Use the Agreement of Sale, the whole Agreement of Sale

I’m currently defending a broker and her salesperson in a failure-to-disclose lawsuit.  My client — a buyers’ agent —  has been accused of failing to tell her clients that mold is not an unusual environmental condition and that they have a right to test for its presence.

Had the broker used the Standard Agreement for the Sale of Real Estate – all of it – she would probably not have been involved in this suit.  Well, perhaps she would have been involved in the suit — but my chances of getting her out of the suit early would have been better!

During a deposition a few weeks ago, I asked the buyers whether they thought it was important to read the Agreement of Sale that contained all of the terms and defined the rights of the buyers and seller. Didn’t they think that their initials on each of the pages signified their review? When I got to the question about reviewing the Notices provisions relating to inspections, environmental conditions and specifically mold, I got a surprise: the buyers were out of town when they signed the Agreement of Sale and transmission of the form to and from the broker were by fax. The buyers never received the reverse sides of the Agreement and therefore could honestly say that they were not provided with the opportunity to read the mold notice.

Based on the buyer’s testimony, we know that had they received it they would have read it, called the EPA, undertaken further research, tested for mold, etc.  (Plaintiffs in litigation will always say they would have availed themselves of all of the testing and assessment opportunities had they been properly advised.  In real life, very few people who receive this Notice test or assess for the presence of mold. )

Paragraph 11 (Inspections) specifically addresses the buyers’ right to assess the property for mold.  A more comprehensive discussion of mold is found in the Notices section.  There, mold is identified as a contaminant, the presence of which may be confirmed by tests.  It is this provision to which I will frequently direct the buyer during the course of litigation by having them acknowledge that yes, they received this information and had the opportunity to read and follow the advice given.

This suit is not going to be won or lost as a result of the agent’s failure to assure that all pages of the Agreement of Sale were reviewed by the buyers with copies provided.  But the failure to prove delivery of the Notice provision pulled from our grasp one very useful defense.  I would be much happier arguing to the jury that not only did the buyers sign the Agreement of Sale with an inspection contingency that allowed for the testing for the presence of mold but also were provided with a lengthy disclosure of the hazards associated with mold and the advisement of having the appropriate qualified expert test for its presence.

The Notices of the Agreement of Sale are not merely inserted for the purpose of giving you a pre-fabricated defense to hold in your back pocket.  The reason the Notices serve as a defense is because they do what agents should be doing: advising buyers of the common pitfalls that may be encountered when purchasing a home and of their ability to choose a course that will eliminate such pitfalls to the extent possible.  One would think that all buyers understand that the presence of mold in any home is a possibility.  Do not, however, overestimate what the average layman understands about environmental hazards or other issues that relate to a home purchase.  The Notices provisions were included in the Agreement for a reason.  Take the time to fax or scan all pages.  By the way, one reason the new Agreement is longer is for the very purpose of accommodating faxing and scanning.  The larger font assures clearer legibility for those on the receiving end of the scan or fax.