Appellate Law Blog

The Court of Appeals held last week that a real estate agent representing a buyer in a transaction only owes the selling party a duty of honesty and a duty of not knowingly giving out false information, pursuant to Indiana statutory law.

In Likens v. Prickett’s Properties, Inc., a buyer’s agent in a real estate transaction contacted a seller independently to encourage acceptance of the buyer’s offer. The agent represented to the seller that, although closing would have to wait several months until the buyer was able to secure enough cash for the purchase, the buyer presented a good offer and would make rental payments to the seller on the property until closing. The agent also told the seller that the buyer deposited $10,000 in escrow, which was to be held in the form of a bank letter of guarantee of funds. After closing did not occur by the date specified and the bank letter was determined to be fraudulent, the seller sued the agency, the buyer, and the agent for negligence and fraud.

The trial court granted summary judgment in favor of the real estate agent on both counts, citing Indiana Code § 25-34.1-10-11, which states that a licensee (a real estate agent) representing a buyer “owes no duties or obligations to the seller or landlord except that a licensee shall treat all prospective sellers or landlords honestly and not knowingly give them false information.” The statute also states that the agent bears no responsibility to ensure the financial stability of the buyer. The Court of Appeals, in affirming the granting of summary judgment, explained that because there was no statutory duty owed to the seller, there could be no negligence claim. The seller failed to appeal the summary judgment as it related to the fraud claim, so no further investigation of the agent’s knowledge needed to be conducted.