Brief Fact Summary. Gladys Messler, (Plaintiff) sued Sandra Phillips, (Defendant) for fraud, negligence and theft resulting from a real estate transaction. The trial court ruled in favor of Plaintiff. Defendant appeals.
Synopsis of Rule of Law. Even though an agent does not formally contract to represent a party in a real estate transaction, she may nevertheless be held responsible for violation of an assumed duty of care in representing said party’s interests.
When a statute is amended, the judicial construction previously placed upon the statute is deemed approved by the General Assembly to the extent that the provision remains unchanged.View Full Point of Law
Issue. Whether Defendant negligently breached a duty of care to the plaintiff.
Held. Yes. Defendant negligently breached a duty of care to the plaintiff.
Discussion. In order for a real estate broker to represent both the seller and buyer in a transaction, the broker must put the agency agreement in writing and the seller and purchaser must both sign it. If this agreement is not made, the agent is considered only the agent of the seller. Therefore, no fiduciary duty arises between Plaintiff and Defendant in this case.
However, real estate brokers have been held accountable for failure to deal fairly and honestly with a purchaser while serving as the seller’s agent. Defendant’s negligent misrepresentation of her ability to represent plaintiff’s interests constitutes a violation of the broker’s duty of honesty and fair dealing.
Even though defendant did not formally contract to act as plaintiff’s agent for the purchase of the townhouse, she is responsible for violating an assumed duty of care in representing plaintiff’s interest in the townhouse closing. The assumed duty arose when Defendant told Plaintiff and her relatives that she would look after Plaintiff’s interests and assured Plaintiff’s relative they need not attend both closings. The trial court did not err in determining that Defendant assumed a duty of care to Plaintiff by her promises and subsequently breached that duty.