Can You Prove It?

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judgeI attended GAR’s annual broker and manager meeting a few days ago. It’s the second annual meeting hosted by GAR and open to brokers and managers from every GAR member firm in the state. The intent is to give all the company leaders some insight into industry trends. Part of each meeting, though, is devoted to current lawsuits which affect or could affect Realtors in Georgia. A couple of them are pertinent to agents’ day to day dealings and will help us avoid future problems. Here’s one of the current cases…

A woman purchased a townhome in Atlanta, closed the sale and moved in. Several months after moving in she discovered waterlogged carpeting, falling sheetrock and other water-related issues. She also discovered a lot of mold. The buyer sued the Selling Broker and the Listing Broker for concealing the water and mold issues.

It turns out that a 20-page mold screening inspection report which revealed extensive water stains and mold throughout the home had been left in the property for prospective buyers to review but this buyer never looked at it. The report further explained that extensive mold remediation had been performed, thus no visual evidence of the prior problems existed at the time of contract, inspection and closing. 

Fortunately for the Listing Broker, the Listing Agent had an email record showing that she had emailed the 20-page report to the Selling Agent. The Selling Agent had acknowledged receiving the email and the report. The Selling Agent had a Buyer Brokerage Agreement with the buyer, and thus, notice to the Selling Agent was notice to the buyer. 

In court the buyer swore on a stack of Bibles that she had never been given the mold report. The Selling Agent swore on an equal stack of Bibles that she had handed the report to the buyer during a specific visit to the property. Which one is telling the truth?

PROBLEM:  The Selling Agent couldn’t PROVE that she had delivered the mold report to the buyer.  SOLUTION:  Before handing a mold report, survey, termite inspection, home inspection report or ANY document to a customer or client, make a copy of the report, scan it, and email another copy to the intended recipient with a little note, “I know I already gave you this but wanted to give you another copy for safekeeping.” I would also suggest asking some type of question, “Are you going out of town this weekend?” etc. so that the recipient will reply and verify that he/she received your email. 

Wow! It doesn’t matter what you DO, it only matters what you can PROVE you did.

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9 Responses to “Can You Prove It?”

  1. Dennis Doll Says:

    Is it that Buyers seem to be looking for ways to back-track on decisions made in the past? With falling prices any “out” could remedy their situation. The answer is to document everything!
    Again, You and all the Metro Brokers, Broker Support team are there to warn us of dangers in our paths.

  2. Ann Bone Says:

    Dennis is exactly right. There is a rise in cases of buyers suing to get out of or get money for buying decisions they made recently which they now regret.

    I JUST had a call from one of our good agents who has been BEGGING the buyer to get a survey done on the REO property he’s buying. It was formerly a 10-acre tract of land, but their contract is only for the house and 4 acres. The tax records still indicate that that address is a 10-acre parcel. I suggested to her to document her recommendation of a survey to the buyer through an email before his Due Diligence period ends. No one PLANS on suing or being sued, but it happens when buyers discover anything they believe they were not made aware of prior to purchasing.

  3. conyersom Says:

    No matter what changes occur in this industry, from contract to closing. one thing doesn’t change- the CYB rule- cover your backside at all times and you won’t be blind-sided.

  4. Dottie Wise Says:

    If it is not in writing, it does not exsist! Thanks for the reminder!

  5. Christina Poodt Says:

    Great article, great truth!! Thanks Ann for your wisdom and great advice always!

    When dealing with foreclosures and REO’s where we mostly do not have disclosure statements or any reports at all, it is up to the buyer to order any report they really want or need. I get buyers and their agents to sign additional docs that spell out that a whole host of problems are up to them to verify, and they are always given the right to inspect. If any bank or institution does not allow an inspection, don’t walk, RUN!!

  6. ann bone Says:

    I agree. I recently saw a listing posted on one of the MLS systems that said, “no disclosure, no due diligence, no financing contingency, no appraisal contingency.”

    In a case like that, if I had a buyer really interested in the property, I would suggest that they hire an inspector and appraiser BEFORE making any offer.

  7. K Bernard Strong Says:

    Thanks Christina and Conyersom for your comments. I will construct a “CYB Checklist” and place a copy in each file. It can’t hurt.

  8. Cathy Witherspoon Says:

    Great advice. Thanks.

    I am always amazed how short a client’s memory can be about everything related to the buying process. The checklist is a great idea too.

  9. leslie flint Says:

    Always have buyer sign and/or initial and date anything related to the purchase.
    Your copy & their copy.
    Document everything since memory tends to be short and selective.

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