Opinion ID: 2602251
Heading Depth: 2
Heading Rank: 3

Heading: breach of duties as a licensed real estate professionals

Text: ¶ 18 The Hermansens allege that Tasulis and Terena breached duties owed to them as licenced real estate professionals in not disclosing known material defects in the property. We discuss each alleged breach in turn. ¶ 19 The Hermansens assert that as a licensed real estate broker, Tasulis owed them a duty to disclose known material defects in the soil condition at the subdivision. As discussed above, if Tasulis owed an independent duty to the Hermansens, American Towers does not bar the Hermansens claim. ¶ 20 In Secor v. Knight, we discussed the duties imposed upon real estate brokers to deal fairly and honestly, despite the fact that the broker is acting primarily as the seller's agent. 716 P.2d 790, 795 n. 1 (Utah 1986) (citing Note, Real Estate Brokers' Duties to Prospective Purchasers, 1976 B.Y.U. L.Rev. 513, 514-15.) We cited with approval a California case that held that the purposes for imposing a duty to disclose accurate or complete information are to protect the buyer from the unethical broker and seller and to insure that the buyer is provided sufficient accurate information to make an informed decision whether to purchase. Id. (citing Easton v. Strassburger, 152 Cal. App.3d 90, 199 Cal.Rptr. 383 (1984)). Because of the potential of substantial injury that could result from misplaced reliance on a broker, the Easton court held: A real estate broker is a licensed person or entity who holds himself out to the public as having particular skills and knowledge in the real estate field. He is under a duty to disclose facts materially affecting the value or desirability of the property that are known to him.... Easton, 199 Cal.Rptr. at 387. We conclude that Tasulis owed an independent duty to the Hermansens to disclose facts materially affecting the value or the desirability of the property that were known to him. ¶ 21 Similarly, the Hermansens allege that although Terena was selling property for McDougal Shaw Development, she owed a duty as a licensed real estate agent to disclose known soil defects. Terena's liability would flow to Tasulis as a result of the employer-employee relationship, which defendants have not challenged. In Christenson v. Commonwealth Land Title Co., 666 P.2d 302 (Utah 1983), we stated that although gratuitous advice from a stranger to a transaction cannot be actionable, when or if the information is given in the capacity of one in the business of supplying such information, that care and diligence should be exercised which is compatible with the particular business or profession involved. Those who deal with such persons do so because of the advantages which they expect to derive from this special competence. The law, therefore, may well predicate on such a relationship, the duty of care to insure the accuracy and validity of the information. 666 P.2d at 305 (quoting 1 F. Harper & F. James, The Law of Torts, § 7.6, at 546 (1956)). ¶ 22 Specific to the duties of a real estate agent to those persons to whom the agent owes no fiduciary duty, we stated in Dugan v. Jones that [t]hough not occupying a fiduciary relationship with prospective purchasers, a real estate agent hired by the vendor is expected to be honest, ethical, and competent and is answerable at law for his or her statutory duty to the public. 615 P.2d 1239, 1248 (Utah 1980). We apply this reasoning and hold that Terena as the real estate agent owed a duty, independent of any implied or express contracts, to be honest, ethical, and competent in her relationship with the Hermansens, although she and Tasulis were hired by the vendor. We agree with the assessment of the court of appeals in Schafir v. Harrigan when it stated: Oftentimes, ... real estate agents and sellers are understandably unaware of latent defects in the home at the time of sale. This is an inherent risk involved in purchasing a home. Thus, the mere fact that the real estate agent has a duty to disclose known defects to potential purchasers does not mean that the [seller's] agent is liable for all subsequent problems that come to light. The purchasers must also demonstrate that the real estate agent misrepresented, or had prior knowledge of, defects in the home. Only when the purchaser can establish that the agent had both the duty to disclose and knowledge of the defects is recovery appropriate. 879 P.2d 1384, 1390 (Utah Ct.App.1994). ¶ 23 Accordingly, we do not impose upon real estate professionals a duty to conduct independent inspections of property they sell. However, when real estate professionals undertake to secret known material defects, they breach their duty to be honest, ethical, and competent and are liable for their actions.