First Time Home Buyer Gets Inadequate Seller Disclosure

Q: My husband and I purchased a house last August from an agent who was selling the property for her parents. She told us that she would be acting as a dual agent so that we could get a better price on the home.

This was our first home purchase so we went along with everything that she told us.

In January, we decided to sell the home in order to save some money. We found out that our septic was not on our property. We then contacted the real estate agent and she then informed us that she and her parents had known that the septic field was not on the property for some time.

Since then, we have tried to get the issue resolved. The agent will not return my phone calls and even hung up on me.

I’m really not sure what step we need to take next. Is there any way that I can file a complaint against the agent? She is really unprofessional and as a dual agent, I thought it was her obligation and duty serve as our agent too.

A: As you’re finding out, it can be difficult to be a first-time buyer and not have your own buyer’s agent to assist you in the transaction. It also sounds as if you didn’t hire your own (not the bank’s) real estate attorney to help you understand your transaction and close your deal.

Without some professional guidance, you’ve made mistakes, and may pay dearly for them.

Let’s start at the top. First, your agent really wasn’t your agent. “Dual agents” represent both the buyer and the seller in a single transaction. In some parts of the country, they are called “non-agents” or even “facilitators,” because they have no allegiance to the buyer or the seller. They’re just interested in getting the deal done – and pocketing both sides of the commission. (Telling you that you’d get the house for less because she is a dual agent sounds fishy to me.)

Which is fine – if everyone in the transaction really understands what is going on. In your case, you apparently thought the agent was your fiduciary – that is, she had your best interests at heart. That’s a mistake anyone can make. Did the agent have you sign an agency agreement? This would have disclosed to you that the agent was acting as a dual agent and that she was not your fiduciary in the transaction.

If the agent didn’t present you with an agency agreement (most, if not all, states require them I think), then that’s her fault. If she presented it to you and you signed it without reading it or without completely understanding it, that’s your mistake.

Next, while you may have had a chance getting a fair shake from a dual agent who was representing just any old seller, your dual agent was representing her parents. So, you had to ask yourself at some point, isn’t she going to do a better job for her parents than me, just another buyer off the street? That’s the question I’d have been asking all along.

You had the right to ask the managing broker of her office to assign you to another agent in the office to act as your buyer’s agent. If you had done this, the septic mess might have come out – or not. Some courts have held that dual agency extends to the entire office. That is, another agent in the office might still not have had your best interests at heart.

If you had hired an independent real estate attorney (not the mortgage company’s attorney, who you may have paid to be at your closing), and a real estate inspector and septic system inspector to help you through, it’s likely that the septic issue would have come up well in advance of the closing, giving you the opportunity to renegotiate or pull out of the deal.

Did you hire a professional home inspector to go through the property? Did you have the septic system inspected? These additional inspections might have provided some valuable information about the septic system and where it was located. It might have been a red flag for you.

Finally, did the sellers provide you with a written seller disclosure form? Did it mention the septic system and where it was located? This may be your best shot at getting a favorable resolution to your situation.

Sellers are required in most states to provide buyers with a written seller disclosure form that discloses any hidden, material defects to the property. That means if there are issues that they know about, but that you can’t see, they need to disclose information about them to you. Where a septic field is located might be the kind of issue that should have been disclosed to you.

Finally, just because the septic system is not located on your property does not mean that your property may not have the right to keep that septic system where it is located. You need to find out if there is an easement agreement that permits the septic system from being where it currently is located. The easement agreement would be a legal document that would be recorded at the local office where legal documents get filed and would allow you to continue to use the septic system.

You also need to find out whether there are any laws that the seller’s might have broken when they installed the septic system the way they did. If they broke any laws, you may have an action against the seller and may even have an action against the broker.

Just because the broker acted as a dual agent does not mean that she can bury her head in the sand if she has actual knowledge of legal problems with the home and fails to disclose them to you.

Please contact a knowledgeable real estate attorney who can go over your documentation and provide you with your legal options at this point.

April 18, 2008.


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