Termiteps.com Public Service Protecting your investment from termites

As a real estate agent in today’s market things are tough enough as it, worrying about getting sued for selling a house with termites is probably the last thing you want to think about. However, it happens more than you think.For Sale Sign

Potential Liability

Real estate agents have been held liable for ref=”http://en.wikipedia.org/wiki/Fraud”>fraud, misrepresentation, breach of contract, and even negligence for their intentional or accidental non-disclosure of termite damage or infestation.  The consequences of being held liable have ranged anywhere from rescission of the sale to punitive damages. Courts have ruled differently depending on the knowledge level of the real estate broker.

You have knowledge of an infestation

Several years ago in a case in California a home purchaser was defrauded by the seller’s real estate broker by their concealment and nondisclosure of the fact that the house purchased by the plaintiff contained an extensive termite infestation.  The court said that such an agent or broker is liable to a buyer not only for his affirmative and intentional misrepresentations to the buyer, but also for mere nondisclosure of defects known to him and unknown and unobservable by the buyer.

The court said that whether a matter not disclosed by a real-estate broker or agent is of sufficient materiality to affect the desirability or value of the property sold, and thus to make him liable for fraudulent nondisclosure, depends on the facts of each case, and that here there were allegations that presented triable issues of fact, tendered not only on the basis of positive statements and misrepresentations of fact allegedly made by the defendants, but also on the alleged suppression and nondisclosure of facts known to the defendants and unknown and unobservable by the plaintiff. 1

The case in California is similar to cases found all around the country where courts have clearly held that a real-estate broker can be held liable to a purchaser of real property for misrepresentation or a nondisclosure of damage due to termites or other insect infestations was proven or supportable where the broker knew or apparently knew of such damage.

What you should gather from these case is if you know about termite damage to a house you’re selling you should disclose that information to the buyer, if you don’t you will face serious consequences when the nature of the problem comes to light.

You unknowingly sold a house with a termite infestation

Courts have been easier on real estate agents whose knowledge as to infestation was on the same level as the buyer.  For example in an Alabama case the purchasers of a home failed to present substantial evidence that the real-estate agent was aware of potential moisture and termite problems with house, and thus the real-estate agent could not be held liable under fraud theory for nondisclosure of such problem to purchasers.2

In a recent case in Georgia a purchaser of a home infested with termites did not have viable claim against sellers’ real estate agent for fraudulent concealment, absent showing that agent had any actual knowledge of termite damage beyond that which was disclosed to purchaser; agent’s representations that house did not have to be inspected, that he would pay to replace sheetrock and ceiling in bathroom, and that he represented purchaser’s interests rather than interests of seller did not show that agent knew about the extent of the termite damage.3

Likewise in Louisiana a real estate broker did not breach a duty owed to the purchaser to provide correct information regarding the home, and thus, was not liable for termite damage to the home under a theory of negligent misrepresentation; because when the broker disclosed information she had been given about leaks in the stucco to the purchaser, she did not have knowledge of the condition of the interior structural problems caused by termite damage.4

Saporta v Barbagelata 220 Cal App 2d 463, 33 Cal Rptr 661(1963)

2 Rumford v Valley Pest Control (1993, Ala) 629 So 2d 623

3 Power v. Georgia Exterminators, Inc., 243 Ga. App. 355, 532 S.E.2d 475 (2000)

4 Osborne v. Ladner, 691 So. 2d 1245 (La. Ct. App. 1st Cir. 1997).

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