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Malibu homeowner sues for inaccurate square footage

Malibu homeowner Hiroshi Horiiki paid $12.25 million for his new home after the listing agent Chris Cortazzo provided a flier advertising 15,000 square feet of living space. However, a building permit documented 11,050 square feet and tax records showed 9,500 square feet.

When Horiiki renovated a room of the mansion, he discovered that his home was well-below the marketed 15,000 square feet. Horiiki pursued a claim against Cortazzo and Caldwell Banker, the firm that jointly represented both buyer and seller in the property sale claiming a breach in fiduciary duty. Did they have a fiduciary duty to Horiiki?

Determining fiduciary duty

Horiiki claimed that Cortazzo and Caldwell Banker had a fiduciary duty to him and that it was breached. During the initial trial, the court decided that Cortazzo solely represented the seller and had no duty to Horiiki. Horiiki appealed the decision, and the California Supreme Court decided that Caldwell Banker had a fiduciary duty to Horiiki since the firm represented both parties. Horiiki was not awarded financial compensation for the discrepancy in square footage.

Six aspects of fiduciary duty

Real estate agents must adhere to six aspects of fiduciary duty as they represent their client buying or selling property:

  • Loyalty- the realtor must place their client's interests above everything else
  • Confidentiality - the realtor cannot share client information that could harm their ability to bargain
  • Disclosure - the realtor must disclose all pertinent information to their client about the potential deal
  • Obedience- the realtor must efficiently follow all their client's lawful requests
  • Reasonable care- the realtor must execute actions using the same level of reasonable care as is expected of a real estate professional
  • Accounting- the realtor must safely retain any assets their clients entrusted to them

If your real estate agent fails to uphold any of these duties, they may be liable for negative financial repercussions that you suffer from their actions.

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