Watching your step
A salesperson was walking a potential buyer through an unfinished attic in a residential property. While looking around, the buyer lost her balance and fell through the ceiling to the floor below! Fortunately, the buyer sustained only minor injuries.
Is the Broker liable civilly for the minor injuries sustained by the buyer? Is the Broker subject to discipline by the Real Estate Commission under a theory that the Broker failed to adequately supervise her salesperson?
Regardless of the answers, the Broker should immediately notify her general liability insurer and, if there is any indication that a complaint has or will be made to the Real Estate Commission, her Errors & Omissions insurer. The general liability insurer may provide a defense (legal counsel to defend the salesperson and Broker) and will pay up to the limits of the liability insurance purchased in the event of a verdict or settlement against the Broker. The E&O insurer may provide a defense (cost of defense counsel) to protect the Broker against disciplinary claims filed with the Real Estate Commission. Not all E&O policies provide such coverage and it is likely that there will be no coverage beyond the cost of defending the disciplinary suit (no insurance coverage to pay fines or the discipline imposed).
Whether the Broker is liable for the injuries sustained by the buyer will depend upon whether the salesperson was negligent in any respect and whether that negligence led to the fall and the injuries. A salesperson is negligent when his/her behavior fails to conform to what we hold as the standard of behavior for the “reasonable” salesperson. A salesperson may be, but is not necessarily, negligent for taking a buyer into an unfinished attic. If the buyer is healthy and physically capable of ascending the stairs and walking about the attic, the lighting is good, and there are no latent conditions that the buyer, exercising ordinary care, would not perceive, then it is unlikely that the salesperson is liable.
If, however, the buyer is not steady on his feet, is older and has difficulty negotiating tight spaces or steep stairs, or the lighting is bad and the buyer does not understand that the attic is not fully decked, then the salesperson is on notice to exercise a special caution. What is reasonable will always depend upon the circumstances that exist at the time and place of the incident. An injured person who brings a claim of negligence has the burden of proving that the salesperson did not act reasonably under the circumstances. When these questions cannot be resolved amicably, then the parties may resort to the judicial process for such a determination.
Our salesperson’s negligence, if any, may be offset by the comparative negligence of the buyer. The buyer entering an unfamiliar property has a duty to be vigilant and see what is there to be seen! Whether a buyer should perceive and avoid potential pitfalls is also answered in light of the circumstances then and there existing. Keep in mind that when a buyer examines a property he will be “shopping” and perhaps not as careful about looking at his footing as he might otherwise be. These are all questions that are taken into consideration when liability is assessed.
Because salespersons so frequently enter into unknown properties, it might be argued that they have the greater responsibility to look for the likely pitfalls that may cause injury. Additionally, a listing salesperson may be under a duty to assure that the property is in a reasonably safe condition before the doors are opened to potential buyers. In the least, a clear explanation should be given to owners that the property should be made safe for visiting buyers and agents who will be unfamiliar with it.
Whether the Broker should be disciplined by the Commission for failing to supervise is a separate issue. The duty to “adequately” supervise is an ambiguous concept, but one on to which prosecutors latch when pursuing penalties for alleged licensing violations. The “Prohibited Acts” section of the Real Estate Licensing and Registration Act authorizes the Real Estate Commission to punish Brokers who fail to “exercise adequate supervision over the activities of his licensed salespersons or associate brokers within the scope of the Act.”
Generally, one thinks of salesperson “activities” to include activities having to do with the specialized knowledge of a real estate professional including the preparation of comparative market analyses, preparing marketing strategies, drafting contracts and marketing materials, and negotiating prices. One would think that a Broker need not provide special supervision when it comes to those activities that are not unique to real estate such as driving a car, accompanying a buyer into a house or similar physical activities. Clearly, RELRA does not require the Broker to accompany the salesperson who accompanies the buyer! The Broker is well-advised, however, to assure that there are appropriate policies that advise listing salespersons to instruct owners to keep the property in a safe condition, and to instruct buyer agents who accompany their buyers to properties to be extra vigilant for those hazards a salesperson might reasonably expect to encounter.
Jim Goldsmith and Brett Woodburn are attorneys with Caldwell & Kearns. They serve as general counsel to PAR. Their legal practices vary, but both of these attorneys represent and defend real estate agents and brokers in all types of civil law suits and licensing claims across the Commonwealth. They are also two of the voices of the Legal Hotline. To see the other members of Caldwell & Kearns and the Legal Hotline, visit www.caldwellkearns.com.