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'Sinking Home' Verdict
April 12, 2010

Karen and Anthony Regan purchased 107 Blue Heron Court in 2007 from owners Elaine and Robert Altman. They spent $282,000. It should have been just another residential real estate transaction – completed, recorded and, except for those involved, forgotten. Instead, it may have far-reaching consequences in the local real estate market.

As the Regan family soon found out, the house was one of the “sinking homes” in Amherst with serious foundation issues. The Altmans completed the required property condition disclosure paperwork prior to the sale. The Regans, with a home warranty in place, opted not to spend the money for a home inspection that may have exposed the foundation issues.

The result: The Regans filed suit against the Altmans and both real estate agents involved in the transaction, John Fox of Hunt Real Estate Corp. and Scott Thomas of Keller Williams Realty.

Last month, a jury in state Supreme Court awarded $282,000, the full purchase price of the property, to the Regans.

The jury then divided the liability, finding that the previous owners were 75 percent liable for the verdict, the buyers were 5 percent liable and Fox, who represented the sellers, was 20 percent liable.

It is the 20 percent liability for the real estate agent that has many wondering: Was the verdict fair?

If a real estate agent is given information and he presumes it to be true, how far will he or she now have to go to verify facts? Will agents have to insulate against what could be a flurry of similar lawsuits from homeowners unhappy with their new purchase?

Attorney Bruce Ikefugi, chair of the Real Estate Law group at HoganWillig, said there likely will be some fallout from this case, especially if it holds up on appeal.

“There is going to be a group of agents who have never thought about these issues in the past and they will tighten up some of their requirements and be careful to draw the seller out a little more,” Ikefugi said. “The good agents will check in with questions, and we often advise to overdisclose to protect yourself against these kinds of situations.”

In light of the Amherst case, Ikefugi said he plans to add elements of the case into the training refresher course his firm offers clients.

“We cover inspection issues and estate-selling issues,” he said. “I think a refresher covering this case would be a good one because these are things they learn in their training and, for some of them, have never dealt with it since. Going forward, this certainly may be the No. 1 issue we are talking about.”

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