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Judges affirm judgment for real estate agent on negligence claim

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The Indiana Court of Appeals affirmed that a real estate agent representing buyers did not breach the duty he had to the sellers when he communicated with them personally about accepting his clients’ offer.

Jack Stump represented Zachary and Holli Gredy, who wanted to buy Terry and Marti Likens’ home. The Likenses had their own real estate agent, who advised the couple to accept another offer instead of the Gredys’. Stump contacted the Likenses directly by phone and e-mail encouraging them to accept the Gredys’ offer.

They executed a purchase agreement, in which the Gredys were to close before Sept. 30, 2008, and have $10,000 held in escrow. Closing didn’t happen on time, and the bank letter guaranteeing the funds was fraudulent. The Likenses sued the Gredys, Stump and his employer, Prickett’s Properties. At issue in the instant case is the grant of summary judgment in favor of Stump and his employer on the Likenses’ negligence/breach of agency duty claim.

The Likenses argued Prickett’s Properties was liable under the doctrine of respondeat superior. They also claimed that Stump owed them a common law duty because he went beyond acting as an agent for the Gredys and undertook to advise and coerce the Likenses into a course of action.

But statutory law supersedes any common law to the contrary, the Court of Appeals concluded in Terry Likens, et al. v. Prickett's Properties, Inc., et al., No. 43A03-1008-PL-455. The judges cited Indiana Code Chapter 25-34.1-10, which governs real estate agency relationships, to define the duty Stump owed the Likenses. Section 11 of the chapter says a licensee representing a buyer owes no duties or obligations to the seller, except that a licensee shall treat all prospective sellers honestly and not knowingly give them false information, wrote Judge Nancy Vaidik. The section also says that the licensee owes no duty to conduct an independent investigation of the buyer’s financial ability to purchase or verify the accuracy of any statement made by the buyer or a third party.

“Indeed, Stump had a duty to treat the Likenses honestly and not knowingly give them false information. But the negligence count against Stump does not allege any violation of this clearly-articulated statutory duty,” she wrote, noting the Likenses didn’t appeal the summary judgment ruling pertaining to their fraud claim against Stump. “Finally, while Stump’s actions in directly contacting the Likenses to encourage them to accept the Gredys’ offer may seem inappropriate, Stump, as the buyers’ agent, is allowed to provide the Likenses services in the ordinary course of a real estate transaction and any similar services that do not violate the terms of his agency relationship with the Gredys.”

Judge Vaidik also referenced section 15, which says the “duties and obligations of a licensee set forth in this chapter supersede any fiduciary duties of a license to a party based on common law principles of agency to the extent that those common law fiduciary duties are inconsistent with the duties and obligations set forth in this chapter.”

Also, there’s no evidence of a writing that the Gredys and the Likenses consented to Stump acting as a limited agent for both of them.

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