A Massachusetts broker, Elena, represents buyer Paul. Paul is interested in a commercial property that Elena suspects may have environmental contamination based on the property's prior use as a dry-cleaning facility. Elena does not conduct any investigation and does not advise Paul to hire an environmental consultant. Paul purchases the property and later discovers significant MGL Chapter 21E contamination requiring $200,000 in remediation. Which of the following best describes Elena's potential liability?
Correct Answer
B) Elena may be liable for breach of her fiduciary duty of reasonable care by failing to advise Paul to investigate a suspected environmental issue.
Under 254 CMR 3.00 and Massachusetts agency law, a buyer's agent owes the client the fiduciary duty of reasonable care and diligence. When Elena suspected contamination based on the property's prior use — a red flag that a competent licensee should recognize — her duty of reasonable care required her to advise Paul to engage an environmental consultant or conduct appropriate due diligence under MGL Chapter 21E. Failure to provide this advice when a reasonable agent would have done so constitutes a potential breach of fiduciary duty, regardless of whether Elena had actual knowledge of the contamination.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
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