Relying on representations made by the sellers, a real estate agent listed a home for sale. He posted information in the Multiple Listing Service (MLS) indicating the property was connected to “Public Sewer, Public Water.”
The Problem
The agent had sold numerous homes in the neighborhood, all having private septic systems.
The Mistake
Ignoring his own instincts and knowledge of the community, the agent failed to double-check the information entered into the MLS.
The Result
The property later went under contract, and just a few days prior to close of escrow, the buyer sent a text message seeking confirmation on the public sewer representation. The agent answered in the affirmative.
Approximately one month after taking possession of the property, the buyer noticed the toilets and sinks were draining slowly. He then called a plumber, who attributed the problem to the septic tank, because he had encountered similar issues in that neighborhood. A septic inspector later checked the decades-old tank and found it had collapsed.
The buyer sued both the agent and sellers, alleging intentional misrepresentation, breach of contract, breach of the standard of care (as to the agent), and rescission. The defendants opted to settle the case for a monetary sum.
Prevention
A pre-closing septic inspection can determine what type of system serves the property and its condition. In some unfortunate cases, a real estate professional lists and advertises a property’s access to public sewers, only to learn later the property is actually serviced by a private septic system. The revelation usually occurs after the septic system fails and backs up into the property.
Recommending the right experts to buyers will help prevent claims and catastrophes. Your clients will know they’re negotiating with accurate information, and you’ll reduce liability by staying up-to-date on common environmental issues in your area.