Seller not liable, broker liable?

From the purchase agreements of homes (e.g., the NVM model sales contract whether it Amsterdam model sales contract), follows when the seller is liable for defects. Usually, the seller's liability is limited. For example, the seller usually only guarantees that the home can be used ‘as a home. In addition, older homes usually have a age clause included. Therefore, it can be difficult for buyers to hold the seller accountable if there are hidden defects. Many angry buyers therefore try to get their revenge by suing the broker liable argue. Very sometimes this is justified, but then the broker must have really screwed up.

Broker liability

Attorney Robert van Ewijk has written blogs on broker liability for this website before. For example, in 2024 he discussed a ruling by the NVM disciplinary board, which ruled that the broker had violated the honor code, by concealing the fact that the property was not allowed to be rented out. Another blog by Robert addressed the question of when a broker could be liable. The blog you read below discusses case law on this topic.

The general rule: standard of care

A selling broker acts unlawfully toward a prospective buyer if the broker does not exercise the care that can be expected of the broker under the circumstances of the case. This is the standard according to established case law. It comes down to the trust that the buyer could derive from the given information in the given circumstances of the case, determined the Supreme Court in judgment of July 13, 2018 (ECLI: ECLI:NL:HR:2018:1176).

Broker need not inform prospective buyer of competing offer

The Hof ’s-Hertogenbosch ruled on January 30, 2024 (ECLI:NL:GHSHE:2024:249) that the broker cannot be expected to inform the prospective buyer of a bid made by another prospective party. The buyer in this case argued that the broker did not convey the buyer's bid to the seller, but also that the prospective buyer did not know that there were others making bids.

Letting agent liable to tenant if rent is violated

In a case of The Amsterdam Court of Appeal of July 14, 2015 (ECLI:NL:GHAMS:2015:2890) followed that brokers (when mediating) may be liable to an individual tenant in tort when they act in breach of a duty of care owed to them. The broker in this matter was acting for the homeowner. The tenant (i.e., not the broker's contracting party) held the broker liable because the amount of the rent violated the rules.

According to the tenant, the broker had an obligation to disclose this to the prospective tenant. This obligation had arisen because the tenant was so involved in the brokerage agreement that the broker was expected to take the tenant's interests into account according to standards of care. This involves the professional expertise of the broker, the dependency position of the tenant and her trust in the representation of her interests. Thus, brokers are expected to adequately inform the tenant about the existence of regulations regarding rent, rent review and Rent Commission.

Rental agent also liable to landlord in case of rent violations

The same Court found in another case that the rental agent was liable to the landlord - i.e., his own client - because mistakes had been made with the rent. This was because the broker had mediated a rental agreement and had included an all-in price. This is not allowed. The tenant went to the Rent Commission and the rent was corrected. According to the Amsterdam Court of Appeal, the broker was liable to the landlord for damages. However, the Court of Appeal also found that in this case the real estate agent was not liable for the fact that the rent was above the liberalization threshold, even though this was unjustified. Note: the court of appeal came to this opinion because the rent was just below the limit, the property agent had acted with due care and for that reason it went too far to consider the property agent liable for the risk that the rent was set too high.

Broker liable: failure to report remodeling in violation of permit

At The case of the Court of Appeal of ’s-Hertogenbosch (ECLI:NL:GHSHE:2023:3572)  involved a house that had not been converted in accordance with the issued building permit. Since real estate agents have a duty to provide accurate information about the properties of the property that he must understand may be of interest to the (concerned) buyer in the purchase decision, this information about the non-conformity of the remodel was material. Under the circumstances that served in this case, the broker should have reasonably understood that the remodel violated the permit. Accordingly, the Court held that the broker did not act with due care and was liable.

Information about potential tenants

From another judgment of the ’s-Hertogenbosch Court of Appeal of April 23, 2024 (ECLI:NL:GHSHE:2024:1400) follows that a broker can be expected to verify the financial goodness of the potential tenant when entering into a private rental agreement. Therefore, it is expected that income and asset information of the tenant should be requested before the lease is entered into. If the broker fails to do this, he is failing in his duty of care.

Selling broker also has duty of care to buyer

The selling broker also has to refrain from providing false or misleading information to the potential buyer, according to the judgment of the Arnhem-Leeuwarden Court of Appeal of May 21, 2024 (ECLI:NL:GHARL:2024:3466). If he does not comply, he can be held liable. The selling broker in this case knew there was a malfunctioning water drain and other problems with the roof. There was also more asbestos in the home than previously disclosed.

Broker's role in dispute over home size

When the promised living area turns out not to be correct, the real estate agent may also be liable for providing false information about the size of the property, ruled the Court of ’s-Hertogenbosch on March 19, 2024 (ECLI:NL:GHAMS:2015:2890). The real estate agent should, again, not provide false or misleading information about characteristics of the property that he should understand may be important to the buyer in his purchase decision. This could include the size of the property. However, this ruling does not yet make the real estate agent actually have to pay damages. After all, the buyer has yet to prove that he has any damages at all. And if that succeeds, then there is often evidence in the sales ad or brochure included a disclaimer. That can also absolve the broker of liability.

Duty of care broker essential for trust in real estate industry

As discussed in previous cases, brokers' duty of care is an important basis for their liability regarding the purchase or sale of real estate. Whether it concerns informing about defects, providing correct and complete information or, on the contrary, carefully representing the interests of the parties: an estate agent bears a great responsibility. However, in this blog I have mainly discussed judgments about cases in which the real estate agent was indeed liable. However, this is usually not the case. The real estate agent has to make things pretty bad in order to be successfully held liable by the buyer.