Question: Three months after we closed escrow on our Peoria home, we discovered major leaks in the bathroom plumbing. One of our neighbors said that two prior buyers of our home had cancelled the purchase contracts when they discovered these water leaks. When we contacted the real estate agent who represented both the seller and us in this transaction, she said that she had no liability because we agreed in the purchase contract to release her from any liability. Is she correct that she has no liability because of this release?
Answer: Probably not. Lines 428-434 of the standard Arizona Association of Realtors Purchase Contract are usually initialed by both the seller and the buyer, and state in bold print that the seller and buyer release the brokers in the transaction from any liability for the condition of the home. This blanket release language in the purchase contract, however, is probably not enforceable. The reason is that public policy requires that licensed professionals such as real estate agents, doctors, and attorneys be responsible for professional negligence if they violate the standard of care for their profession. In other words, licensed professionals generally cannot defeat liability based on a signed release in advance of the professional services. If so, the surgeon in Austria who recently amputated the wrong leg (and two days later had to amputate the correct leg!) would have no liability for professional negligence.