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Brokers Liable to Home Buyers for Misinformation Even If Sellers Lied

Updated on December 9, 2014
Tom Ramstack profile image

Tom Ramstack is a Washington, D.C. lawyer, journalist, author, foreign language translator and owner of The Legal Forum.

Brokers Take the Blame

Brokers can be forced to compensate home buyers for inaccurate information about a property even if the seller lied to the broker, a New York court ruled recently.

Recent regulatory decisions in other states have found realtors must comply with similar rules.

Brokers are charged with knowledge and responsibility to check the public records to confirm any information the broker is conveying to the potential purchasers, the court ruling said.

The ruling resulted from a lawsuit filed by home buyer William McDermott against real estate firm Related Assets LLC. McDermott said the broker told him the house he purchased was hooked up to the municipal sewer system when it actually used a septic tank system.

The broker was ordered to pay the homebuyer $4,200 to reimburse him for the cost of installing a sewer line after closing on the house on Staten Island.

McDermott claims he told the broker before buying the home that he would consider buying only a house connected to a sewer system. The broker allegedly told him the house was connected to the local sewer system after getting the false information from the seller.

At trial, the broker argued he should not be liable for the misdeeds and misinformation of the seller.

The court disagreed, ruling in favor of the home buyer.

The court’s written decision said the primary responsibility for discovering the inaccurate information must fall on the listing broker.

In addition, if the listing broker acted as a professional and checked out the public records, the listing would have been corrected and claimant would not have even looked at the house, the ruling said.

The broker failed to demonstrate the due diligence required by law, the court said.

The case is McDermott v. Related Assets, LLC 2014 NY Slip Op 51464(U) (Sept. 16, 2014).

Brokers' hopes for easy home sales go down the drain in cases of misrepresentation.
Brokers' hopes for easy home sales go down the drain in cases of misrepresentation.

Who pays when home sellers misrepresent

Should real estate brokers be required to compensate home buyers for misrepresentations when the home seller lies to the broker?

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