Originally Posted By: Nick Gromicko
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Courts Rule Buyer’s Representatives Have No Obligations under Federal Lead-Based Paint Act
Two courts have considered whether a lawsuit can be brought against a buyer's representative who is compensated by a seller's broker alleging violations of the federal Residential Lead-Based Paint Hazard Reduction Act of 1992 ("Act"). Both courts followed the decision issued in the Flowers case, previously summarized in The Letter of the Law.
Kevin and Heather Keegan ("Buyers") retained Robert Houle ("Buyer's Representative") of The Downing Agency, Inc, as their representative. The Buyers purchased a home, and the Buyer's Representative received compensation from the seller's representatives. Following the purchase, the Buyers discovered lead paint throughout their home. The Buyers brought a lawsuit against the Buyer's Representative, alleging violations of the Act as well as negligence. The Buyer's Representative filed a motion to dismiss the lawsuit.
A magistrate judge for the United States District Court, District of Maine, ruled that the Act violations should be dismissed but that the negligence allegations could proceed. The court looked at the Act's language, which states that whenever a seller/lessor enters into "a contract for the purpose of selling or leasing a unit...the regulations promulgated under this section shall require the agent, on behalf of the seller or lessor, to ensure compliance with the requirements of this section." Based on the statutory language and in accordance with the decision in the Flowers case, the court ruled that the Act imposed no obligations upon a buyer's representative, only on sellers and seller's agents. While the regulations state that buyer's representatives are required to comply with the Act if they are paid by the seller or the seller's agent, the court ruled that this requirement conflicted with the plain language of the Act and thus was without effect. Therefore, the court dismissed the Buyers' allegations involving violations of the Act.
Next, the court considered whether the negligence actions could proceed against the Buyer's Representative. A similar question had faced the Flowers court, and that court had ruled that if state law required a real estate salesperson to disclose material defects about the property, then a buyer's representative could be liable under a negligence theory for failing to disclose a latent defect on the property, such as lead paint (click here to read a summary of this decision). Looking at Maine law, the court found that buyer's representatives have the duty to disclose all material facts about the property which they know or should have known about. Since the Buyers alleged that the Buyer's Representative "knew or should have known of the risk that lead-based paint was in the house and this fact was material to the transaction", the court ruled that the Buyers had adequately stated a negligence claim against the Buyer's Representative. Thus, the negligence claims were allowed to proceed.
Keegan v. The Downing Agency, No. 03-56-P-H, 2003 WL 21210326 (D. Me. May 22, 2003). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].
Angelic Griffin and Anthony Lowe ("Buyers") hired Rodney Bruner ("Buyer's Representative") of Century 21 Country North to serve as their representative in their property search. The Buyers purchased a property, and the Buyer's Representative received compensation from the seller's broker. Following the purchase, the Buyers' minor son became ill from lead paint poisoning. A subsequent inspection of the premises revealed lead paint on the premises. The Buyers filed a lawsuit which contained allegations against the Buyer's Representative for violations of the Act. The Buyer's Representative filed a motion to dismiss the allegations, and the trial court granted the Buyer's Representative's motion. The Buyers appealed.
The Appellate Court of Illinois, Second District, affirmed the ruling of the trial court. The court found that only two decisions (the Flowers and Keegan decisions) had addressed this issue, and both had determined that the Act only allowed for lawsuits against a seller/lessor and his/her "agent". The court said that the language of the Act itself was controlling, and regulations conflicting with the express terms of the Act must be rejected. Thus, the court affirmed the trial court's dismissal of the allegations against the Buyer's Representative for violations of the Act.
Griffin v. Brunner, No. 2-02-0898, 2003 WL 21675327 (Ill. App. Ct. Jul. 15, 2003). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].