November 13th - 2009

LEGAL BEAT: Disclose market value comparables

The REALTOR® knew that a development property might be for sale and discussed it with the sellers.

The REALTOR® knew that a development property might be for sale and discussed it with the sellers. Eventually he brought them an offer for $800,000 but that was not acceptable. After further negotiations he brought an offer for $1 million and that was accepted.

He had faxed the consumer brochure "Working With A REALTOR®," an exclusive Listing Contract and a Limited Dual Agency Agreement (LDAA) with the first offer. The sellers signed those when the second offer was presented and accepted.

After the deal closed the sellers decided that they should have received $400,000 more and sued the REALTOR® for that amount. The judge decided that the sellers had not proved that their REALTOR® was negligent and that they failed to establish that he had breached the customary standard of care in discussing the market value.

The judge also preferred the appraisal evidence of the REALTOR®'s witness that the sale price was close to market value. The sellers' appraiser's evidence was not accepted by the judge.

The sellers also complained that the REALTOR® had charged them too much and that the 10% they agreed to pay was excessive. That judge decided that was not an illegal or unconscionable amount and that these knowledgeable sellers had agreed to it.

Then the sellers argued that they should have been told that the buyer was a developer. The judge noted that they were also developers and that a logical buyer would also be one. In any event the LDAA provisions modified the duty of disclosure and that in these circumstances the buyer's occupation was excluded from disclosure as it was personal information.

The sellers lost.

Summit Staging v 596373 B.C. Ltd 2008 BCSC 198

Whenever possible, disclose market value comparables. In other situations the identity and occupation of the clients might be found to be a material fact also requiring disclosure.

This B.C. case reminds me of the Ummel case in San Diego that received a lot of media attention when the buyer sued their REALTOR® claiming that they had overpaid. They also lost.

Give all clients comparable data.

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