Realtor statement. Client bound? Infringement of duty of care?

These questions were recently raised in a case before the Court of Appeal of Arnhem-Leeuwarden. The case was as follows.

The seller engages a real estate agent when selling his home. Next to the house is a building with a garden. In the garden is the remainder of a former house located (hereinafter: “the ruin”). According to the buyer, the broker would have ensured prior to the sale that there would not be any development on the site of the ruin. After the sale, it appeared that the owner of the neighboring plot has obtained a building permit for a new house to be built on the site of the ruin afterall. The buyer then holds the seller and the estate agent liable for the damages suffered by him.

With regard to the seller, the buyer takes the position that he has gone astray when entering into the purchase agreement. In other words: if the buyer had had a correct presentation of the building plans of the owner of the neighbouring plot of land, he would not have concluded the sale under the same conditions (i.e. he would have paid a lower purchase price). With respect to the estate agent, the buyer has taken the position that the estate agent acted unlawfully by announcing that the ruin site would not be built on, while it has turned out to be wrong.

The Court of Appeal first of all looked at the question whether the seller is bound by the statements of the broker. In this respect, the Court of Appeal pointed out that, in principle, an estate agent acts as the principal and not as a representative or authorised representative of the client. In order to bind the client, additional facts and circumstances are necessary, such as, for example, announcements by the broker about the content of the brokerage agreement and/or the conduct of the client. According to the Court, these additional facts and circumstances have not been stated or proven. This means that the communication of the broker about the ruin cannot be attributed to the seller. Therefore, the reliance on error is unfounded. The seller is therefore not liable.

Subsequently, the Court of Appeal assesses the question whether the broker has acted with sufficient care. In this respect, the Court of Appeal put first and foremost that, assuming that the real estate agent has made the relevant communication about the ruin, this communication does not concern a relevant property of the real estate itself, but an aspect in its vicinity. In that case, according to the Court of Appeal, a potential buyer may be expected to be a little more attentive than in the case of a communication from the real estate agent about the immovable property itself.

The Court does not share the view of the buyer that the estate agent’s statement should be regarded as a guarantee for the future. The Court of Appeal considers that it is a fact of common knowledge that zoning plans can change and that owners of adjoining plots can make changes to their plots. The Court of Appeal also took into account that the buyer did not rely on the mere communication from the real estate agent, but also investigated the question of whether there were any building plans in relation to the ruin prior to the sale and inquired with the municipality to that end.

With regard to the correctness of the notification of the real estate agent, the Court of Appeal considered that at the time of the notification there was a zoning plan on the basis of which only an annexe could be realized on the ruin site. Only later (read: after the sale) was exemption from the zoning plan granted for the construction of a dwelling on the ruin site. This means that the real estate agent’s notification was in accordance with the zoning plan. Moreover, prior to the purchase, the real estate agent inquired with the municipality, on which the municipality indicated that there were no building plans with regard to the garden of the neighboring plot. In short: the announcement of the real estate agent was correct. Therefore, the estate agent is not liable either.

It follows from the ruling that a real estate agent is not quickly seen as his client’s proxy. In addition, it follows from the ruling that an estate agent not only has a duty of care towards his client, but also towards third parties, and that the question of whether this duty of care has been violated is assessed on the basis of all the circumstances of the case.

Would you like to know more? Feel free to contact us.

Marius Rijntjes (rijntjes@m2advocaten.nl)

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