The case discussed herein underscores the importance of providing Real Estate NHD reports to buyers and having said reports explained. Every Property I.D. California NHD Report comes with direct access to Property I.D. Corporation's Legal Department and the full explanation of Property I.D. Reports from Natural Hazard Disclosure Attorneys. Property I.D. is the only Natural Hazard Disclosure company that offers this full statement.
Saffie v. Schmeling, 224 Cal.App.4th 563, March 7, 2014,
In this case, there was a vacant parcel for sale in Hemet California (Riverside County). The Seller's Broker stated in the MLS "This parcel is in an earthquake study zone but has had a Fault Hazard Investigation completed and has been declared buildable by the investigating licensed geologist. Report available for serious buyers." This information was true but the study was from 1982, before the building standards changed after the Loma Prieta and Northridge earthquakes. The property sold in 2006 and buyer discovered he could not build on the parcel so he sued his broker, the seller, and the seller's broker alleging that the omission of the date of the report was a misrepresentation. The trial court found that the buyer's broker was liable for breaching the fiduciary duty to the buyer. The seller and the seller's broker were not held liable. Buyer appealed only as to the seller's broker. The court found that even though a real estate broker owes his own client a fiduciary duty, he owes 3rd parties who are not his clients only those duties imposed by regulatory statutes (i.e. honesty, fairness, and full disclosure, as well as Civil Code Section 1088 - the responsibility for truthfulness of statements in the MLS. The court found that the seller's broker's statement on the MLS was true: there was a report; a geologist did find the parcel buildable; and the fact that the MLS did not state that the report was from 1982 was cured by the report's availability; and the date of the report (May 20, 1982) appeared prominently on its cover. By providing this, the court held that the seller's broker had met the requirements of honesty, fairness, and full disclosure.
This did not help the buyer's broker, however. The buyer's broker gave the buyer a copy of the report and merely stated "check it out". The court stated that the buyer's alleged injury arises from the failure to investigate and understand the implication of the information - the report was from 1982, this was a failure that the trial court found was the buyer's broker's responsibility (not from the failure of the seller's broker to provide the information).
Buyer's Broker was found liable in the amount of $232,147.50 for breach of fiduciary duty and negligence. The court held that none of the defendants should recover anything on their cross-complaints for indemnity. Seller's broker was awarded his costs on appeal.
This case provides that something more than "check it out" was required of the buyer's broker.
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