Caveat Emptor

by Jonathan Salon, Attorney at Law

One of the key players a homebuyer will encounter in an effort to purchase real estate usually will be the real estate broker. Simply put, the broker is a licensed professional who is in the business of selling real property on commission for a percentage of the agreed price or a specified fee to be paid by the seller. It is important to understand that the broker is an agent of the seller and has certain obligations to the seller which are described in the broker's agreement.

A homebuyer must be cautious when dealing with the seller's broker and should understand that the broker represents only the seller and does not owe a fiduciary duty to the buyer. A seller's broker is obligated to give the seller the benefit of his knowledge and advice, obtain the best possible terms with regards to the sale, and keep the seller fully informed of all material facts which come to the broker's attention with respect to the transaction. However, the seller's broker owes no such duty of good faith and loyalty to the buyer under Massachusetts law. Very often the broker serves as a "middle-man" throughout the negotiations and the buyer must be aware that the broker does not represent both sides. In such cases, the buyer may want to hire an attorney to represent his interests throughout the transaction.

One of the most common problems a homebuyer encounters when purchasing a home concerns the seller or broker's oral representations about some condition of the property which later turns out to be misleading or untrue. The general rule is that when asked about a specific condition, the seller or broker must answer truthfully and may be held liable for representation which turns out to be false. An example would be telling the buyer that the roof does not leak when, in fact, it has leaked for years. However, the seller or broker ordinarily has no obligation to disclose defects affecting the property if not asked. For this reason, the wise buyer should meticulously inspect the property and ask a lot of questions concerning its condition.

In dealing with misrepresentation by the seller or broker, the buyer has to separate fact from opinion. A buyer has no cause of action against a seller or broker who offers his mere opinion or engages in "sales talk" which is misleading. A broker who tells the buyer that the house is "well build" can not be sued if the foundation later cracks. However, if the buyer specifically asks about the condition of the foundation and the broker does not reveal the presence of cracks, an action may be brought for fraud or deceit. In addition, in some instances, a buyer is protected from such misrepresentation by the Massachusetts Consumer Protection Act. In distinguishing between fact and opinion, a court will look at all of the circumstances of the particular case including the sophistication of the parties involved. Retaining competent legal representation at an early state is an effective way for the homebuyer to avoid numerous pitfalls which may be encountered throughout the course of the transaction.

Jonathan Salon is an Attorney with the firm of Salon & Danis, located on Union Wharf in Boston, Massachusetts.

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