Brokerage Counsel, Intero Real Estate, Inc.
A frivolous small claims complaint recently gave me opportunity to look up the law concerning agent indemnity when it comes to making disclosures to a buyer via a professional property inspection report.
Cal. Civ. Code § 1102.4
According to §1102.4, brokers and agents are not liable for any “error, inaccuracy, or omission” of any information conveyed by a public agency or a licensed contractor to the buyer. §1102(b) states that the conveyance of information from a contractor or public agency to the client relieves brokers and agents of any further duty to convey the same information.
This means that agents are generally held harmless for facilitating the transfer of inaccurate information from the inspection report to the buyer, so long as the agent is acting in good faith and the agent does not know the information is false. This also means that agents have generally met their duty to disclose certain information so long as the inspector included that information in his report.
Limitations
Of course, if the broker or agent has information that is not discovered by the contractor, and the broker fails to hand that information over, then the broker and agent may still face civil liability for fraud and negligent misrepresentation. So agents should always disclose and hand over the information they have, regardless of whether it is disclosed somewhere else.
Even with that limitation, the presence of a thorough property inspection report often ends up being a brokerage’s best defense when a disgruntled buyer starts to complain about non-disclosure and misrepresentation.
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