When Should an Agent Give His/Her Client A Copy of the Termite Inspection Report?

Question

I represent the Buyer in a transaction.  My Buyer is a property investor and had a termite inspection done of the property to be purchased.  The inspector sent me the termite inspection report.  My client told me to just hold on to the termite inspection report until we get to closing.  What should I do?

Answer

This week’s question highlights a Louisiana 1st Circuit Court of Appeals case dealing with an agents’ failure to provide a termite certificate to her client prior to closing.

It’s an oldie, but it’s still a goodie!

Reeves vs. Weber, 509 So.2d 158 (La. App. 1 Cir, May 27, 1987)

On November 15, 1982, Mr. and Mrs. Horace Reeves purchased a house in Ponchatoula, Louisiana.  On the day of closing, Buyer signed a termite certificate that stated:

  1. the house was termite infested,
  2. the house had been treated,
  3. the house had visible damage to the wood in contact with the ground.

 

Buyer stated that while he signed the termite certificate at closing, he did not read it prior to signing it.

On February 8, 1983, Buyer discovered the termite damage when he had his house exterior cleaned with a high pressure washer.  On May 8, 1984, (i.e. more than one year after discovery of the termite damage), Buyer filed a lawsuit against the real estate agent.

The trial court held that buyers had ten (10) years to file a lawsuit against their Real Estate Agent.  Additionally, the trial court held that the Real Estate Agent had possession of the termite certificate prior to closing and, thus, possessed knowledge of the termite damage but failed to provide this information to the Buyer prior to closing.

The Real Estate Agent appealed.

On appeal, the 1st Circuit Court of Appeals held Buyer had one (1) year to file a lawsuit against his/her Real Estate Agent, not ten (10) years.  Since Buyer filed his/her lawsuit outside of one year from the date of discovery of the termite damage (i.e. Buyers discovered the termite damage on February 8, 1983, but did not file their lawsuit until May 8, 1994), Buyer failed to timely file his/her lawsuit and the 1st Circuit Court of Appeals dismissed the lawsuit.

The 1st Circuit Court of Appeals did not address whether the Real Estate Agent breached a duty by failing to provide Buyer with the termite certificate prior to closing.

A couple of things to note from this case:

  1. Since the trial court found the Real Estate Agent breached a duty by failing to provide the Buyer with the termite certificate prior to closing, there is a good chance the Court of Appeals would have ruled likewise;
  2. Realtors should always provide their clients with a copy of the termite certificate prior to closing and it’s a good idea to transmit this information in writing either by email, fax, or mail and confirm that the client received the termite certificate.