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Authors

Dawn K. McGee

Abstract

While the caveat emptor (buyer beware) theory has traditionally applied to real estate purchases, courts are continuously recognizing a brokers' duty to disclose. Some courts have found duty under an agent-principal relationship; others have found a duty as a matter of public policy, statutory language, ethics codes, or malpractice case law. Courts also differ on whether brokers have a duty to investigate the property and disclose defects. The author recognizes three issues of broker liability about which courts are divided: (1) the level of culpability required to find broker liability; (2) the basis of a real estate broker's duty to a prospective purchaser; (3) the scope of any duty a broker owes to a prospective purchaser. The note examines the role of a broker and surveys tortious misrepresentation in the real estate context. The author concludes that courts should not impose liability for innocent misrepresentation, nor an affirmative duty of inspection and disclosure. The note recommends that legislatures take action to prevent transaction of defective real estate in order to protect both home buyers and brokers.

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