.

The court also considered whether the buyer’s representative had any liability for allegedly telling the buyer that the inspection report was not a cause for concern. The buyer’s rep’s statement didn’t alter the fact that the inspection report had alerted the buyer to a potential problem, negating reliance on the disclosure form.

And since the disclosure report was the seller’s responsibility, the practitioner was not deemed responsible for its accuracy.

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