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.

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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Ilya Somin: officially banned

So now Orin owes you a beer.

Ilya Somin: 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.

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).

Ben P: 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.

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.

Guest14: That’s not sad at all. Smokers deserve whatever they get, and worse.

So do you.

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.

AJM: 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.

That’s not sad at all. Smokers deserve whatever they get, and worse.

ShelbyC: 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.

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.

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.”

Ben P: 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.

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.

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.”

AJM: 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?

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.

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?

Ilya Somin: 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.

How do you know what evidence was in the record?

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.

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.

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.

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.

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.

Would it have been too hard for the broker to have asked someone?

ShelbyC: 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.

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.

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.

BenP: 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.

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.

Ilya Somin: 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.

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.

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.)

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.

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.

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.

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.

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.