In previous articles, our firm has discussed the risk of professional liability incurred by “dual agency” real estate brokers. “Dual agency” exists when the listing broker is also the buyer’s broker. At present, California law recognizes and allows real estate brokers to engage in this kind of representation, despite the inherent problem of conflicting loyalties simultaneously owed by the agent to both buyer and seller. Moreover, California imposes the same premises liability on listing brokers and agents as it does for property owners.
In Coughlin v. Harland L. Weaver, Inc., 103 Cal. App. 2d (1951), the listing agent was liable to a prospective buyer who fell down the basement steps theorizing the listing agent was holding “open house” and therefore had possession and control of the property. Consequently, the typical Errors & Omissions insurance carried today by real estate agents covers personal injury liability during “open house.” In Hall v. Rockcliff Realtors, 215 Cal. App. 4th 1134 (2013), the listing agent was found liable for an injury caused by a defective attic ladder due to his status as the owner’s agent who failed to warn. But so far premises liability has not been extended to reach a non-listing agent (buyer’s broker).
Today, we report on a slip and fall case decided in July 2017, by a Los Angeles Superior Court in favor of a buyer’s broker, while their co-defendants, the seller’s broker and agent, accepted liability and settled the lawsuit.
A young professional couple with a toddler and plans for more children sold their first house in order to buy a larger home. They found the one they wanted in a gated community, for approximately $1 million. It was a lovely, two-story home with a hilltop view, immaculate landscaping, swimming pool, and room for a tennis court. It was also vacant and ready to move in. After one look the young couple made a formal offer to buy through their own real estate agent who was not the listing broker.
Two days after escrow opened, the young wife arranged to show the new place to her parents. It was late on a November afternoon just before dark, when their real estate agent escorted them into the gated community, unlocking the front door so she could give her mother and father a quick tour. Wife’s mother was duly impressed with the wide marble foyer, dining room, butler’s pantry, kitchen and family room and everything. After exploring and talking for about twenty minutes, they decided to end the visit. But as the wife and her mother were leaving, they decided to detour into the sunken living room for a closer look at the fireplace. Unfortunately, wife’s mother fell on the wide marble step leading from the marble foyer to the sunken living room and broke her hip.
It was an accident. It could have happened to anyone not paying attention while walking in a strange house.
Nearly two years later, mother decided to sue. Claiming nobody warned her of a dangerous condition (the dimly lit marble step) wife’s mother sued the seller, the seller’s broker, the seller’s real estate agent, the buyer’s broker, and the buyer’s real estate agent alleging premises liability against all. Premises liability, by definition, is imposed on those who own or control the premises. Yet, the only person not sued by the wife’s mother was the new owner—the wife. California law makes a property owner responsible for damage caused to visitors by any hidden dangers or defects on his property that he does not warn of, or correct. The seller was arguably liable to the wife’s mother in this case, assuming a jury found the dimly lit step to be an unreasonably dangerous condition. If the seller was liable in these circumstances, then the seller’s broker marketing the property is also liable as the owner’s representative.
This is nothing new.
Homeowners insurance protects against that sort of risk, and listing brokers have professional liability coverage, sometimes called “Errors and Omissions” insurance, for the same reason. But here the buyer’s agent was also sued, because he had allowed wife’s mother access. He allowed her to walk around the empty house with his client, her daughter, and did not warn her of the dimly lit step when she was guided to it by her daughter.
To prevail on a premises liability claim like this, the plaintiff must prove she was owed a duty to correct, or warn of, a hidden dangerous condition of the premises, that such duty was breached, and that such breach caused injury to plaintiff resulting in damages. In this case, we filed a motion for summary judgment, arguing that unless the buyer’s agent is a “dual agent”, he is not liable for defects in the premises and has no duty to warn, because he has no agency relationship with the owner.
There had been no California case that directly addressed this issue, but now there is. The court ruled—as a matter of law—the buyer’s broker and real estate agent had no legal duty to correct the condition of the dimly lit step, nor did they have a duty to warn wife’s mother of any dangerous condition of a property they neither owned nor controlled.
Note: Had the buyer’s broker also been functioning as the listing broker, such dual agency would have resulted in a different outcome.