Selling agents Beware!

Fiduciary Duties are broader than CC 2079!

Agent Mike inspects a Northern California house hoping to secure a listing when the house goes on the market. He makes some notes about possible water leaks, cracked walls and pool damage.

Mike does not get the listing. But another agent with the same firm ends up representing the buyer. Mike is part of the same team, so he ends up showing the house to the buyers. They ultimately write an offer that is accepted.

The selling agent receives a TDS from the seller, which discloses most, but not all, of the defects Mike noted during his prospecting inspection. Turns out the slab is on-tilt and the house requires substantial repair to keep it from cracking further.

A jury found the selling agent had fulfilled their disclosure obligation in compliance with Civil Code 2079 Can the selling agent (and her employing broker) be liable for negligent non-disclosure, even though they complied with 2079?

The court says YES a selling agent may be tried for constructive fraud. Fiduciary responsibility is broader than 2079-- regardless of how a selling agent obtains information and even if the information is largely redundant to that disclosed through other sources, a fiduciary can be taken to trial for negligent non-disclosure. The case: Michel v. Palos Verdes Network Group, Inc.