A Massachusetts woman is suing her real estate broker over exposure to second-hand smoke in her condo, which the broker helped her purchase:
Alyssa Burrage says she was smoked out of her new $405,000 condominium.
Burrage, a 32-year-old advertising company employee with a history of asthma, had smelled cigarettes when she first visited the bright, parlor-level condo in Boston’s South End in 2006 with her real estate broker. But the broker, she alleges, assured her that the owner must be a smoker and the stench would disappear.
After Burrage moved into the Milford Street brick row house, she says, she discovered the secondhand smoke was coming from one of two men living in the condo below. The men and the condo association refused to fix the problem, she adds, and she had to move out.
Today, in what tobacco law specialists call one of the first lawsuits of its kind to go to trial in Massachusetts, a jury is scheduled to decide whether Burrage’s real estate broker is liable for damages.
I hate cigarette smoke myself. And I think the real estate broker should not have been so quick to assume that the stench was left over from a previous owner. Despite these points, I think this is a very dangerous lawsuit, and I hope it fails.
Regardless of what the broker said, any reasonable buyer should realize that there’s no way to guarantee that you won’t have neighbors who smoke in a building where smoking isn’t forbidden (as it apparently was not in this condominium association). Even if the current neighbors are all nonsmokers, you don’t know who might live there in the future. If asthma or some other factor makes it necessary for you to live in a home completely isolated from smokers, you should buy a unit in a condominium association that forbids smoking, rent an apartment in a building with such a ban, or buy a free-standing house. Another possible option is to engage in Coasean bargaining with neighbors (i.e. — compensating them in some way for foregoing the right to smoke in their condo).
If real estate brokers can be held liable for remarks like this, the end result will be to make brokers more expensive and/or that brokers will be very reluctant to give advice to their clients for fear that it might turn out to be wrong and land them in legal hot water. Indeed, that may happen even if the broker wins this particular suit. The Boston Globe article on the case says that the broker offered Burrage a settlement because doing so was cheaper than litigating the case. Unless the courts or the Massachusetts legislature firmly slam the door on these types of lawsuits, this result could be a signal to future plaintiffs and lawyers that this kind of case is an effective nuisance suit. That, in turn, will reduce the value or increase the cost of real estate brokerage services for all Massachusetts buyers.
Perhaps current Massachusetts law allows these kinds of suits nonetheless. If so, it should be changed.
UPDATE: The linked Boston Globe article has been updated to indicate that the case has been settled for an undisclosed amount.
UPDATE #2: Some commenters who claim that it is important to prevent brokers from making inaccurate statements may be misconceiving the role of real estate brokers in such transactions. Much of what the broker does is give his client probablistic advice about such matters as the condition of the property, its likely future market value, and so forth. Such claims are necessarily fallible and will often turn out to be wrong. They are nonetheless valuable to clients because, on average, they are more likely to be correct than the client’s own less expert judgments. If brokers risk a lawsuit any time their advice on such issues turns out to be wrong, they will probably either be much less willing to give advice, charge more for their services, or some combination of both. None of these options is likely to be good for consumers. Obviously, the situation is different if the broker and the client sign a contract in which the former assumes liability for any mistakes in his advice on a particular range of subjects. But that doesn’t seem to have happened here.
matt c says:
i don’t know mass. law but this sounds like an easy fraudulent inducement or negligent misrep claim. and why is agent who makes a negligent or fraudulent misrepresentation of material fact intended to induce action not supposed to be held civilly liable for the reliance thereon. the agent made money on the transaction
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February 9, 2010, 9:17 pmKieth says:
The realtor had no way of knowing what caused the smoke smell. An intelligent client would know that he didn’t know (he’s a salesman for heaven’s sake). Is there no doctrine that recognizes the fundamental unreliability of someone who is trying to sell you something? especially in the case where the information was obviously guess work? (the existing owner “must be...” a smoker) he did not, apparently, say “oh yeah, I know this guy, smokes like a chimney”.
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February 9, 2010, 9:21 pmSammy Finkelman says:
The broker basically made a claim of knowledge — that this smoke can only be coming from the owner — in an effort to assuage the worries of the potential buyer — and succeeded. Only this was wrong. And the broker had no better knowledge — but might have been expected to have more knowledge because of experience in dealing with many houses.
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February 9, 2010, 9:47 pmIlya Somin says:
I can’t believe you are defending lying and/or deceptive misrepresentation, Mr. Somin. That is a new low.
There is no evidence that the broker was either lying or deceptive. He simply stated an opinion that turned out to be wrong. A previous owner who was a smoker is in fact a common cause of such a stench.
BTW, this may be a good opportunity to warn Mr. Welker (author of the above ridiculous distortion of my position) that he is beginning to test the limits of even my copious tolerance for obnoxious and foolish comments. If he doesn’t clean up his act, he will have the honor of becoming the first person I ban from posting here in many months.
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February 9, 2010, 9:54 pmMike Keenan says:
I wonder if you read the entire article, Mr. Somin?
The woman is claiming that the real estate agent burned scented candles at the open house in an attempt to mask the smell. She is also claiming that the agent did not allow her to contact the seller to determine if he was in fact a smoker. She says the agent stated the smoking as a matter of fact not opinion. Of course, the agent denies all of this, but the facts as alleged by the woman certainly seem to indicate unethical behavior.
Could all be nonsense though!
I think Mr. Welker’s post is fine if you remove the sentence “That is a new low.” There is no call for that in polite discourse.
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February 9, 2010, 10:10 pmMike Keenan says:
Hmm, now that I think about it. Burning scented candles is probably a pretty common technique. That would seem to be unethical only if the agent knew the smoke smell was coming from somewhere else. That seems unlikely.
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February 9, 2010, 10:12 pmArthurKirkland says:
If the broker “assured” the client — to whom the broker had a duty of at least honesty — the smoke “would go away,” it seems strange to argue that the complaint is ridiculous.
Should a broker be entitled to advance his interests, and disadvantage a client who is expressly seeking the advice he presumably is paying for, by engaging in what is at best unsubstantiated puffery?
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February 9, 2010, 10:14 pmepeeist says:
It sounds like negligent representation at the least(ignoring for the moment that most real estate contracts have no reps or warranties clauses). According to what was posted above, she was “assured...” as to the source. Not told e.g. “it’s my opinion that...” It would be very different in my view (as a matter of principle) if e.g. she had been told it was “probably...” from the current resident. “Assured” suggests a level of certainty beyond mere opinion.
Now, there may very well be (and probably are, as noted above) good legal reasons not to grant relief, but as a matter of principle it does not sound outrageous for her to make a claim.
In this instance, based upon what she was “assured”, the plaintiff may have decided that on the balance of probabilities the smell of smoke was not from a neighbour. Had the broker not (for the sake of argument) negligently misrepresented the facts, she might well have decided not to buy. But she was misled about something important.
It would be even more egregious if e.g. she had told the broker she was asthmatic and inquired about the smoke smell, and she was then “assured” it was not from a neighbour...
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February 9, 2010, 10:15 pmEMB says:
I wouldn’t be so quick to ascribe to malice what could also be ascribed to stupidity: it seems entirely possible that (3) it didn’t occur to the broker either that the stench might be coming from another condo.
I have no idea what Massachusetts laws might say about the matter, but it seems like it would be very hard to prove that (1) or (2) were the case rather than (3) and it’s not so clear that making (3) illegal would be a good idea.
(On another note, I once dated a girl who had similar asthma problems with second-hand smoke, and I’m pretty sure she’d have just left the moment she smelled smoke on her first visit.)
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February 9, 2010, 10:22 pmbyomtov says:
I don’t think Welker misrepresented your position. You dismiss the broker’s statement as a “remark,” but it was more than that. The smoke situation was clearly of concern to Burrage, and she asked very a specific question about it. Surely the broker is required to answer honestly. Further, as Mike Keenan points out, the broker stopped Burrage from contacting the previous owner to verify the information.
That said, I’m not a big fan of this lawsuit, since I think Burrage might have done more herself, given the importance of the smoking issue to her. Still, I do think the broker’s actions were questionable.
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February 9, 2010, 10:24 pmIlya Somin says:
According to what was posted above, she was “assured...” as to the source. Not told e.g. “it’s my opinion that...” It would be very different in my view (as a matter of principle) if e.g. she had been told it was “probably...” from the current resident. “Assured” suggests a level of certainty beyond mere opinion.
The word “assured” comes from a newspaper article. It is not a direct quote from the broker. In ordinary, nonlegal usage, “assured” can easily indicate a strong statement of opinion rather than a legally binding guarantee.
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February 9, 2010, 10:25 pmIlya Somin says:
Hmm, now that I think about it. Burning scented candles is probably a pretty common technique.
That is true. I went to many open houses when I bought a condo in 2003, and again last year when we bought a house. Such candles are by no means uncommon, and are not proof of an intent to deceive about the source of smoke stench.
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February 9, 2010, 10:28 pmepeeist says:
So then, the issue is fact-dependent? Depending upon what, on a balance of probabilities, the broker said, there might or might not be liability? Sounds reasonable to me, i.e. that to call the lawsuit dubious in the absence of knowing what was said is itself arguably dubious...but, that’s just my opinion [grin]
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February 9, 2010, 10:29 pmKent says:
I don’t see why this is a specious claim. At the very least, it sounds like a fact issue as to whether the agent negligently or intentionally misrepresented a fact that he knew to be material to the buyer. As the other commenters have indicated, if he did one or the other, why shouldn’t he be liable?
I don’t see how that is puffing. Puffing is something that is usually hyperbolic: “The best apartment in the world!” His statement doesn’t sound like a hyperbolic statement or something one would expect a salesman to say; it sounds like a statement of fact. Once again, at the very least, it should be for a jury (or perhaps judge) to decide if it is puffery.
Moreover, because the agent was her fiduciary, I don’t see why he is entitled to “puff.” He is not a third-party salesman; he was her agent that owes her fiduciary obligations. The law should require fiduciaries — including lawyers — to have knowledge before speaking. What would be the policy supporting them being able to state what sounds like facts without any investigation, while being paid to offer those facts?
What is more, the client is now most likely going to have to disclose this smell to any future buyer. It is something that numerous buyers would like to know and something that could reasonably affect the value of the property (not the fact that a smoker lives above or below, but that the smell seeps into the other condos when one smokes in an adjacent condo). If the smell were somehow masked or absent during the sales process, most buyers would be very unhappy to learn of this latent defect — which a buyer in numerous jurisictions has a duty to disclose.
And I agree that David’s comment should not be banned (despite the fact that I, too, don’t like his “new low” language; it’s not civil and doesn’t further discourse). But I don’t see the ridiculous distortion about which Ilya complains. David offered an intelligent critique.
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February 9, 2010, 10:49 pmBenP says:
I will say you do seem to be going a significant way to giving a hostile interpretation to the Plaintiff’s complaint.
I think the subject matter of the suit is as bad as anyone else, but it’s really not any different than noisy neighbors where the agent knows the buyer wants quiet, or any other condition a buyer explicitly wants and is discouraged from asking about by the agent.
Not saying the suit’s good, but I’d fully expect this to make it to a jury, then the facts mean much less in comparison to whether or not the jury doesn’t like the landlord.
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February 9, 2010, 11:39 pmSteve says:
Unless the courts or the Massachusetts legislature firmly slam the door on these types of lawsuits, this result could be a signal to future plaintiffs and lawyers that this kind of case is an effective nuisance suit. That, in turn, will reduce the value or increase the cost of real estate brokerage services for all Massachusetts buyers.
Oh please. Not every silly lawsuit requires a sweeping legislative remedy. Paying a nuisance settlement the one time in a thousand that a customer sues over something like this is hardly going to affect the price of services as a whole, nor is it plausible that brokers will stop providing competent services out of fear of the random piece of litigation. Heck, I don’t think the broker in this case ought to be liable, but if he had focused a little more on providing the client with an accurate answer maybe everyone would be happier today.
I can only imagine what sort of legislative remedy you would propose. No real estate broker may be sued based upon a neighbor’s secondhand smoke? I can only imagine a world where the legislature instantly responds to any frivolous lawsuit by passing a law prohibiting the precise sort of claim asserted therein, to head off the possibility that more suits of the exact same type might be filed and thereby make services more expensive for the taxpayer. You thought the statute books were too thick now...
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February 10, 2010, 12:10 amShelbyC says:
Geez, Welker accusing somebody else of being full of themself? Now I’ve seen everything. Dude, your name links to a blog of your own. Why don’t you spend your time writing your own blog posts instead of talking shit about other people’s?
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February 10, 2010, 12:37 amTony says:
I love reading about wacky frivolous lawsuits. I just read a post ranting about this at this other blog: http://lawblog.legalmatch.com/2010/01/12/top-5-prosecutorial-blunders-of-2009/
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February 10, 2010, 12:40 amFub says:
I think we have a thread winner.
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February 10, 2010, 1:25 amstash says:
These types of suits are mostly fallout from falling real estate (especially condo) prices. Remember, if she had been “forced” to sell it during a time of rising prices, she would have no damages, and would quite possibly have walked away with a tidy profit as an involuntary “flipper.” When the bubble burst, I saw the number of suits against builders, sellers, and real estate agents go way up. Many people, especially those who bought at the top of the market, were looking for something, anything, that would let them out, or pay for their loss. This is not to say that they do not have good cases. It is simply that falling prices have increased the gain they can acheive with litigation. Like anything else, this will cause more people to sue, and on more marginal bases.
Of course, this effect is not limited to real estate transactions. A recession also increases the number of business disputes of all types as people seek and need excuses to get out of deals that the economy has rendered bad, or even untenable.
As things go, this suit seems to me to be entirely an issue of fact. If the broker was clearly speculating “it must be” the resident who smoked, there is no liability. If he stated it as a matter of fact, it may be different. To nail down liability, it seems to me that he would have had to also represent that no one else in the condo smoked, or that if so, the ventilation was such it would not bother an asthmatic. I did not see that representation.
The counter-argument would seem to be that by lying about the source of the smell, the broker lulled the buyer into a false sense of security. I.e., if there were smokers in the building, and their smoking affected the unit, the most effective way to determine that was by inspection. No smell, no problem. The notion would be that it would be the same as if a broker had said that a water stain was the result of a bathtub overflow when the real reason was a leaky roof or wall.
From my experience of living in apartment buildings, the usual situation is sometimes you can notice the smoke, and others, not. But if she was induced to to treat the condo as if you wouldn’t smell smoke, except due to the previous owner, she could reasonably conclude that any problem would be at worst intermittent.
On the other hand, even if she did believe that the smell was attributable to the previous owner, this did not negative the possibility that she would be able to smell the smoke from her co-residents. That is, everything else being equal, if the representation had been true–that the former owner in fact smoked–she still would have had the same problem with smoke from other units.
So the question is, was her reliance reasonable? It certainly could be argued that it was incumbent on a person with the degree of aversion to smoke that the buyer claims,to inquire further. Okay, the former owner smoked, but–given her sensitivity–“knowing” that the former owner was a smoker is arguably an insufficient reason to conclude that she would not be bothered by smoke in the condo.
I think that this is a very fact specific case, both on what the representation was precisely, and on reasonable reliance. Preventing her from talking to the former owner is a “bad fact” for the broker but hardly dispositive. It is also plausible that the particular unit might be problematic on the smoke issue–as the other residents did not seem to mind. Lots of facts to play with here, and it is very hard to litigate a case from a newspaper story.
Apparently, as in most cases, neither side was confident in victory. Hence the settlement.
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February 10, 2010, 1:41 amWakefield Tolbert says:
...things will get more complicated. Not in this case, perhaps. But stay tuned on this issue...
http://www.nytimes.com/2009/01/03/health/research/03smoke.html
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February 10, 2010, 1:41 ameyesay says:
David Welker wrote, “There is a reason that you are my least favorite blogger on this site. And it is not because you are a libertarian. It is because you are a broken record who never surprises. And also, that you go to such absurd extremes. . . . Some of your fellow conspirators go off the deep end too. Just not as consistently.”
In my humble opinion, there are other bloggers on this site who never surprise, for example, David Bernstein. Not that I don’t agree at least in part with what Bernstein has to say, but I think he is a stronger candidate for the Broken Record Award for Unsurprising Opinion™ than Ilya Somin. Also, there are other bloggers on this site who go off the deep end more consistently than Ilya Somin, but it would be injudicious for me to identify them.
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February 10, 2010, 2:28 amIlya Somin says:
Mr. Welker has chosen to respond to my warning with yet further incivility and obnoxiousness. So be it. He is now officially banned.
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February 10, 2010, 3:08 amIlya Somin says:
I don’t think Welker misrepresented your position. You dismiss the broker’s statement as a “remark,” but it was more than that. The smoke situation was clearly of concern to Burrage, and she asked very a specific question about it. Surely the broker is required to answer honestly. Further, as Mike Keenan points out, the broker stopped Burrage from contacting the previous owner to verify the information.
Welker said that the broker was engaged in deliberate deception and that I was defending such deception. Whether or not the broker erred, there is no evidence that he answered with deliberate dishonesty, and certainly no evidence that I tried to defend deliberate dishonesty on his part.
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February 10, 2010, 3:17 amIlya Somin says:
I agree that David’s comment should not be banned (despite the fact that I, too, don’t like his “new low” language; it’s not civil and doesn’t further discourse). But I don’t see the ridiculous distortion about which Ilya complains. David offered an intelligent critique.
Welker has a long history of being obnoxious and uncivil. I wouldn’t have banned him for one such offense or even several. I’m banning for literally dozens of them. The distortion in his comment is in his claim that I am defending deliberate deception whereas my view is that no such deliberate deception occurred. Even if I’m wrong about the facts, there is zero reason to assume that I’m actually justifying deception as opposed to being mistaken about whether it occurred.
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February 10, 2010, 3:20 amIlya Somin says:
I don’t see why this is a specious claim. At the very least, it sounds like a fact issue as to whether the agent negligently or intentionally misrepresented a fact that he knew to be material to the buyer. As the other commenters have indicated, if he did one or the other, why shouldn’t he be liable?
The problem is that on this evidence, you can make a claim that there was negligent or deliberate misrepresentation every time a broker gives advice that turns out to be wrong. There is no evidence here that the broker knew his statement was inaccurate. The only evidence of negligence or intentional wrongdoing is that his assertion turned out to be wrong.
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February 10, 2010, 3:22 amshawninPhx says:
This is real estate 101 for those who get their real estate license. Never, never, never stipulate to a fact that you do not know. Whether it be a smoke smell or the last sewer inspection. Buyers rely on agents (and the agent’s broker) to provide them with the necessary information to make a buying decision.
This is a pretty easy case (at least from my DC real estate exam). The plaintiff wins. The agent, on behalf of the broker, made a claim that was materially false and the plaintiff suffered for it. This is no different than if I, as an agent, would tell a client that the boundary fence was the legal yard without having looked up the means & bounds of the property. It’s real estate 101 and that’s why they warn you of this throughout your exam classes. I assume it’s no different than if a lawyer casually waved off the Miranda process as “just procedure” and then was sued because of statements made after the fact.
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February 10, 2010, 3:31 amIlya Somin says:
This is real estate 101 for those who get their real estate license. Never, never, never stipulate to a fact that you do not know. Whether it be a smoke smell or the last sewer inspection. Buyers rely on agents (and the agent’s broker) to provide them with the necessary information to make a buying decision.
This is a pretty easy case (at least from my DC real estate exam). The plaintiff wins.
I highly doubt that you can sue a real estate agent any time that he makes a factual claim that turns out to be false, even if he had no intent to deceive. If that were true, agents and brokers would be hypercautious in giving any advice with a factual component whatsoever. Moreover, much of what they say necessarily concerns issues where only probablistic judgments are possible in advance.
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February 10, 2010, 4:28 amDavid Chesler says:
Moreover, much of what they say necessarily concerns issues where only probablistic judgments are possible in advance.
I’m less certain about her now-settled claims with the other tenants, but this doesn’t seem more probabalistic than “is” given the philosophical limits on any knowledge. If the broker did in fact say it would disappear (that is, if the case is that he said, “... it will disappear”) there aren’t even weasel words.
“Must be” could arguably be weaker than “is” but it is certainly stronger than “probably is”. It seems to say there can be no other cause — it must be this, because it cannot be anything else. (But like “literally” itself, people sometimes use words to mean other than what they literally mean.)
In my non-lawyerly opinion, the claim is not totally without merit As epeeist said, fact-dependent.
That said, as stash said, this lawsuit wouldn’t be happening if prices hadn’t crashed, and Burrage thought it would be in her better interest to simply flip the condo and find another. Trust and verify, any prudent buyer will have an inspection, especially on matters that are as fundamental to her as smoke. (Many home purchases are learning experience. The buyer would never again buy a home with or without something, which was factually obvious, just its importance to that buyer wasn’t.) And as commenters to the boston.com article said, if it had been the case that the former owner was a smoker, but new downstairs tenants had taken up smoking, as is their right, she wouldn’t have had any recourse.
On the other hand, brokers should expect to be held to what they say. (Famous in at least some circles, at least 20 years old, is an IPO that listed among the technical staff ‘Doc’ so-and-so, which was overturned, and the investors won, because ‘Doc’ did not have a doctorate in anything.)
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February 10, 2010, 6:44 amTim says:
And here I thought all this talk about a Pareto optimal level of smoking within a shared residence in my law and economics class was hogwash. Who knew this literal fact pattern would be litigated?
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February 10, 2010, 6:54 amFebruary 10 roundup says:
[...] Woman Sues Real Estate Broker over Second-Hand Smoke in Condo” [Somin, Volokh; case [...]
BenP says:
It all depends on the facts. If he makes a factual claim that you relied on to buy the house, that “turns out to be wrong” why shouldn’t you have the right to sue.
I realize smoking might be controversial so I’ll put down a couple other examples.
1. Buyer asks agent if house has any structural problems, Real Estate agent swears to buyer that foundation of house is well built and has no problems, but otherwise doesn’t know anything about foundations. Buyer presents evidence that before showing house agent put spackle on outside foundation to cover up crack that turned out to be evidence of serious defect in the foundation, he’ll testify he thought that was just a cosmetic defect. House suffers serious structural problems that have to be expensively corrected, it was not new, so statute of repose has passed against the builders.
2. Agent shows buyer a new house, Buyer notes a “chemical smell” while the house is being shown. Agent does not know the source of the smell but assures the buyer “it’s just new construction, it’ll go away in a few weeks.” After buyers live in house for several months and were made ill from the chemical smell, they get another inspector who finds that the house was built with defective drywall. There’s probably some claim against the builders, but you’re arguing there shouldn’t be a claim against the agent as well?
3. Agent shows house in rural area outside public water network, house has a well. Buyers specifically ask if the House’s well is good, agent answers that “previous owners used well without problems” but has not had well tested and does not know of the water quality. The water from the well turns out to be contaminated and buyers become ill from it.
Again, I’m not sure where this sense that Real Estate agents are entitled to a special level of protection is coming from. Real estate agents are professionals and people rely on their opinion in buying houses. That’s why they have errors and omissions insurance.
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February 10, 2010, 8:20 amShelbyC says:
Many of these posts assume that the agent is the sellers agent, or that the agent should have specialized knowelege about the house. Maybe I’m mistaken, but it appears that the realtor is representing the buyer, no? So if I’m with my agent looking at a house, I wouldn’t assume that my agent has any knowelege about the property that I don’t, and that any “claim” would just be a guess. And the “former owner must have been a smoker” guess is a reasonable one.
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February 10, 2010, 9:03 amSteve says:
There is no evidence here that the broker knew his statement was inaccurate. The only evidence of negligence or intentional wrongdoing is that his assertion turned out to be wrong.
There’s a reason judges typically review the whole record before determining there’s no evidence of something, as opposed to drawing that conclusion based on an article in the newspaper. Mind you, even the article contains allegations (like the scented candles) that could at least support an inference of knowledge.
Let’s assume, for the sake of argument, the buyer said “Do any of the neighbors smoke? I have asthma and it’s definitely a material part of my decision.” And the broker said, “No, I know for a fact they don’t, the smoke you smell is just from the prior owner.” If these were the facts, would you dispute the buyer has a cause of action? As a lawyer who represents many agents of all shapes and sizes, I have to say the argument that “it wasn’t reasonable for her to rely, because a smoker might move in someday anyway” wouldn’t get very far.
Now, my hypothetical probably isn’t what happened. Indeed, I suspect the lawsuit is probably BS. But if the reason it’s BS is that there’s no evidence of knowledge, I’ll ask again (while noting that you responded to virtually every comment except mine): what the heck legislative remedy are you agitating for? A statute saying “people shouldn’t sue with no evidence”? If your contention is that the trial judge improperly denied summary judgment, forcing the defendant to pay a nuisance settlement to avoid the cost of trial, I have no idea how you intend to fix that through legislation. And I continue to think the idea that a legislative remedy is necessary is ridiculous.
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February 10, 2010, 9:34 amBen P says:
That would change the situation some, but my thought is that it would turnthe situation into something that looks more like a professional malpractice situation or even a breach of contract than an errors and omissions type situation.
I’m not entirely sure how such an arrangement might work, but I assume if you were hiring your own real estate agent to go out and find you a house, and you clearly specify that it must be non-smoking, the agent then finds a house, tells you that it fits your requirements and makes the arrangements for you to buy the house then leaves with his commission, and you find the house didn’t match up to what he represented it to be, you’ve probably got something, breach of contract at least.
It also might be analogous to a lawyer who drafts a contract or a will. He does it, and represents to the client that “This will accomplish what you set out to do,” and collects his fee. It turns out that through the negligence of the lawyer, the contract (or whatever) has a serious flaw that a competent lawyer would have seen.
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February 10, 2010, 9:45 amWoman Buys Condo Above Smoker so She Sues Real Estate Broker | KEYTLaw says:
[...] Associate Professor of Law at George Mason University and a blogger for the Volokh Conspiracy sheds more light on this lawsuit from the perspective of a law professor. He [...]
Charles says:
As far as update 2 goes, wouldn’t it be pretty easy for a broker to write a no reps and warranties for information clause into the broker agreement. Also I don’t see a problem with salesman of any ilk being less willing to make absolutely baseless claims to induce a sale.
Would it have been too hard for the broker to have asked someone?
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February 10, 2010, 10:18 ambrubaker says:
Ilya,
I’m curious why you believe that “Much of what the broker does is give his client probablistic advice about such matters as the condition of the property, its likely future market value, and so forth.”
Maybe that’s something they should do, but something they do? In my experience, salesmen typically aren’t big on nuance.
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February 10, 2010, 10:36 amyankee says:
This seems undisputed. But was the broker representing his claim as his actual knowledge or as a mere opinion that might or might not be correct? (And even a professional opinion might be negligently made.)
Also, you criticize commenters as “misconceiving” the role of the broker in a real estate transaction, but you also seem to be misconceiving the role of a broker. A broker hired by the buyer is a fiduciary and so has a heightened duty to the buyer. However, the broker has incentives to act as a salesperson rather than a fiduciary, because brokers work on commission and the fastest way to earn commissions is to get the client to buy a property as quickly as possible.
First, you are significantly overstating the facts; saying a fiduciary should be liable for misrepresenting their opinion as actual knowledge is not at all the same as saying someone should risk a lawsuit every time their advice turns out to be wrong. Also, I agree that prices going up is bad for consumers, but brokers being less willing to represent their opinion as fact based on actual knowledge is good, not bad.
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February 10, 2010, 10:49 amyankee says:
How do you know what evidence was in the record?
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February 10, 2010, 11:06 amAJM says:
This woman is completely self absorbed. If she is that asthmatic she should not have purchased the property in the first place when she smelled smoke. It was her option. Why did she not hire an home inspection prior to buying? Why wasn’t she working with a buyer’s agent, rather than a seller’s? This smacks of not having an personal responsibility and as such, should be thrown out of court. What a waste of taxpayer’s dollars.
What I find saddest about this she was going to sue her neighbors and they’ve settled, because they said it would be more expensive to defend themselves in court. They had lived there for 13 years.
There is such a thing as karma though...for all of her greed,she has managed to make herself a social leper and has her tweets protected and no longer is on Facebook...at least not under he real name.
I personally think this has more to do with money and the fact that she probably lost money on the place because she bought at the peak of the real estate bubble. She was also recently married...so maybe her husband already had a place or something of the sort. Not only that she has been claiming the residency exemption for the past couple years to the tune of $1400 a year...while she has been renting the place out. Is she going to pay the city back?
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February 10, 2010, 11:29 amyankee says:
Whether those contributory/comparative negligence defenses would fly would depend on the contributory/comparative negligence laws of Massachusetts. Even if they’re valid defenses, it’s very unlikely they would be a total bar to the claim, unless Massachusetts is one of the jurisdictions that still has contrib.
As for the buyer’s/seller’s agent issue, she’s suing the buyer’s agent who she hired. The defendant was supposed to represent her interests, not act as a salesperson.
Actually, if the seller’s agent had made the representation, the suit would likely be stronger, not weaker. The seller’s agent is more likely to have actual knowledge of the cause of the smoke than the buyer’s agent. If the seller’s agent knew about the cause of the smoke and lied, it would be fraud, not just negligence.
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February 10, 2010, 11:45 ambyomtov says:
Much of what the broker does is give his client probablistic advice about such matters as the condition of the property, its likely future market value, and so forth. Such claims are necessarily fallible and will often turn out to be wrong.
True. But this wasn’t a probabilistic claim. It was a factual one, and one that the broker prevented the client from verifying.
“I think property values are going to rise significantly in this neighborhood,”
is much different than
“There was a new roof put on last year.”
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February 10, 2010, 11:46 amAbdul Abulbul Amir says:
Good grief! It should be obvious to any person with more common sense than God gave a door knob that any statement by anyone regarding the source and duration of any particular smell in a situation like this cannot be made with certainty. Such a statement is really no more than an estimate.
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February 10, 2010, 11:52 amShelbyC says:
Well, the way it’s worked in my experience is that you find and agent and tell him what you are looking for. The agent runs a search and sends you a list of properties, and you go out and look at them together. You ask the agent questions like “I wonder why xyz?” and the agent says, “probably because of zbg.”, clearly speculating. If something’s important, you get the response from the seller in writing. It doesn’t sound like this agent did a good job representing his buyer, but I don’t see any fraud. That is, assuming that this is the buyer’s agent, what is what I (and appearently Ilya) am assuming. If this was the seller’s agent, I think the case would be different.
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February 10, 2010, 12:03 pmGallileo says:
The number one thing to remember when dealing with real estate agents–either someone else’s or your own–is No real estate agent makes any money until you sign.
The second most important thing to remember is: An agent makes more money per hour if you sign quickly.
This is a fundamental and insoluble conflict of interest with every single real estate agent you will ever deal with, and you have to take every single thing they say with that in mind.
This isn’t to say that there aren’t good and honest ones out there, but that you have to discount their advice appropriately every single time. If one says, “I think it will be OK.”
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February 10, 2010, 12:05 pmBen P says:
I’d agree, more or less.
However, (and I could be way off base if it’s different elsewhere) but my experience in real estate is that if you’re buying a house, you’re almost always dealing with the seller’s agent. If you’re contacting a real estate agent who has a “listing” it’s because the seller listed their house with that agent. It’s a relatively common warning for buyers to remember that the agent isn’t working for them.
The fact that the agent had access to the apartment to clean it up and light candles suggested to me they were a sellers agent, as a buyer’s agent would be less likely to have the kind of access to the property that a sellers agent would. But again, this is speculation and I could be way off base.
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February 10, 2010, 12:18 pmGuest14 says:
That’s not sad at all. Smokers deserve whatever they get, and worse.
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February 10, 2010, 12:21 pmLaura Victoria says:
All this angels on a head of a pin analysis is giving me a headache. The broker should have provided the buyer a copy of the HOA regulations. That would leave open the possibility that a neighbor smoked, was allowed to smoke, and that at any moment a new neighbor might move in who smoked.
The broker should also have recommended a professional home inspection. The inspector could have determined if the property was built in a way that allowed smoke to seep into adjacent units.
I wish the actions of criminal prosecutors who through gross negligence at best and mens rea at worst, put people behind bars and receive absolute immunity and little bar attention for their misconduct, received this sort of scrutiny and legal excitement.
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February 10, 2010, 12:31 pmShelbyC says:
So do you.
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February 10, 2010, 12:54 pmShelbyC says:
Gotcha. Both times I’ve bought a house I’ve gone through a buyer’s agent; I’ve never dealt directly with a seller’s agent, so my assumptions are based on that. If this is a seller’s agent who could be expected to have knowelege of why the place smells like smoke, the lawsuit strikes me as less frivolous. Unless, of course, the previous occupant was, in fact, a smoker.
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February 10, 2010, 1:00 pmepeeist says:
To (loosely, don’t rely on as advice!) define terms:
Negligent misrepresentation = making a statement (which turns out to be false, was relied upon, etc.) with no knowledge of whether true or false, i.e. made negligently/carelessly. No intent to deceive is required.
Fraudulent misrepresentation = knowingly making a false statement (there’s an intent to deceive).
You appear to be stating that lack of intent to deceive = no liability. But someone can make a statement negligently, with no intent to deceive, but the statement was relied upon and turned out to be wrong, and recovery may be possible (though possibly not in this situation, as noted).
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February 10, 2010, 1:10 pmDan Weber says:
So now Orin owes you a beer.
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February 10, 2010, 2:08 pmEldora Leard says:
Love your blog, i’m glad you’re enjoying it. I have just got interested in blogging and hopefully i am able to do so
Follow me on Twitter
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February 10, 2010, 2:46 pmKieth says:
Not mentioned above: in a normally construction multi-unit building it is very unlikely that smoke from one dwelling unit will migrate to another (and, if it does, you have the basis for another suit). As a rule condominiums and rental apartments are not ventilated, heated or cooled by a central system; the exhaust ducts from kitchens and baths are separately ducted to the exterior of the building. Given an at least tacit awareness of how buildings are constructed the realtor was well justified to “assure” the prospective buyer that the smoke came from the present owner (or his friends) just on the basis of common sense.
I can’t find the comment now but the speculation above that dropping values for condominiums is an unspoken motive in this lawsuit is surely correct.
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February 10, 2010, 5:18 pmmattc says:
ilya,
check out negligence in terms of negligent misrep. the broker ahs done exactly what he shouldn’t have done–negligently and falsely represented a material fact, which he should have known with exercise of due care was false.
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February 10, 2010, 6:03 pmDavid Chesler says:
She lost.
http://www.boston.com/news/local/breaking_news/2010/02/jury_rejects_co.html
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February 16, 2010, 9:37 pm