Listing Brokers Could Be Liable For Defects
Hall v. Aurora Loan Services, LLC
(Cal. Ct. of App., 1st Dist.), filed April 26, 2013
Aurora Loan Services foreclosed on a house. The house had a “bonus room” in the attic, and a folding ladder gave access to this room.
Aurora listed the house for sale with Rockcliff Realty. Jon Wood and Holly Sibley were the listing agents.
A licensed contractor inspected the house and prepared a report titled “Estimate for Repairs.” Wood, Sibley, and a bank loan officer received copies of the report.
The report listed more than 50 items needing repair under a heading entitled “Health and Safety Required Repairs-Group 1.” This list combined cosmetic or minor items with health and safety items. One of the listed items was “Stair-Remove and replace attic stair.” Other than the report, the listing agents received no information or complaints about a potential defect in the stairway ladder.
Pinda Hall showed the house to some of her clients. When she went to show them the “bonus room,” she warned them to be careful of the ladder because she was concerned about it. When she climbed it, a hinge broke and she fell and sustained injuries.
Hall sued Aurora and the listing agents for negligence and premises liability. Her husband sued for loss of consortium.
The trial court granted summary judgment in favor of the listing agents. It then granted summary judgment in favor of Aurora.
HOLDING & REASONING
The Court of Appeal reversed. It ruled there were triable issues of material facts as to whether the various defendants had actual or constructive knowledge of the concealed dangerous condition of the ladder and satisfied their duty to notify Hall of it.
Under Civil Code section 1714, all people, including property owners, are required to use ordinary care to prevent injury to others. To establish liability on a negligence theory against an owner for injuries caused by a dangerous condition of the property, a plaintiff must prove duty, breach, causation, and damages.
Because the owner is not the insurer of the visitor’s personal safety, the owner’s actual or constructive knowledge of the dangerous condition is key to establishing its liability.
Under the law of agency, real estate agents owe a duty of care to all persons, including third persons, within the area of foreseeable risk. Having affirmatively undertaken to show the house to a buyer or renter in the regular course of their business with the purpose of earning a commission, real estate agents are under a duty of care to warn someone looking at the property of a concealed danger in the premises of which they were aware and from which an injury might be reasonably foreseen.
A real estate agent has a duty to notify visitors of marketed property of concealed dangerous conditions of which the agent has actual or constructive knowledge. The agent’s actual or constructive knowledge of a dangerous condition is imputed to his or her principal, the property owner, who shares with the agent liability for damages proximately caused by a breach of this duty.
The court noted that Hall did not, and could not, claim to have been unaware of the stairway ladder or the general risks associated with using one, as it was obvious that access to the attic room was by means of the stairway ladder. The question, therefore, was not whether Aurora and the listing agents had reason to know that the stairway ladder was dangerous simply because it was a ladder. Instead, the question was whether evidence was presented upon which a jury could conclude that Aurora and the listing agents had reason to know that the stairway ladder was potentially dangerous because it was in disrepair.
The court found that because of the contractor’s report, a jury could.
The opinion carefully defined the knowledge that was required to impose liability. The defendant had to have knowledge of a special danger posed by this particular ladder, as opposed to merely knowing that certain risks are attached to the use of any ladder.