1. AGENT ACCOUNTABILITY AND LIABILITIES
Presented By:
Instructors:
Andrew Treuting & David Vicknair

2. About Your Instructors
Andrew Treuting
Title Stream, LLC
Smith & Treuting, LLC, Attorney at Law
David Vicknair
Scott, Sevin & Vicknair

3. COURSE OBJECTIVES
Identify situations that create liability for agents and their clients
Discuss the ways to avoid or minimize agent and client exposure

4. LEGAL DUTIES OF AGENTS La R.S. Title 9 arts. 3891 - 3899
La R.S. Title 37, Chapter 17 – Louisiana Real Estate License Law

5. DUTIES TO CLIENTS
Perform the terms of the brokerage agreement with client
Promote the best interests of the client by:
Sticking to the agreed upon terms
Timely presenting all offers to and from client
Timely accounting for all client’s money and property received
Exercise reasonable skill and care

6. DUTIES TO CUSTOMERS
Treat customers honestly and fairly

7. REAL ESTATE AGENT LIABILITY
2 WAYS TO INCUR LIABILITY WHEN ACTING AS AN AGENT:
FRAUD (INTENTIONAL MISREPRESENTATION)
NEGLIGENT MISREPRESENTATION

8. LSA-C.C. Art FRAUD
An intentional misrepresentation or a suppression of the truth
Done to obtain an unjust advantage or cause a loss to the other party
May result from silence or inaction

9. NEGLIGENT MISREPRESENTATION
LSA-C.C. art Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it
Occurs when there is a legal duty to supply correct information and a breach of that duty results in damages --- detrimental reliance

10. FALSE INFORMATION
Not liable to a client / customer unless the licensee knew or should have known it was false

11. Detrimental Reliance
A party may be obligated by a promise when he knew or should have known that the promise would induce the other party to rely on it to his detriment and the other party was reasonable in so relying.
Recovery may be limited to the expenses incurred or the damages suffered as a result of the promisee's reliance on the promise.

12. CASE STUDIES

13. Duplechin v. Adams, 665 So.2d 80 (La.App. 1st Cir. 1995)
Buyer of sinking house sues seller and listing agent under redhibition, fraud and negligent misrepresentation
Testimony established that the sinking was apparent through multiple cracks, swinging doors, etc…
Agent “glossed over” the problems

14. Duplechin v. Adams, 665 So.2d 80 (La.App. 1st Cir. 1995)
“In order for a plaintiff to recover for negligent misrepresentation, there must be a legal duty on the part of the defendant (agent) to supply correct information, a breach of that duty, and damage to the plaintiff caused by the breach.”
Agent owes a specific duty to communicate accurate information to the seller and purchaser

15. Hancock v. Lauzon, 161 So.3d 957 (La.App. 2nd Cir. 2015)
Suit for negligent misrepresentation regarding in connection with property disclosure portion due to backyard flooding
Question: Was flooding an “apparent” or “redhibitory” defect
Question: Was disclosure of a sump pump in MLS adequate?

16. Hancock v. Lauzon, 161 So.3d 957 (La.App. 2nd Cir. 2015)
“Where the alleged misrepresentation of a real estate agent to a buyer relates to defects which are apparent and discoverable on simple inspection, and where the buyer inspects the property before the sale, the buyer cannot complain of fraud or negligent misrepresentation”

17. Cormier v. Coldwell Banker, 150 So.3d 557 (La.App. 3rd Cir. 2014)
Suit against listing agent (RELO) for failure to disclose accurate property acreage and “knowingly misrepresenting the boundary lines”
Recovery sought based on detrimental reliance
Duty to disclose…extends only to those defects (issues) of which the agent is aware

18. Louisiana Warranties

19. Implied Warranty of Merchantability
Property can be sold or mortgaged in the ordinary course of business by reasonable persons familiar with the facts and questions involved
Title is not suggestive of litigation

20. SALE WITH WARRANTIES
“The SELLER and the BUYER acknowledge that this sale shall be with full SELLER warranties as to any claims or causes of action including but not limited to redhibition pursuant to Louisiana Civil Code Article 2520, et seq. and Article 2541, et seq.”

21. Warranty Against Redhibitory Defects
A hidden defect that renders the thing useless or so inconvenient that buyer would not have bought it or would have paid less
Gives rise to rescission of sale or reduction of the price

22. Apparent Defects
No call in warranty if defect is known or easily discoverable by a reasonably prudent buyer

23. Thing Fit for Ordinary Use
When the seller has reason to know the particular use the buyer intends for the thing, or the buyer's particular purpose for buying the thing, and that the buyer is relying on the seller's skill or judgment in selecting it, the thing sold must be fit for the buyer's intended use or for his particular purpose.

24. Prescriptive Period
If seller knew of the defect, one year from the date of discovery by the buyer
If seller did not know, one year from the date of delivery of the property

25. Liability of Seller – LSA-C.C. art. 2345
A seller who knows that the thing he sells has a defect but omits to declare it…or declares that the thing has a quality that he knows it does not have is liable to buyer for:
return of the price with interest from the time it was paid
reimbursement of the reasonable expenses incurred for the sale and preservation of the thing
Other damages
reasonable attorney fees.

26. Liability of Seller – LSA-C.C. art. 2345
A seller is deemed to know that the thing he sells has a redhibitory defect when he is a manufacturer of that thing

27. WAIVER OF IMPLIED WARRANTIES
Must be written in clear and unambiguous terms
Must be contained in the sale document
Must be brought to the attention of the buyer or explained to him

28. SALE “AS IS” WITHOUT WARRANTIES
The SELLER and the BUYER hereby acknowledge and recognize that the Property being sold and purchased is to be transferred in “as is” condition and further the BUYER does hereby waive, relieve and release the SELLER from any claims or causes of action for redhibition pursuant to Civil Code Article 2520, et seq. And Article 2541, et seq. or for reduction of Sale Price pursuant to Louisiana Civil Coe Article 2541, et seq.

29. SALE “AS IS” WITHOUT WARRANTIES
Additionally, the BUYER acknowledges that this sale is made without warranty of fitness for ordinary or particular use pursuant to Louisiana Civil Code Article The SELLER and BUYER agree that this clause shall be made a part of the Act of Sale.

30. PROPERTY SOLD “AS IS”
Simply saying that the property is being sold “AS IS” is not enough
“AS IS” waiver in LA contract effectively waives all implied warranties except title

31. Limitations on “As-Is” Waiver
Purchaser must show fraud to defeat the waiver
Fraud carries tremendous burden of proof

32. RECALL LSA-C.C. Art. 1953 - FRAUD
An intentional misrepresentation or a suppression of the truth
Done to obtain an unjust advantage or cause a loss to the other party
May result from silence or inaction

33. CASE STUDIES

34. Creger v. Robertson, 542 So.2d 1090 (La.App. 2nd Cir 1989)
Suit in redhibition for reduction of purchase price for “soiled” carpet
“A sale made “as is” is not a waiver of all warranties”
“A buyer is only under a duty to make an inspection which is reasonable in light of all the circumstances…”

35. Batt v. Cohen, 139 So.3d 1284 (La.App. 4th Cir 2014)
Suit in redhibition by dentist against seller of commercial office space
Illustrates the importance of a solid waiver

36. Louisiana New Home Warranty Act (NHWA)
LSA-9:3141, et seq.

37. NEW HOME WARRANTY ACT
The NHWA promotes commerce in Louisiana by providing clear, concise and mandatory warranties for the purchasers and occupants of new homes in Louisiana,”
Sets out “the exclusive remedies, warranties, and peremptive periods as between builder and owner relative to home construction

38. Warranty Commencement Date
The date that legal title to a home is conveyed to its initial purchaser or the date the home is first occupied, whichever occurs first.

39. One Year Following Commencement Date
Home will be free from any defect due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards

40. Two Years Following Commencement Date
The plumbing, electrical, heating, cooling, and ventilating systems exclusive of any appliance, fixture, and equipment will be free from any defect due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards.

41. Five Years Following Commencement Date
The home will be free from major structural defects due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards.

42. Major Structural Defects
Physical damage to the following designated load-bearing portions of a home caused by failure of the load-bearing portions … to the extent the home becomes unsafe, unsanitary, or is otherwise unlivable:
Foundation systems and footings
Beams
Girders
Lintels
Columns
Walls and partitions
Floor systems
Roof framing systems

43. What’s Not Included?
Fences, landscaping, off-site improvements, all driveways and walkways, or any other improvement not a part of the home itself.
After the first year, the concrete floor of a basement and the concrete floor of an attached or unattached garage that is built separate from a foundation wall or other structural element of the home

44. Case Study

45. Shaw v. Acadian Builders and Contractors, LLC, (La. Sup. 12/10/13)
Buyer sues builder under NHWA for water damage due to failed stucco?
What constitutes “major structural defect”?

46. Louisiana Private Works Act
LSA-R.S. 9:4801 et seq.

47. The Private Works Act
Allows persons who perform work or supply labor or materials in connection with the improvement of real estate to sue the owner and contractor for amounts owed
Allows a lien or privilege against the property to secure the claim against the owner

48. Who is entitled to the Privilege?
General and Subcontractors
Laborers or employees of the owner
Suppliers and Materialmen
Lessors and sellers of movables used at the site
Consultants (engineers, surveyors, architects)

49. Prescriptive Period for the lien
Suit to enforce lien and lis pendens must be filed within one year f filing the lien

50. When does the lien period start?
Starts the moment work is performed or material is provided.
“A work is a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.”

51. When does the lien period end?
Laborers and Materialmen that did not have contracts with the GC have 30 days to file after substantial completion
GCs have 60 days from substantial completion
Lessors of movable have 70 days from substantial completion

52. What is Substantial Completion?
Case-by-case determination
Certificate of Occupancy
Actual Occupancy
Filing of notice

53. Protecting Owner against claims
The owner is relieved of the claims against him and the privileges securing them when the claims arise from the performance of a contract by a general contractor for whom a bond is given and maintained as required by R.S. 9:4812 and when notice of the contract with the bond attached is properly and timely filed

54. Removing Liens Surety bond
Cash bond in the amount of 125% of the claim amount
Writ of Mandamus (LSA-R.S. 9:4833)

55. Preventing Title Issues
Filing Notice of Building Contract
No Work Affidavit
Filing Notice of Termination of Work and/or Notice of Substantial Completion
Cancellation of Building Contract

56. SUCCESSIONS - ASSESSING THE ESTATE

57. What is a Succession?
Succession is the transmission of the estate of the deceased to his successors.
The successors thus have the right to take possession of the estate of the deceased after complying with applicable provisions of law.

58. What Makes up the Estate?
The property, rights, and obligations that a person leaves after his death.
The estate includes not only the rights and obligations of the deceased as they exist at the time of death, but all that have accrued thereto since death, and the new charges to which it becomes subject.

59. JURISDICTION Succession must be opened in either:
Parish where decedent was domiciled at the time of death;
If no domicile in LA, parish where decedent owned property

60. 2 TYPES OF SUCCESSION
Intestate – No will, so the estate passes to heirs according to LA law
Testate – Decedent left a valid last will and testament (olographic or notarial form)

61. QUESTIONS TO ASK Has a Succession been opened? Is there a valid will?
Has a Judgment of Possession been rendered?
Is there a usufruct in place?
Is the estate under Administration?
Ordinary or Independent?

62. What about disclosure?
If the property is being sold by the Succession, the seller (estate) is exempt from completing the property disclosure.
If a Judgment of Possession has been rendered, heirs are now the owners, and have a legal obligation to complete the property disclosure.

63. Trusts Living Trust vs. Testamentary Trust
Ask for a copy of the Trust instrument and have it reviewed by title attorney
Trust instrument will dictate authority
Trust (extract) must be recorded

64. Who signs the Listing and Purchase Agreement?
If a JOP has been rendered, all owners
If a JOP will be rendered before sale, all heirs / legatees
If the property is under ordinary administration, the administrator / executor will sign, but court approval will be required
If independent, the appointed administrator

65. Purchaser / Developer Considerations

66. Zoning and Permitting
Determine zoning and permitted uses prior to expiration of inspection period
While zoning may allow for the client’s intended use, additional considerations such as size limitations, parking, drive-through, etc… may require conditional use approval

67. Navigating Parish and City Requirements
1st, determine what is needed to meet the client’s needs
Ex. Variance, zoning change, etc…
2nd, Determine the appropriate process mandated by the Parish or City
3rd, file necessary applications and attend the necessary meetings

68. Zoning Change - City of New Orleans
Neighborhood Participation Program (NPP)
Owner consults with the City Planning Commission (CPC) to determine city criteria, and the names and addresses for all interested persons and neighborhood associations within certain radius of the property
Notice letters sent out containing NPP criteria to all identified parties and NPP meeting is scheduled to discuss proposed change

69. Zoning Change - City of New Orleans
Neighborhood Participation Program (NPP)
Full report of the meeting submitted to the CPC, along with the application, including survey, architect plans, landscape plans, etc…
CPC reviews the application and makes its formal recommendations to the City Planning Committee, who holds a public hearing, and votes on recommendations to the City Council
City Council votes on the change