Claimant, William McDermott, commenced this day small claims action against defendant, Related Assets, LLC d/b/a RE/Max Metro Calabrese, alleging that owing to the defendant improperly listing the premises claimant purchased as having city sewers when it did not, claimant was forced to incur the cost of installing a sewer line after closing. A trial was held on August 15, 2014. Both sides were represented by counsel. The caption was amended to what is set forth above which reflects defendant's correct corporate name.

Claimant testified that he was induced to initially look at, and then eventually purchase, the premises, 1304 Woodrow Road, Staten Island, New York because the house was listed as having "city sewers." Defendant is a licensed real estate broker and was the listing broker on the sale. Claimant stated that he was only interested in homes that had a city sewer and was shown the house by another real estate brokerage firm. Claimant asserts that after he closed on the house in March 2013, he learned that the property did not have city sewers but in fact had a septic tank system. Because the City of New York installed sewers in Woodrow Road at that time, claimant was required to spend $4,200.00 to run a sewer line from the city line in the street to his house. He also incurred bills to clean the septic tanks while he lived there until the sewer line was installed and had additional expenditures for paving and landscaping, although no paid bills were presented for the last two items. Claimant has not submitted the original listing agreement from the Multiple Listing Service (MLS) but has the final report from MLS showing a sales price of $460,000.00 and the notation of city sewers.

Defendant admits taking the listing with that notation but insists that she relied upon the seller for all information concerning the sewer system and in fact, when the house was relisted by the defendant the seller provided the same information.

There are several problems with the claimant's allegations. First, he testified that he worked for the New York City Department of Environmental Protection and does sewer [*2]maintenance as part of his job. Second, both he and the defendant broker's witness testified that there were contractors installing sewer lines in the Woodrow Road area when the house was listed and when the claimant visited the premises on more than one occasion. Yet no one thought to make inquires to why the streets were being dug up. Third, claimant hired a structural engineer to prepare a report prior to entering into the contract. That report was not put into evidence. Fourth, claimant did not produce the contract of sale which he entered into with the seller which may have had a representation as to the existence of city sewers, private sewers, septic tanks or cesspools. Fifth, claimant did not produce his title report which if done in the standard manner as prepared in Richmond County, would have included municipal searches marked "for information only" disclosing any city related water and sewer charges assessed against the property. The lack of this information in the title report should have triggered an inquiry by all parties to the transaction. A certificate of occupancy search which may have contained information in that regard, is also a customary document provided by a municipal search.

This court is well aware that the real estate industry locally, if not statewide, continues to assert that real estate brokerage is a "profession" requiring training, skill and expertise in all areas of real property activities. Brokers are constantly seeking to be granted the authority draft contracts for the sale of real property, if not other documents usually prepared by attorneys at law. Although not classified as a "profession" regulated by the Education Law or the Judiciary Law, the Department of State has continued to monitor and enforce the requirements for becoming a licensed real estate broker or salesperson. The Real Property Law (RPL) requires an applicant to show "trustworthiness" and the "competency to transact the business of real estate broker in such a manner as to safeguard the interests of the public." [RPL §441(1)(b)]. That section provides that any applicant must furnish proof of completing one hundred twenty hours of approved real estate related courses and demonstrated knowledge of the "legal effect of deeds, mortgages, land contracts of sale, and leases." In order to maintain a license, continuing real estate education courses must be completed every two years [RPL §441(3)].

RPL §443 sets forth the form containing the disclosures a broker is required to deliver to either the seller or the buyer in a transaction. Defendant as the "seller's agent" is required "(i)n dealings with the buyer, a seller's agent should (a) exercise reasonable skill and care in performance of the agent's duties; (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the agent materially affecting the value or desirability of property except as otherwise provided by law."

Neither party has placed into evidence a copy of the signed contract between the claimant and the seller. Although an argument could be made that the defendant as the real estate broker would not necessarily have a copy of the contract, the rules of the Division of Licensing Services of the Department of State does require licensed real estate brokers to maintain certain records of each transaction. One of the records that a broker has the option of maintaining is a "copy of the contract of sale" [19 NYCRR §175.23], so it [*3]is possible that the defendant had a copy as part of its records even if there were alternate methods of keeping information.

It should be noted that the Property Condition Disclosure Statement (RPL §462) was apparently not completed by the seller, as is the procedure generally followed in Richmond County. Instead a $500.00 credit was given to the claimant. Paragraph 28 of the disclosure form would have required the seller to make an affirmative representation as to the type of sewer system.

The court is presuming that the standard form of contract utilized in Richmond County was used in this transaction. The failure to do so would be highly unusual. Paragraph 12 of that standard form contract provides:

Purchaser acknowledges and represents that Purchaser is fully aware of the physical condition and state of repair of the Premises..., based on Purchaser's own inspection and investigation thereof and Purchaser is entering into this contract based solely upon such inspection and investigation and not upon any information, data, statements or representations, written or oral, as to the physical condition, state of repair, use, cost of operation or any other matter related to the Premises,...given or made by Seller or itsrepresentatives, and shall accept the same "as is" in their present condition and state of repair,...

Paragraph 18 of the contract provides for apportionment of water meter and sewer rent charges. So if there were none, this clause should have been amended.

Paragraph 28(a) provides:

All prior understandings, agreements, representations and warranties, oral or written, between Seller and Purchaser are merged in this contract; it completely expresses their full agreement and has been entered into after full investigation, neither party relying upon any statement made by anyone else that is not set forth in this contract.

The standard form contract would eliminate any claim the claimant has against the seller arising because of differences between the conditions represented existing at the premises and how those conditions actually exist. It would not preclude the claimant from seeking redress against the defendant for making misrepresentations based on statements from the seller. The contract protects the seller for misstatements made by the broker but not the broker for misstatements made by the seller. The broker, if found liable, may have a claim against the seller for any misrepresentations.

The existence of the entire contract would clarify whether the claimant actually knew that there was no city sewers at the premises prior to signing the agreement based on representations of the seller; whether an adjustment was made in the purchase price because of the lack of sewers; whether upon receiving either the home inspection report or the title report this fact was revealed to the claimant and if the contract was renegotiated because of that information.

The claimant did not produce the title report he received. The title report should have a municipal search showing open water and sewer charges. If the report showed no sewer charges, then a bell should have gone off with claimant's attorney, and even seller's attorney, if either of them or both of them were operating under the assumption that there was a city sewer servicing the premises because the contract was prepared based on information provided either by the seller or by either real estate broker. If there was no sewer charge in the municipal search, it should have triggered inquiry by claimant's counsel as to why that was the case if there was a city sewer.

The title report would also contain a copy of the certificate of occupancy. Defendant's counsel submitted a copy of the certificate of occupancy issued on August 16, 1972 showing a one family dwelling with the notation "sewage disposal/sanitary drainage does not discharge into either sanitary or combined sewer" and "storm drainage does not discharge into either storm or combined sewer." So if the claimant had been provided with this information, he would have known that there was a discrepancy between what the seller was representing as the situation and what the municipal records disclosed.

Although claimant's alleged of lack of knowledge, borders on being less than credible, taking into account all of the facts, the primary responsibility for discovering the inaccurate information must fall on the defendant as the listing broker. Had defendant as a licensed real estate broker compared the information available in the public record to the data provided by the seller, the defendant could have corrected the listing before interested purchasers began calling, and allegedly the claimant would not have even looked at this house. Any damages that have occurred flow from defendant's actions.

Exhibits, if any, will be available at the office of the clerk of the court thirty days after receipt of a copy of this decision.