E&O coverage - Real estate agent

9 Replies

I was in contract to buy a home but found out that it had mold during the inspection process. My real estate agent knew we had issues with buying a home with mold and we talked about it at least 2 times specifically as it related to the contract. We wanted to know we were protected and I had his assurance in writing that we would be able to cancel specifically when finding mold before we signed the contract. What responsibility does our agent have for ensuring we were protected? The seller has not agreed to cancel the contract. The home is in south Jersey.

Originally posted by @Steve J. :

@Russell Brazil Yes, however there is contention about whether the low volume/type of mold (more common strain) is covered under the contract.

 There is no standardized testing for mold, nor any recommended levels set by the EPA.  All houses have some level of mold because there is mold in all air.   You are breathing mold as you read this now. 

If your home inspection contingency allows you to cancel the contract, then cancel the contract.  You do not have power over the seller to force the seller to do anything, you simply have follow the contract, and the remedies laid out in the contract.  Often there is a mediation clause in contracts, so simply enact that if the seller refuses to sign a release.

@Russell Brazil @Brian Pulaski The contingency said the owner was allowed to fix problems so they just rubbed off the mold with alcohol. The home inspection report indicated negative grading and previous water infiltration in a prior report. The seller also provided a report with slight elevated levels of mold from when they purchased the house. The realtor provided told us that we'd be fully able to cancel the contract if we found mold. That's clearly not the case - I'm frustrated that I trusted his word and now he's nowhere to be found and not helping us.

@Steve J. depending on timelines you still might have the ability to cancel the contract.  The standard realtor issued contract in NJ will set timelines for such occurrences.  If you are looking for the interpretation of a contract you should speak with an attorney.  

E & O insurance will not typically cover remediating the mold issue.

@Steve J. you should be allowed to ask for the seller to have a mold remediation company come and remove the mold, and then provide a test to show it has been removed. Inspection contingencies should allow for you to request items be fixed, and in certain cases require they be fixed by licensed contractors. You say your realtor thinks what they did is good enough and has now "disappeared"? Call his broker?

Read the EPA website. Big difference between mold and mildew for clean up. There are different types of mold airborne strain and on surfaces.

Some mold at elevated levels might not bother some and other people with allergies or other conditions could send them to the doctor with symptoms.

You have to determine if it is mold the cause of it. If the cause of the mold is not fixed it will simply come back again. It would be like tearing out drywall with a roof leak. If you dry out and put in all new drywall and insulation then when it rained again the same problem would occur.

There is mold in air people breathe. What can make it dangerous is when something occurs to cause it to grow outside of it's normal levels.

There are swabs for surface mold for testing and air tests for airborne. The wiping off thing is a joke that many sellers do to try and rig stuff. If it is a breath ability issue  because the house is too tight for air circulation with mildew then the wiping method can sometimes work. If the problem is ongoing mold then simply wiping the area isn't going to do anything. Remediation will be needed and then the whole area would have to be fixed and then retested.

It sounds like you are looking to the real estate broker/agent to fix the issue. There is usually language in most purchase and sale contracts that states that brokers and agents are not specialists and that buyers should seek out their own counsel if they have a question about anything. When buyers think brokers or agents can save them some money they want their opinion to save money. As soon as a problem comes up then the tune changes and it becomes the broker or agent told me so and so.

As a buyer you have your (right to your own inquiry) meaning if you are not comfortable signing something and still do it then that is generally on the buyer. In court a judge will likely ask ( Mr. buyer why did you not follow up on initial inspection with expert so and so company?)

Usually it is they did not want to spend the money. There can be exceptions for an (adverse material fact) that you could not easily have discovered on your own or was intentionally hidden by the seller. Proving the seller knowingly hid something is a very high threshold in court to prove.

At this point your communication looking for someone to pay for problems likely has caused the broker/agent to go silent. If they just told you something verbally they could deny they said it or say you misunderstood what they said etc.

You might want to get a real estate attorney at this point to review your contract and steps taken so far in the transaction with timeline of events. The few hundred or so dollars might be time and money very well spent. A crappy attorney will tend to keep charging you and run up a bill. The great ones tend to give you the best advice they can for your situation and what the budget will allow for.

I had a deal one time where an attorney for a couple hundred consult said it would not make sense to go after the person. Court costs would be tens of thousands and even when I would get the judgement I would still have to collect. The time and stress of doing that ( 6 months to 1 year) I could do more deals and make way more than focusing on that.

No legal advice given.        

Thanks all for the insights. There was confirmed mold (note not toxic mold). The seller said he didn't know about it and therefore should not cancel the contract. With the real estate agent, I do have in an email from him that we are fully within our right to cancel the contract if mold is found. This was before the contract was signed. Had he not provided additional assurances, I'm not sure we would have felt so confident going in that we were protected. We weren't trying to save money, we spent several thousand dollars on additional tests because it was an older home. We trusted our broker. While we are ultimately responsible because we signed the contract, I don't believe the agent was forthright about how contracts/mold work -- he was busy getting his next sale. He has sold hundreds of homes. We are first time home buyers where mold is the #1 showstopper for us.