Walking the Line: Foul Odor Not “Sea Air”

In our never ending journey of disclosures, we thought we would share a story with you that could have been avoided with proper seller disclosures and inspections. This was not a Select transaction! It is always best to learn from the mistakes of others.

A California appellate court reviews the damage awards made to purchasers who were told by a real estate professional that a strange odor on the property was “sea air” but the purchasers later discovered buried oil and septic tanks on the property.

Justin Fong, M.D., and Suzanna Fong (“Buyers”) purchased a seaside home from Phillip Sheridan (“Seller”).  When they visited the home prior to purchasing, they noticed a strange, moldy aroma in one of the rooms.  The real estate professional (“Licensee”), who was serving as a dual agent, told the buyers that the smell was from “sea air” and could be fixed by “changing things like sheetrock.”

Following purchase, the Buyers moved onto the property and began noticing an “oil-like” odor on the first floor.  They continued noticing the smell for two years and eventually hired a contractor to investigate.  The contractor found a buried septic tank on the property, and then also found a buried oil tank.  The Buyers notified both the Licensee’s broker and the seller about what they had found on the property.

During the removal of the oil tank, an inadvertent spill took place on the property which caused additional property remediation efforts.  Eventually, the Buyers moved away from the property due to the overwhelming chemical smell on the property.  In order to fully remediate the property, the entire house was removed from the property.

The Buyers filed a lawsuit against the Seller, the Licensee, and the Licensee’s broker.  The Buyers settled with the Licensee and the Licensee’s broker for $275,000.  A trial was held to consider the Buyers’ claims against the Seller.  The court rejected the fraud allegations against the Seller, but ruled the evidence supported the negligent misrepresentation allegations, holding the Seller vicariously liable for the Licensee’s statements that the strange smells were “sea air.”

View the full decision:  Fong v. Sheridan, No. A144286, 2016 WL 1626221 (Cal. Ct. App. Apr. 21, 2016)

 Just think what a little more research and a few more questions could have solved.  Not to mention all of the time that was expended – Remember don’t ASSUME ANYTHING-GET THOSE INSPECTIONS (Preferably before it is put on the market) – MAKE SURE YOUR SELLER DISCLOSES EVERYTHING ABOUT THEIR PROPERTY.

For questions or  further information email Ron.Hoy@Cbselectre.com.

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