Listing Agent’s Knowledge Of Dangerous Condition Imputed To Servicer Marketing REO Property

In _Hall v. Aurora Loan Services LLC_, 215 Cal. App. 4th 1134, 155 Cal. Rptr. 3d 739 (April 26, 2013) a real estate agent was injured while showing prospective buyers a house that the servicer had taken back in foreclosure. The facts were that one of the features of the house was an attic that had been converted into a bonus room by a previous owner. It was accessed by using a pull-down stairway ladder, which was hinged and braced with metal brackets. The listing agent had used the stairway ladder once to climb into the attic room before he listed the house and had not observed anything wrong with it. Although he could not remember if he pulled down or retracted the stairway ladder on that visit, he recalled operating it on subsequent visits without incident. Before the accident the home had been inspected by a licensed contractor who included the ladder in a report for repairs Stair-Remove and replace attic stair. On the day of the accident, the plaintiff brought prospective purchasers around to view the property. They visited the attic and while looking in the attic from the ladder, a hinge broke, the ladder failed and plaintiff fell and fractured her leg and injured her knees. She sued the servicer and the listing agent for negligence. The trial court entered summary judgment for the defendants but the appellate court reversed. The appellate court observed that to be liable the defendants had to have actual or constructive knowledge of the dangerous condition. Real estate agents, such as the listing agent, have a duty to notify visitors of marketed property of concealed dangerous conditions of which they have actual or constructive knowledge. The court determined that the listing agent had such knowledge because the ladder was in disrepair and the inspection report identified the ladder as an item that should be replaced under the heading ”Health and Safety Required Repairs”. Furthermore, because the listing agent was the servicer’s agent, his knowledge was imputed to the servicer. Thus, summary judgment was improper because there was evidence of a triable issue as to whether the servicer and the agent knew or should have known that the stairway ladder was a concealed danger.

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