A higher level of reliability

A seller’s broker and seller’s agent have only a general non-agency duty to deal honestly and in good faith with a prospective buyer. As for a buyer, the seller’s agent’s opinions are those of an adversary.

Thus, a seller’s agent’s opinion cannot be reasonably relied upon by a prospective buyer as having a high probability of occurring, unless special circumstances exist.

Related article:

When an Opinion Becomes a Guarantee

In contrast, a buyer’s broker and their agent have a special fiduciary duty to handle a buyer with the same level of care and protection a trustee exercises on behalf of their beneficiary.

This special agency duty owed to a buyer raises an opinion given to a buyer by the buyer’s broker or their agent to a higher level of reliability than had the same opinion been expressed by a seller’s agent acting solely on behalf of a seller. Thus, as a fiduciary, the opinion of the buyer’s agent becomes an assurance the condition or event which was the subject of the opinion will occur, unless the buyer’s agent conditionalizes their opinion.

For the buyer’s agent to give their opinion to their buyer and keep it from rising to an actionable assurance when the predicted event fails to occur, the opinion will include a recommendation to investigate and expertly analyze relevant information to confirm the agent’s opinion. Further, to mitigate risks, a further-approval contingency provision covering the condition or event that is the subject of the opinion needs to be included in any offer made by the buyer. [Borba v. Thomas (1977) 70 CA3d 144]

All agents give opinions to buyers. However, when the opinion is coupled with advice expressing no further need for the buyer or others to investigate and confirm the prediction, the opinion is elevated to the level of a guarantee.

The level of assurance equivalent to a guarantee also arises when the buyer indicates they are relying on the agent:

  • to analyze a qualifying property to determine the property’s ability to be used or operated as the buyer has indicated; and
  • to advise on whether the property is suitable and will meet the buyer’s expectations.

Further, any affirmative activities or statements of any agent designed to suppress the buyer’s inspection of the property are considered assurances which make the conclusion drawn in the opinion the equivalent of a fact – triggering all the liabilities and obligations that come along with that type of pronouncement.