Please welcome guest author Ed Englander – Ed Englander is a partner in Englander, Leggett & Chicoine, P.C., a Boston law firm with particular expertise in land use and real estate issues.

In today’s competitive real estate market, buyers are writing heart-warming letters to sellers about why they would be the best owners for the treasured family homestead. Sellers with a handful of competitive offers are often making decisions based on their interactions with the prospective buyers. Emotions are trumping the fact that selling a home is a sophisticated legal transaction and should be treated as such.

Much as they may like to get to know the buyers of their treasured family homestead, sellers should keep their distance. Friendly banter between buyer and seller could result in legal headaches down the road for the sellers.

Sample Legal Case

I recently defended the seller in this case:

In 2006, the Fowlers (a fictitious name) put their home of 35 years on the market. The history of the Fowlers’ connection to this land dated back to the 1930s, when Mr. Fowler’s father purchased a farm. Mr. Fowler had been raised on the farm, portions of which had been used for various activities over the years including a pig farm and a town dump from 1955 to 1978. In the late 1960s, Mr. Fowler’s father carved out a roadside house lot from the farm and deeded it to his son. Mr. Fowler built a home for his family on the lot.

While this home was on the market, the Fowlers felt it was important to be present for every showing to keep their dogs under control. During one of the showings, a prospective buyer chatted with Mr. Fowler while he was minding his dogs in the breezeway. The potential buyer asked, “What was all that land?” Mr. Fowler answered by pointing out the old farm house where he had grown up and told the buyer that the property used to be his father’s pig farm. Mr. Fowler never mentioned that part of the property had been used as the town dump from 1955 to 1978.

The potential buyer subsequently purchased the property in August 2006. The Fowlers moved on to Florida. The buyers sued the sellers in 2008, in Massachusetts, for claims of fraud, intentional infliction of emotional distress and civil conspiracy — all because Mr. Fowler shot the breeze in the breezeway and he failed to disclose the adjacent farm had been used as a town dump in the course of the conversation.

The sellers had no choice but defend the lawsuit which, after five years of discovery and motions, went to a jury trial in the Norfolk Superior Court. After five days of trial and two days of deliberation, the jury returned a verdict for the Fowlers because the buyers did not reasonably rely on the conversation in the breezeway.

Simple Steps to Reduce Seller Liability

Loose lips really can sink ships in real estate transactions. The best way to minimize seller liability is to keep the buyer/seller relationship as formal and separate as possible. I recommend that:

1. Buyers and sellers never meet in person;
2. Buyers should be informed by the seller’s real estate broker if the buyer has a question they deem important. The question should be asked in writing and the seller should answer in writing; and
3. Attorneys for sellers should add a clause to the purchase and sale agreements that states “any questions the buyer(s) have deemed important have been asked in writing and the seller(s) have answered those questions in writing, and attached are copies of the questions and answers.” If the buyer(s) have asked no questions then the purchase and sale agreement should state “The buyer(s) have asked no questions.”