Real Estate Investing

Let me preface this by saying I am NOT an attorney, I have never studied law, and should you have any legal questions, seek the opinion of a legal professional.

Liability is actually a nine-letter word, but it may as well be the four-letter kind in the real estate dictionary.  An agent recently shared her experiences with a seller who had already moved out-of-state but had a swimming pool in the back yard.  The pool was behind an eight-foot fence.  There were two sets of gates any trespasser would have had to go through to access the water, yet she was still a nervous wreck.

Why?  Because the son of the seller lived nearby and he’d come over every day or two to check on the house.  When he left - every single time - he’d leave at least one of the gates wide open.  The agent begged the seller to tell the son to close the gates, but when the gates were left open repeatedly, she took matters into her own hands.  She bought two padlocks, placed them on the gate latches, and her liability is hopefully gone.

A swimming pool can be a huge liability issue for an agent (on both sides of a transaction) and a homeowner.  The implications for the homeowner are obvious - if they haven’t made efforts to make the water inaccessible for trespassers, neighbors, children and something happened, they could be held liable.  For the listing agent liability is less clear, but if we are knowledgeable that a pool is accessible to someone and the owner is absent, we must make every effort to protect both the possible drowning victim AND the absentee homeowner.

But how could the buyer’s agent be liable?  The same way another agent was sued because their buyer went into an attic space and didn’t walk on the rafters.  They put their weight in the wrong place, went through the floor and fell out of the living room ceiling.  They buyer sued the agent because the agent didn’t clearly warn the buyer to “Watch your step!”  (This is why we often see signs at homes under construction that say “Warning: Construction area.  Enter at your own risk.”)

The buyer’s agent should warn their clients, “Careful! There’s a swimming pool!  Watch your children.  Don’t drown!”

We face all kinds of potential liability issues as Realtors every single day.  Ryan Shaughnessy, a Realtor in St. Louis, wrote an excellent article about who is required to disclose what on his Active Rain site.  I think his best tip for avoiding liability is,

Where appropriate, suggest to the owner/seller that they retain a building inspector to conduct a building inspection prior to the listing of the property for sale so that the potential problems can be repaired before the property is listed for sale.  Verify that pre-listing repairs are documented and accurately disclosed to the prospective purchaser.  The resolution of problems prior to listing can lead to a quicker sale at a higher price.

Read the rest of his post for some great insights.

Photo from Me’nthedogs via Flickr.