After working hard to transform a house into a treasured home, homeowners often want to meet with prospective buyers when it comes time to sell. They often want to feel “their” home is going to a good family and seek a warm connection with the new owners.
Selling a home is emotionally laden, but it is also a sophisticated legal transaction in which sellers open themselves to a host of liabilities. E&C partner Edward S. Englander, who has more than 35 years of experience in real estate litigation and in negotiating purchase and sale agreements, says that desire for face-to-face contact with potential buyers could result in legal headaches for the seller. Consider the following real-life case:
In 2006, the Fowlers (a fictitious name) put their home of 35 years on the market. The history of the Fowlers’ connection to this land dated back to the 1930s, when Mr. Fowler’s father purchased a farm. Mr. Fowler had been raised on the farm, portions of which had been used for various activities over the years including a pig farm and a town dump from 1955 to 1978. In the late 1960s, Mr. Fowler’s father carved out a roadside house lot from the farm and deeded it to his son. Mr. Fowler built a home for his family on the lot.
Mr. Fowler and his wife put this home on the market in 2006. The Fowlers felt it was important to be home for every showing to keep their dogs under control. During one of the showings, a prospective buyer chatted with Mr. Fowler while he was minding his dogs in the breezeway. The potential buyer asked, “What was all that land?” Mr. Fowler answered by pointing out the old farm house where he had grown up and told the buyer that the property used to be his father’s pig farm. Mr. Fowler never mentioned that part of the property had been used as the town dump from 1955 to 1978.
The potential buyer subsequently purchased the property in August 2006. The Fowlers moved on to Florida. The buyers sued the sellers in 2008, in Massachusetts, for claims of fraud, intentional infliction of emotional distress and civil conspiracy — all because Mr. Fowler shot the breeze in the breezeway and he failed to disclose the adjacent farm had been used as a town dump in the course of the conversation. The sellers had no choice but defend the lawsuit which, after five years of discovery and motions, went to a jury trial in the Norfolk Superior Court. After five days of trial and two days of deliberation, the jury returned a verdict for the Fowlers because the buyers did not reasonably rely on the conversation in the breezeway.
How can sellers avoid painful, expensive and risky lawsuits like this? Attorney Englander recommends following these rules:
- Buyers and sellers never meet in person;
- Buyers should be informed by the seller’s real estate broker if the buyer has a question they deem important. The question should be asked in writing and the seller should answer in writing; and
- Attorneys for sellers should add a clause to the purchase and sale agreements that states “any questions the buyer(s) have deemed important have been asked in writing and the seller(s) have answered those questions in writing, and attached are copies of the questions and answers.” If the buyer(s) have asked no questions then the purchase and sale agreement should state “The buyer(s) have asked no questions.”