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Failure to Disclose Landslide

“A real estate broker is a licensed person or entity who holds himself out to the public as having particular skills and knowledge in the real estate field. He is under a duty to disclose facts materially affecting the value or desirability of the property that are known to him or which through reasonable diligence should be known to him”. Easton v. Strassburger, (1984) 152 Cal.App.3d 90,98.

Failure to Disclose Landslide

Buyer received $1 Million for failing to disclose landslide zone. Buyer did not suffer a landslide on the property but was awarded with settlement because seller and agents failed to disclose the property was in a landslide zone. Cleckley v. Coldwell Banker, Superior Court of CA, Santa Clara County Case # 1-03-CV-815421, filed 03/12/03.

Failure to Disclose Landslide

Buyer did not receive disclosure that the property was located within a landslide hazard zone, instead buyer received inaccurate information. The agent lost her license. This case demonstrates that if the buyer has not received a disclosure that the property is located within a landslide hazard zone, or has received inaccurate information, the consequences of failing to adhere to required and/or recommended mitigation measures could result in damages equal to the entire value of the property. If the buyer’s property suffers damage due to a landslide, failing to initially take affirmative steps to protect the subject property could result in difficulty to acquire financial assistance and if the damage is great, the buyer may lose the home and/or the value of the property entirely. [property subject to landslide hazard began to suffer damage and within eight months of closing escrow, the appraised value of the property was zero.]. Vaill v. Edmonds, (1991) 4 Cal.App.4th 247.

Failure to Disclose Landslide

The susceptibility to potential for landslide was not disclosed to the buyer. The case settled for $1 Million for failure to disclose landslide potential. Morter, et al. v. Thunderbird Realty, Superior Court of CA, Santa Cruz County Case #CV 136523, filed 08/31/1999.

Outdated Natural Hazard Disclosure Report

The court here found the buyer’s agent liable for negligence and breach of fiduciary duty when the agent delivered a factually true Fault Hazard Earthquake report to the buyer, but failed to investigate whether the contents were outdated and simply told the buyer to “check it out.” Saffie v. Schmeling, (2014) 24 Cal.App.4th 563.

Real Estate Agent Fiduciary Duty to the Client

A real estate agent’s fiduciary duties to the client require the highest good faith and undivided service and loyalty. Stiefel v. McKee, (1969) 1 Cal.App.3d 263, 266.

Real Estate Agent’s Duty to Conduct Diligent Inspections

“If a broker were required to disclose only known defects, but not also those that are reasonably discoverable, he would be shielded by his ignorance of that which he holds himself out to know.” Further, “… if a seller’s broker cannot be held accountable for what he does not know but could discover without great difficulty, it would inevitably produce a disincentive for sellers’ broker to make a diligent inspection.” The purpose of the Cooper-Lingsch rules is to protect the buyer from unscrupulous brokers and sellers, and to ensure that the buyer is given all the information regarding the property, accurate and complete, to make an informed decision of whether to purchase the property. Cooper v. Jevne, (1976) 56 Cal.App.3d 860, 866, and Lingsch v. Savage, (1963) 213 Cal.App.2d 729, 733.

Buyer’s Agent Breached Fiduciary Duty

Buyer’s agent found to have breached fiduciary duty owed to the buyer. This action potentially subjects the buyer’s agent to actual damages caused by the breach. Salahutdin v. Valley of California, Inc., (1994) 24 Cal.App.4th 555, 565.

Fraudulent Concealment of Liquefaction and Bay Mud Susceptibility

Seller received a complete and accurate NHDS report when purchasing a property and then provided a new buyer with an incomplete and inaccurate report when the property was resold. Bandalin v. Sohai Superior Court of California, County of Marin, CIV073157. In RE Sohaei, Memorandum Decision, 2012 WL 2790802.

Failure to Disclose Liquefaction Zone

If the subject property is located within a liquefaction hazard zone, the buyer should receive this disclosure. (2011) Oakland Heritage All. v. City of Oakland, 95 Cal.App.4th 884.

Failure to Disclose Expansive Soils

Court affirmed an award for actual damages based on misrepresentation of a material fact where the seller’s concealment of soil conditions was discovered when the buyer noticed structural property damage. Burkett v. J. A. Thompson & Son Civ. No. 22188. Second Dist., Div. Two. Apr. 29, 1957.

Failure to Disclose Protected Habitat/Species Zone

Buyer precluded from certain actions on his/her property even if the protected species or habitat is not physically located on the subject property but still poses an imminent threat of harm to that species or habitat. Conservation Council v. Rosboro Lumber Co. No. 94-35070 (9th Cir. March 24, 1995).

Failure to Disclose Environmental Hazard

Seller failed to disclose environmental contamination. Just after the close of escrow, buyers learned that the mini-mart / gasoline service station they purchased was environmentally contaminated by gasoline leaks. Further it was discovered that the property was under state and county orders to monitor the spreading of the contamination. None of this was disclosed to the buyers. Buyers were able to successfully rescind the transaction and recover all monies and expenses they incurred. Lively v. Heydarian, et al, Superior Court of CA, County of El Dorado PC0000236.

Right to Farm

California courts have interpreted the right-to-farm protection as extending to more than just nuisance actions where an extension is warranted by the underlying legislative intent. In this case, the court upheld summary judgment in favor of the defendant avocado farmer where the plaintiff brought a trespass action against the defendant for runoff and irrigation water that damaged and destabilized the plaintiff’s soil while the property was being prepped for development. The court stated that a property owner cannot side-step the agricultural practices immunity prescribed by CIV § 3482.5 simply by framing the owner’s cause of action under a legal theory other than negligence because to make agricultural practices that constitute both a nuisance and a trespass actionable under a theory of trespass would frustrate the right-to-farm laws’ purpose. Rancho Viejo LLC v. Tres Amigos Viejos LLC, (2002) 100 Cal.App.4th 550.

Duty to Disclose Material Facts

The court here held that seller and his broker must reveal all factual matters bearing upon the quality of the property being sold which might be detrimental to value, including that the property was constructed on filled land, that the structure was in violation of building codes or zoning ordinances, that the structure was condemned, or that it was termite ridden. Duty of disclosure relates to facts that materially affect the value and desirability of the property, but not the consequences of those facts. Sweat v. Hollister, (1995) 37 Cal.App.4th 603.

Agent and Supervising Broker Held Liable for Agent's Failure to Make Disclosures

If the seller’s agent acts negligently or willfully in failing to make disclosures to the buyer, the corporation may be vicariously liable for the buyer’s actual damages. If this is the case, the supervising broker may be subject to liability to the corporation for indemnification if an injured buyer joins the corporation as a defendant in any action against the seller’s agent, but likely will not be liable to the buyer directly. Walters v. Marler, Civ.No. 40396. First Dist. Div. Four. June 23, 1978.

Intentional Misrepresentation

Agents’ liability for breach of fiduciary duty and intentional misrepresentation. Had the buyers known that the soil report was produced by an illegitimate source misrepresenting the property’s build-ability, the buyers would not have purchased the property. Glen Oaks Estates HOA v. REMAX Premier Properties, (2012) 203 Cal.App4th 913.

Concealment of Material Facts

“Where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him and also knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer.” The mere nondisclosure of such a fact may subject the seller to liability for fraud because this “conduct in the transaction amounts to a representation of the nonexistence of the facts which he has failed to disclose,” which can amount to a “negative fraud.” In the case of fraud, it must be shown that the seller failed to disclose a material fact within seller’s knowledge, that this fact was unknown or beyond the buyer’s reach, that the nondisclosure was intended to induce the buyer, and that the buyer was so induced resulting in damages. Lingsch v. Savage, (1963) 213 Cal.App.2d 729, 735.

Buyer Not Held to Constructive Notice of Public Record

In the case of fraud, an injured buyer may claim that buyer justifiably relied on the seller’s non-disclosure or inaccurate disclosure in the transaction, rather than try to prove the intent to induce. Buyer, “is not held to constructive notice of a public record which would reveal the true facts.” Manderville v. PCG & S Grp., Inc., (2007) 146 Cal.App.4th 1486.

Failure to Disclose Military Ordnance

Due to proximity to Military Ordnance, the evidence by expert reduced the fair market value of the subject property. Kuperman v. Assessment Appeals Bd. No. 1, 137 Cal.App.4th 918.

Disclosures Mandated by Local Jurisdiction

The property was in a Creek Regulated Area. If the subject property is located within an Oakland Creek Regulated Area, the buyer may also be liable to downstream property owners. If the buyer’s improvements or development on the subject property cause damage to property downstream, the buyer may be liable for that damage if, under the totality of the circumstances, the buyer’s actions were unreasonable. Locklin v. City of Lafayette, (1994) 7 Cal.4th 327, 353, 867 P.2d 724, 739.

Failure to Disclose Flood

Morris v. Taulbee, Superior Court of CA, County of Santa Clara Case CV977421, filed 06/26/01. Seller and dual agent failed to disclose the flood zone potential to the buyer.

Failure to Disclose Noise

Fraud against agent and seller - Real estate transaction rescinded for misrepresentation of noise. Bennette v. Cesari (binding arbitration) cited in “Property Condition Disclosure Forms” by George Lefcoe in Real Property, Probate and Trust Journal (Summer 2004),pp, 906-207.

Actual Damages Definition in Nondisclosure Claims

“Actual damages” in terms of CIV § 1102 nondisclosure claims has been interpreted as the damages described in CIV § 3343 as, “the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction. Saunders v. Taylor, (1996) 42 Cal.App.4th 1538.