Opinion ID: 1952878
Heading Depth: 1
Heading Rank: 5

Heading: The Agents' Duty of Disclosure Under Chapter 20.8 of Title 5 and G.L. 1956 Chapter 20.6 of Title 5

Text: Although we hold that no private right of action for damages exists for aggrieved buyers of real estate under the act, this holding does not preclude plaintiff's separate causes of action against the different defendants in this case for negligent omission, negligence, and breach of fiduciary duty. Although the Legislature has not included a provision within the act allowing buyers to sue sellers and real-estate agents for damages resulting from their alleged violations of the act, this does not prevent this statute, or other applicable provisions of the General Laws, from creating a duty on the part of real-estate agents and sellers to disclose material defects to buyers when the defects satisfy the conditions mandating their disclosure under chapter 20.8 of title 5 and otherwise fall within the agent's personal knowledge. The act contains several provisions relating to the duties and obligations of real-estate agents. Thus, § 5-20.8-1(1) defines the term agent to include both buyer's and seller's agents and their respective brokers. [2] Section 5-20.8-2(a) goes on to provide that the seller shall deliver a written disclosure to the buyer and to each agent involved with the sale of real estate. In addition, the provision states that  [t]he agent is not liable for the accuracy or thoroughness of representations made by seller in the written disclosure or for deficient conditions not disclosed to the agent by the seller.  Section 5-20.8-2(a). (Emphases added.) Under the plain language of this section, the seller's agent has no derivative or vicarious liability for misrepresentations or omissions by the seller on the written disclosure form. And this section further protects the seller's agent from liability for deficient conditions not disclosed to the agent by the seller. In our judgment, this language applies to a situation in which an agent is accused of failing to disclose information about a disclosable deficiency, or a seller's misrepresentation concerning the property, when the agent lacked any knowledge of this condition from the seller or otherwise. Under these circumstances, the act immunizes the seller's agent from liability. But the act does not speak to whether the seller's agent has a duty to disclose a defective condition when the agent has independent knowledge of same or when the seller has disclosed the condition to the agent but not to the buyer. Thus, the statute distinguishes between knowledge of the seller and knowledge of the agent, and exempts the agent from liability for information known to the seller, but not communicated to the agent and not otherwise known by the agent. But it does not exempt the agent from his, her, or its independent duty to disclose to the buyer in situations where [the agent] has special knowledge not apparent to the buyer and is aware that the buyer is acting under a misapprehension as to facts which would be important to the buyer and would probably affect [his] decision. Stebbins I, 766 A.2d at 373 (quoting Hoffman v. Fletcher, 244 Ga.App. 506, 535 S.E.2d 849, 851 (2000)). Under these circumstances, agents can be held liable for negligently breaching a duty to disclose such information to the buyer. Another section of the act also implies that agents have a duty to disclose certain information to the buyer. Section 5-20.8-7, titled Public agency notification, provides that information required to be disclosed by this section to a prospective buyer by a public agency is deemed to comply with the requirements of this section and relieves the seller or agent of any further duty under this section as to that item of information. (Emphasis added.) This languagealso implies, however, that an agent has some duty to provide information to a buyer, as we noted in Stebbins I, 766 A.2d at 373. Finally, § 5-20.8-9 provides: Neither the seller nor agent is liable for any error, inaccuracy, or omission of any information delivered pursuant to this chapter if the error, inaccuracy, or omission was not within the personal knowledge of the seller or agent, was based on information timely provided pursuant to §§5-20.8-7 and 5-20.8-8 and ordinary care was exercised in obtaining and transmitting it. (Emphases added.) Again, this language anticipates that an agent could be held liable for information provided or not provided to a buyer concerning the real estate in question, if the above-specified conditions for immunity are not satisfied. On the other hand, the act relieves the agent from liability if the error, inaccuracy, or omission in communicating the information was not within the agent's personal knowledge, if the information was timely provided to the buyer under the applicable provisions of the act, and if ordinary care was exercised in obtaining and transmitting this information to the buyer. In Stebbins I, 766 A.2d at 373, we acknowledged that despite the application of the doctrine of caveat emptor to real estate transactions, `passive concealment by the seller' is an exception to this rule. Citing a Georgia case, we said that such an exception: `places upon the seller or agent a duty to disclose in situations where he or she has special knowledge not apparent to the buyer and is aware that the buyer is acting under a misapprehension as to facts which would be important to the buyer and would probably affect its decision.' Stebbins I, 766 A.2d at 373 (quoting Hoffman, 535 S.E.2d at 851). (Emphasis added.) The motion justice cited to the above language from Stebbins I in his written decision granting summary judgment for the buyer's agent, and noted that his decision does not preclude lawsuits against buyer's agents or other types of agents for withholding information from the buyer. Similarly, in his decision for the seller's agent, the court said that, today's decision does not preclude the possibility of lawsuits against a sales agent for allegedly failing to disclose defective realty. In so ruling, the motion justice distinguished the provisions of the act from those addressing the duties of real-estate agents in chapter 20.6 of title 5, opining in both his written decisions that chapter 20.6 of title 5, rather than chapter 20.8 of title 5, deals forthrightly with the agent's duty of disclosure. Thus, he concluded, it is [chapter 20.6] and not chapter 20.8, which affirmatively obligates the buyer's [and seller's] agent to disclose information to the buyer. In interpreting statutory language, our primary concern is to achieve `the purpose of the act as intended by the Legislature.' Mottola, 789 A.2d at 423. It is evident to us that the overall purpose of the act is to set forth a standard of disclosure for sellers and their agents before the transfer of real estate occurs. Because the Legislature purposefully included buyer's agents within the definition of the term agent in § 5-20.8-1, we conclude that the General Assembly did not intend to distinguish between the different types of agents involved in real estate transactions, but rather intended buyer's agents to have the same duties, obligations, and immunities as seller's agents under the act. Thus, we hold that chapters 20.8 and 20.6 of title 5 create a duty on the part of real estate agents to disclose to potential buyers of real property any material defects, as defined in the act, when such disclosable defects are within the agent's personal knowledge, and the agents know or should know that the buyer is acting under a misapprehension concerning facts `which would be important to the buyer and could probably affect its decision.' Stebbins I, 766 A.2d at 373. An alleged breach of that duty can be the basis for a negligence claim or a negligent omission claim, and, in the case of the buyer's own agent, a breach-of-fiduciary-duty claim.