Mention the word "real estate" and most people immediately think of buying or selling a property. While it can be an exciting and rewarding process, there are also potential pitfalls to be aware of. One common issue that often arises in real estate transactions is the non-disclosure or concealment of vital information by brokers and agents. This can significantly impact the value and desirability of a property, and in some cases, lead to legal disputes between buyers and sellers.
Understanding the statutes of limitation that apply to claims arising from broker-agent non-disclosure is crucial for buyers who want to protect their rights. In this article, we will explore the different statutes of limitation that govern these claims and shed light on the actions buyers can take to seek recourse.
Broker-Agent Duty of Disclosure: 2-Year Statute of Limitations Civil Code § 2079.4
In California real property sales transactions, brokers and salespersons have a duty of disclosure as outlined in Civil Code § 2079. This duty requires them to conduct a reasonably competent and diligent visual inspection of the property and disclose any facts that could affect its value or desirability. Violating this duty gives rise to a cause of action for the affected buyer.
The specific statute of limitations for claims related to breach of this duty can be found in Civil Code § 2079.4. According to this statute, buyers have two years from the date of possession, recordation, close of escrow, or occupancy (whichever occurs first) to bring a claim. It's important to note that the delayed discovery rule does not apply to actions brought under this statute.
Broker-Agent as Fiduciary: Statutes of Limitation
The relationship between a broker and a client can vary, and it plays a significant role in determining which statutes of limitation apply. In cases where the broker represents the purchaser exclusively or acts as a dual agent, a fiduciary relationship is established with the buyer. This means that the broker has a higher duty of care towards the client.
As a fiduciary, the broker must act in the best interests of the client, providing undivided loyalty, the highest level of good faith, and full disclosure of material facts. Their responsibilities extend beyond the basic disclosure requirements mentioned in Civil Code § 2079.
The statutes of limitation for claims arising from a breach of fiduciary duty by a broker-agent in a real estate transaction are not governed by Civil Code § 2079.4. Instead, they fall within the statutes of limitation for actions related to negligence or fraud in real property transactions. These generally have a 3-year statute of limitations, as outlined in Code of Civil Procedure § 338.
It's worth noting that the discovery rule applies to claims for breach of fiduciary duty. This means that the statute of limitations starts from the date the buyer discovers, or reasonably should have discovered, the negligence or breach of duty. This provision allows buyers a reasonable period to "discover" any harm caused and extends the start time of the statute of limitations to the date of discovery.
Broker-Agent as Fiduciary: Fraud & Constructive Fraud: Statutes of Limitation
In certain cases, a breach of a real estate agent or broker's fiduciary duty may constitute fraud or constructive fraud. While fraud typically involves intentional misrepresentations or concealment, constructive fraud refers to acts, omissions, or concealments that breach a fiduciary or confidential relationship, resulting in damage to another party. Constructive fraud does not require fraudulent intent.
When a breach of fiduciary duty falls under the category of constructive fraud, the statute of limitations applicable is the 3-year statute of limitations for fraud, as per Code of Civil Procedure § 338(d).
It's important to seek legal advice if you believe you have been a victim of broker-agent non-disclosure or a breach of fiduciary duty in a real estate transaction. A skilled attorney can guide you through the legal process and ensure that your rights are protected.
Remember, knowledge is power when it comes to real estate transactions. Understanding the applicable statutes of limitation can help you make informed decisions and take prompt action if necessary.
This is a guest post by Norton & Associates, a leading Los Angeles Construction Defect and Real Estate Litigation law firm. For more information or to schedule a consultation, call (310) 706-4134 or visit their website at constructiondefect.com.