A buyer who signed but didn’t read a purchase contract or seek legal advice can’t later claim her agent breached his fiduciary duty, a North Carolina court ruled.
The case: The plaintiff, Galya Mann, hired Huber Real Estate Inc. and Paul Huber (collectively, “Huber”), to sell her townhome and help her find a new home in the Raleigh– Durham, N.C., area. She signed an exclusive buyer agency agreement that spelled out Huber’s services and advised her to seek other professional advice in matters of law, taxation, financing and issues pertaining to any proposed transaction.
Huber and Mann visited a development operated by Level Homes and met with a sales rep there. Mann decided to buy a home and asked Huber to negotiate changes to the developer’s sales contract related to the interior design, which he did.
The contract included provisions, among other things, disclaiming warranties of merchantability, fitness and habitability; limiting damages; and requiring that disputes be arbitrated. Mann later testified that she didn’t read the “full contract” because her agent said it was a “standard contract.”
After Mann moved in, she discovered defects, including foundation cracks, electrical issues and water problems, requiring repairs estimated at $84,000 to $91,000. She sued all the parties involved, including Huber specifically for breach of fiduciary duty, negligence and unjust enrichment. Huber moved to dismiss the suit under summary judgment, which the trial court granted. Mann appealed.
The Ruling: Mann argued that, by calling the developer’s contract “standard” and not explicitly advising her to seek legal advice, Huber had breached his fiduciary duty and engaged in an unfair and deceptive practice. However, the court said there was no evidence Huber’s remark could be construed to mean that an attorney review wasn’t necessary, nor was there evidence of a deceptive act. The court pointed to the paragraph in the exclusive buyer agency contract that said, “Buyer is advised to seek other professional advice in matters of law, taxation, financing, insurance, surveying . . .” and the “buyer also agrees to indemnify and hold firm harmless . . . as a result of . . . buyer’s election not to have one or more of such services performed.” The court noted that, according to North Carolina law, if you sign a contract, you’re under “a duty to ascertain its contents . . . and you’re held to have signed with full knowledge and assent as to what is therein contained.” Because Mann didn’t ask Huber about the legal terms of the Level Homes contract, the court said Huber’s duty to advise Mann to seek legal counsel was satisfied through the exclusive buyer agency agreement.
The Takeaway: Besides protecting against disputes, exclusive buyer agency agreements, used as a regular business practice, offer benefits for both you and your clients. They:
- Promote transparency
- Help avoid misunderstandings
- Ensure the real estate professional gets paid, and establish the amount
- Establish the contractual relationship between the agent and the buyer
- Demonstrate professionalism
- Clarify what services consumers should expect and what duties they’re owed
Buyer representation agreements not only increase transparency but also provide a natural opportunity to educate consumers about the benefits and value you’ll provide. For resources to help you articulate your value and explain your role, visit competition.realtor.
Galya Mann v. Huber Real Estate Inc., Paul Huber, Level Carolina Homes LLC, d.b.a. Level Homes, and 2-10 Home Buyers Warranty No. COA22-956 (N.C. Ct. App. June 20, 2023)