Common Ground

Just the Facts, Please

By Lisa Scoble posted 11-19-2018 01:41 PM


182046-11-XL-EO-BLOG-MO_image.jpgJust the Facts, Please

Failure to Confirm Can Result in Fraudulent Claims

In the rush of completing paperwork and procuring signatures to close a transaction, it may be easy to brush aside the need for one more phone call or email to double-check some small detail. Unfortunately, a trivial detail to you may not be equally insignificant to a buyer or seller. Or perhaps in your mind, you consulted a “trusted source” who can be counted on for the latest information. But if you’re not confirming all details with the appropriate authorities, you may be leaving yourself and your firm open to a potential claim.

Here’s an actual scenario that could easily happen to anyone. Next time, make sure it’s not you.


A buyer purchased a large single-family home on a one-acre lot. The home site was near a main highway but a large tract of woods located at the rear of the property served as a buffer between the home and the highway. During the home search, the buyer made it clear to the agent that privacy and easy access to the main highway were key considerations in their final decision. The agent believed the property met all the buyer’s needs.


Prior to the sale, the agent informed the buyer that the adjacent woods were a designated greenbelt, protected from development. Based on that information, the buyer agreed to purchase the property. One month after the sale, a large retail chain announced plans to develop the woods and build a large “box store” 100 feet behind the property.


The agent described the woods as a protected greenbelt based on second-hand information and failed to confirm with the appropriate entities. The representation made by the agent was not accurate and was based only on assumption.


The buyer sued the agent for negligent misrepresentation and fraud, demanding rescission of the contract as well as other unspecified damages. Due to the allegation of fraud and negligence, the insurance carrier for the agent provided a defense, but reserved the right to deny coverage for any damages that arose from fraud. Ultimately, the case settled with the parties agreeing to pay for the construction of a large privacy wall and additional compensation to the buyer.


The agent should have confirmed the information with the appropriate authorities before making the statement. Complete accuracy of all representations is critical to avoiding claims. Misrepresentation of material facts is the most common cause of claims against REALTORS®. Verify that any information shared with prospective buyers is factual and reliable. Remember, a homebuyer’s decisions are based on a multitude of considerations, including some that might seem insignificant to others.

As an agent, your duty is to provide buyers with accurate information based on facts that will help them make the right home-buying choice. Successfully fulfilling this responsibility will also ensure you are minimizing risk and protecting yourself against possible liability claims.

This article was produced in conjunction with AXA XL and is not to be taken as legal advice.