California Civil Code § 2079.13 After Horiike v. Coldwell Banker Residential Company

California Civil Code § 2079.13 After Horiike v. Coldwell Banker Residential Company, et al.

Horiike v. Coldwell Banker Residential Brokerage Company (Cal., Nov. 21, 2016, No. S218734) 2016 WL 6833005 (“Horiike”) presents an interesting judicial interpretation of Civ. Code, § 2079.13.

In Horiike, a Coldwell Banker agent listed a Malibu, California property for sale. After receiving an offer, the listing agent made a number of disclosures and recommendations regarding the square footage of the Malibu home. That sale fell through.

The listing agent then received a second offer from a buyer represented by a fellow Coldwell Banker agent. During the course of this sale, the listing agent failed to make the same disclosures and recommendation regarding the square footage. This buyer purchased the property and sued after learning the property was approximately 5,000 square feet smaller than the listing agent had represented.

The Horiike court found the listing agent could be liable for breach of fiduciary duty for failing to make a number of disclosures and recommendations made in the first transaction. Specifically, the Horikke court found the relationship between the agents – through their Coldwell Banker licenses – created a fiduciary duty to disclose everything but price.  In other words, the shared brokerage relationship between the listing agent and the buyer’s agent created a dual agency disclosure obligation on the part of the listing agent to the buyer even though the buyer had his own separate agent.

In practical application, the Horiike decision presents an interesting question: Should you list your property with a large brokerage and risk the possibility that your listing agent may eventually owe a fiduciary duty to a prospective purchaser trying to get the lowest price?

If you are having a Purchase and Sale Dispute, including Non-Disclosure, Specific Performance, Escrow Deposit Disputes, or others, contact our top rated real estate attorneys at Schorr Law in Los Angeles. You can fill out the contact form, email us at info@schorr-law, or call us at (310) 954-1877.