DEAR BARRY: As a new Realtor, I’m concerned about liability for undisclosed property defects. This was discussed often in my real estate classes, and we were advised to make sure that every deal has a home inspection. But what if the home inspector doesn’t do a good job? If major defects are missed by the inspector, am I liable for nondisclosure? –Amy
DEAR AMY: There are two ways that an agent can be liable for defects that were missed by a home inspector:
1. If the agent selects the home inspector, either by calling the inspector to set the appointment or by specifying which inspector the buyer should call, the buyer can blame the agent for "negligent referral." Who you recommend and how you recommend are therefore vitally important.
The best policy for agents who wish to avoid this kind of liability is to prepare a list of the most thorough and experienced home inspectors available. This list should be given to buyers, and they, not the agent, should select the inspector and call for the appointment. Furthermore, the list should be an all-star roster of the best home inspectors in the area, the ones who provide the most comprehensive disclosure.
2. Agents can be threatened with liability for undisclosed defects even when they’ve done nothing wrong. In a lawsuit, attorneys tend to name everyone in sight as defendants because the more defendants named, the more potential for monetary settlements.