Whitney, LLP obtained a $112,000 settlement on behalf Maryland first time homebuyers who decided to sue their real estate agent after discovering termite damage to their home five years after closing.  First time home buyers rely heavily on their real estate agents to guide them through the home-buying process.  However, some real estate agents fail to make the required disclosures.

When real estate agents fail to comply with their duties, they can be held responsible for their clients’ damages.  Whitney, LLP’s attorneys help buyers sue real estate agents for negligence and other failures.

First Time Homebuyers Sue Real Estate Agent and Pest Control Company, Recover $112,000

First time homebuyers trust their real estate agent to guide them through the stressful and complex process of buying a new home. The buyer’s agent owes a fiduciary duty to protect the best interests of the agent’s clients. This includes the duty to advise the buyer about the differences between the Home Inspection by a licensed home inspector, and a Wood Destroying Insect (“WDI”) inspection by a licensed pest control company. Agents must also be familiar with the reporting format of a WDI inspection.

The WDI Inspection Form

By Maryland law, the results of the careful visual inspection for termites, powder post beetles and carpenter ants must be reported in writing on a standardized MD-1 form. If the inspector finds evidence of wood destroying insects, Box B on the form must be checked.

Termite Treatment

When evidence of termites is found, the pest control company will recommend treatment, which the Seller will typically pay for. Real estate agents know or should know that treatment is only step one of a two-step process. The second vital step is evaluation of the termite damage. It is a near certainty that termite damage exists if there is a termite infestation. Termites eat wood and are very destructive.

The Scope of Termite Damage Must be Evaluated

The WDI inspection does not undertake to identify all termite damage or provide a report on structural integrity. A small location of visible damage may be the tip of the iceberg. Massive damage may be hidden behind the walls or beneath the surface of the flooring.

For this reason, the MD-1 form contains a recommendation to the buyer that applies when Box B is checked. The recommendation is for a qualified structural professional to evaluate the scope of damage, including hidden damage, and the need for repairs. To find out just how bad it is, this kind of evaluation requires opening walls and other suspect areas.

A WDI Inspection Was Performed But Agent Did Not Disclose Results

In this case, a WDI Inspection was performed and evidence of termites was found. The Seller agreed to pay for treatment, and our clients thought nothing further needed to be done. They went to closing with peace of mind; however, they were not provided a copy of the MD-1 report to sign which attests to the Buyer receiving and understanding the MD-1 report.

Instead, the Buyer’s agent merely provided our clients with a copy of the pest control company’s invoice which contained a “detailed summary” of the findings and recommendations. Although the invoice accurately noted the finding of termites and the recommendation for treatment, it omitted the MD-1 recommendation to obtain an evaluation of damage. As our clients later found out, if an evaluation had been performed, major termite damage would have been found, and they would have terminated the Contract of Sale. Our clients were not familiar with the MD-1 reporting format, and thought that the description on the pest control invoice was the WDI inspection report.  Our clients decided to sue their real estate agent given their agents’ failure to make a full disclosure.

Five Years Later, Termite Damage Was Discovered

About five years after living in what they thought was their dream home, they discovered suspicious “dirt” in the basement beneath a joist. A pest control company then confirmed an active termite infestation, and major damage was uncovered. Our clients further received shocking news concerning the pre-closing treatment.

The Pre-Closing Treatment Was Not Performed as Described

A forensic investigation by pest control expert retained by Whitney, LLP determined that the pest control company had failed to drill holes around the perimeter of the house that were necessary to inject termiticide into the ground. Although the pest control company had charged for the service, the complete treatment had not been performed.

The Real Estate Agent and Pest Control Company Settled

The lawyers of Whitney, LLP overcame a statute of limitations defense, and built a case that the agent was negligent in not providing the MD-1 report, and that the pest control company was negligent in not performing the treatment that it had represented was performed. Despite the denials of liability, the case settled for $112,000.

Daniel W. Whitney, Sr. and Daniel W. Whitney, Jr. of Whitney, LLP

Lawyers for Maryland Home Buyers

Whitney, LLP’s attorneys represent Maryland home buyers, and help buyers sue real estate agents in a variety of cases involving agents on both sides of the transaction, undisclosed termite damage and hidden defects.

We have experience recovering compensation that allows home buyers to fix serious problems discovered after closing

We offer Legal Consultations to Home Owners

Call Whitney, LLP’s real estate attorneys at 410 583 8000, or use our Quick Contact Form, to discuss your potential case.

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