Suing Real Estate Broker for Failure to Inspect Documents

In Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18, the buyers of a rural residence brought an action against their real estate broker, alleging the broker's failure to inspect certain title documents and to determine the extent of an existing water district easement was negligent and breached the broker's fiduciary duty. The broker contended the action was time-barred under Civil Code section 2079.4, which applies to claims against a broker for violating the statutory duty imposed by Civil Code section 2079 to conduct a reasonable visual inspection of the property, arguing that section also barred a claim for breach of fiduciary duty based on a failure to inspect title documents. The Court held plaintiffs' action was not barred under section 2079.4 because that statute imposed a two-year statute of limitations applicable only to breaches of the statutory duty to visually inspect and disclose material facts imposed by section 2079, and that "the fiduciary duty of a broker, who contracts to exclusively represent a purchaser of real property to investigate for its client, is independent of the separate obligation imposed on a seller's broker to conduct a reasonable visual inspection of the marketed property for a buyer's protection, as . . . incorporated into section 2079." (Field v. Century 21 Klowden-Forness, supra, 63 Cal.App.4th at p. 21.) In Field, the agent was aware the easement existed but "neither verified the extent of the easement or the represented acreage of the property, nor did the agent advise the Fields to do so. . . . Further, an addition to the house violated setback requirements and the agent did not inquire whether permits or variances had been obtained for the addition or advise the Fields to do so." (Id. at p. 22.) Moreover, in Field, both the plaintiffs' and defendants' experts agreed the agent had breached her fiduciary obligations by not reviewing the preliminary title report before the close of escrow to verify the scope of the easement, and the plaintiff's expert "testified the agent fell below the standard of care by, among other things, failing to advise the Fields that, since the property was in a rural area, they should consult with the title officer to review the title report before the close of escrow and to explain and plot the easement, and by failing to investigate the status of permits for the room addition or advise the Fields to do so." (Id. at p. 23.)