Agency Highlights: 3Q 2018

The Agency cases discussed below address breach of fiduciary duty and dual agency. In the first case, the licensee was found liable for damages based on the licensee’s misrepresentations regarding the inclusion of a garden lot in the property purchased. In the second case, the court determined that the licensee was liable for damages where the licensee deliberately lowered the purchase price of the seller’s property for their own benefit.

A. Cases

1. Briggs v. Kidd & Keavy Real Estate Co., LLC, No. 340713, 2018 WL 4603900 (Mich. Ct. App. September 25, 2018)

Buyers consulted real estate representative regarding the purchase of a home that included a garden lot. After closing on the home, buyers learned that the sellers had sold the garden lot to their neighbors the year before. The transaction was orchestrated by seller’s real estate representative, who failed to update the listing and remove the pictures of the garden lot. Buyers alleged their real estate representative misrepresented the property in violation of their fiduciary duty. Real estate representative contended that buyers had plenty of information at their disposal that would have shown the property excluded the garden lot.

In a bench proceeding, trial court entered judgment in buyer’s favor and awarded damages in the amount of $100,000. On appeal, the court noting that the merger clause in the purchase agreement would not defeat the claims for fraud and negligent misrepresentation, and that the Buyers were justified in relying on the real estate representative’s misrepresentations that the garden lot was included. The appellate court affirmed the judgment.

2. Pellet for Pellet v. Keller Williams Realty Corp., No. HHBCV116012338S, 2018 WL 3446642 (Conn. Super. Ct. June 27, 2018)

Seller brought suit against a real estate company and its individual licensees for breach of fiduciary duty and breach of the covenant of good faith and fair dealing, including a failure to disclose “dual agency”. The seller alleged that the real estate company set the list price for the property at $318,000, when they knew, or should have known, that the fair market value of the property was substantially greater. The trial court issued a directed verdict in favor of the real estate company. On appeal, the court reversed and found the real estate company and licensees liable for breach of the covenant of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act, awarding sellers damages of $19,080.

The real estate company and licensees requested the verdict be set aside. The court declined, noting that the verdict, finding the real estate company and licensees acted in their own best interest to make an unscrupulous profit on the sale of the seller’s property, they did not honestly set the sale or offering price of the property, they failed to inform the seller of the relationship between the proposed buyer and the real estate company, and they failed to exercise the degree of care, skill and expertise common to the profession of licensed real estate professionals. The verdict and damages awarded to the seller were affirmed.

3. Krushke v. Newsome, No. 2-17-0613, 2018 WL 3957116 (Ill. App. Ct. August 14, 2018)

Prospective buyer was injured when he fell from a ladder while inspecting the roof of a property he was interested in purchasing. The prospective buyer sued his real estate representative and the real estate corporation who listed the property on negligence and respondeat superior grounds.

The trial court granted the real estate corporation’s motion for summary judgment finding that the real estate representative was an independent contractor and the listing corporation had no control over how the real estate representative performed his job. On appeal by the prospective buyer, the court noted that the factors to be considered when distinguishing an employee from an independent contractor are: (1) the right to control the manner in which the work is performed; (2) the method of payment and whether taxes are deducted from the payment; (3) the level of skill required to perform the work; and (4) the furnishing of the necessary tools, materials or equipment. The appellate court affirmed, finding the real estate corporation was not liable for the actions of the real estate professional.

4. Tamasco v. Rodd, No. A-1574-16T2, 2018 WL 4055919 (Super. Ct. N.J. August 27, 2018)

Plaintiff, a licensed real estate broker, represented the buyer of a house. The real estate broker accompanied the lender’s real estate appraiser to the property, presumably to ensure the appraiser had access to the site. While at the house, the real estate broker slipped and fell, seriously injuring her back. She then filed suit against the seller and the listing real estate broker for negligence, contending the listing real estate broker had an independent duty to keep the property clear of snow and ice.

The trial court disagreed, granting the listing broker’s request for summary judgment. On appeal, the court held that the listing broker had no independent duty to keep the property clear of snow and ice because the buyer’s representative was not injured at a time when the listing broker had control of the property, as would be the case during an open house event. The court affirmed summary judgment for the listing broker.

B. Statutes and Regulations1

North Carolina

North Carolina passed a number of regulations and statutes regulating advertising by real estate professionals. One regulation states that the identification of a broker on an advertisement may not be limited to contact information.2 Another amends requirements for a broker to designate as a BIC for a sole proprietor, real estate firm, or branch office, requiring that a broker apply for BIC Eligible status by submitting an application on a form available on the Commission’s website.3

C. Volume of Materials Retrieved

Agency issues were identified 22 times in 15 cases (see Tables 1, 2); Buyer Representation was the most commonly raised issued, while Dual Agency, Breach of Fiduciary Duty, and Vicarious Liability were addressed in cases this quarter. Eleven Agency regulations and one statute was retrieved (see Table 1).

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.

1This third quarter update reviews legislative activity from the following jurisdictions: North Carolina and Oregon.

2 21 NCAC 58A .0105 (2018)

3 21 NCAC 58A .0110 (2018)


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State Law Based Changes

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