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FINALLY A CASE THAT CAN BE USED TO DEFEAT MLS MISREPRESENATATION CASES

Civil Code Section 1088 has plagued listing agents for many years. Section1088 provides in pertinent part: “If an agent ... places a listing or other information in the multiple listing service, that agent ... shall be responsible for the truth of all representations and statements made by the agent ... of which that agent ... had knowledge or reasonably should have had knowledge to anyone injured by their falseness or inaccuracy.”

Listing agents have been repeatedly sued under Section 1088 for making innocuous statements in the MLS that plaintiff’s attorneys claim are false. In many of these cases the “false” statement relates to the number of bedrooms specified in the MLS. In these situations, plaintiffs' attorneys claim that if one of the rooms is unpermitted and/or violates building code, it means it is not a "bedroom" which makes the listing agent liable pursuant to Section 1088 for misrepresenting the number of bedrooms.

In a new case, Saffie v. Schmeling (2014) 224 Cal.App.4th 563, the court put some limits on how innocent comments by listing agents are used against them. In Saffie, the listing agent stated in the MLS: “This parcel is in an earthquake study zone, but had a Fault Hazard Investigation completed and has been declared buildable by the investigating licensed Geologist. Report available for serous buyers.” The plaintiff sued the listing agent arguing that the listing agent failed to disclose that the report was dated 1982 and that the report was misleading as the property could no longer be commercially developed due to the 1994 Northridge Earthquake. The court held that the listing agent was not liable because the MLS did not say anything that was untrue, More on point, the fact the buyer inferred that the report was still applicable is not actionable.

Saffie should give some protection to listing agents, who declare that a home is three bedrooms, as long as all bedrooms have the physical attributes of a bedroom. Listing agents should not be held liable pursuant to Civil Code Section 1088, if the agent’s statements are truthful. Under Saffie, an agent stating there are three bedrooms (even if one or more are not permitted) is on its face truthful and not actionable, provided there was no intent to mislead the buyer into believing those bedrooms are permitted.

The scope of Saffie is somewhat limited and it is important that agents realize they should provide disclosures of everything of which they have knowledge which may impact the value and/or desirability of the property. That said, this new decision does put some limits on how unscrupulous attorneys attempt to twist good faith statements into claims for unwarranted damages.

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