Can a Colorful Map Cost You a Sale and a Lawsuit?

If a real estate agent refers his clients to an NHD Report that over discloses, can the clients also be held liable for over disclosing? What if it costs the agents the sale?

Reports like this one from Disclosure Source come with a colorful map indicating the location of the property with an icon in the shape of a house. The offending map has a dimension of about four (4) square miles.

The map shows that the house is NOT in any hazard zone for Flood Hazards, Dam Inundation, Very High Fire, Wild Land Fire, Earthquake Fault, Seismic Hazard or Bodies of Water and Rivers. Sounds good, except that this Disclosure Source map shows a Flood Hazard Area, a Dam Inundation Area, and Bodies of Water and Rivers within a four square miles proximity to the location of the house.

In this market condition, where properties that once sold in days are now on the market for months or years, how might the seller react if the buyer were to walk out of escrow because the Disclosure Source NHD Report shows that the property is within 4 square miles of a hazard zone – a fact that was not a legally required disclosure? Does the seller have a right to sue the agent for costing him the sale?

The California Civil Code provides that sellers and their agents must disclose if a property is either IN or NOT IN one of those hazard zones. Showing hazards within four square miles of the property is definitely not required.

It is up the agent to choose a disclosure report that meets the state requirements: California Civil Code Section 1103.2 and Civil Code Section 1103.7 specifically read: transferor(s) and their agent(s) acknowledge that they have exercised good faith in the selection of a third party report provider. Don’t set yourself up for needless liability by thinking those colorful maps are not important – they could cost you a sale and cause you a lawsuit

Please share with us your experiences with “the maps.” Your comments and suggestions are valuable to all our readers.