A new ruling by the Massachusetts appellate court suggests that seemingly informal conversations with a client might be enough to get a real estate agent into hot water – no matter what the purchase and sale agreement says.

The case, DeWolfe v. Hingham Centre, involves a property in a semi-residential neighborhood advertised for sale as zoned “Business B.” DeWolfe, a hair stylist, was interested in opening a six-sink salon in the building. After meeting with an agent of the listing broker – who again assured him in conversation and in writing that the property was zoned for business – DeWolfe purchased it.

Several months later, he discovered that particular zoning regulations governing the building meant he wouldn’t be able to open as big a salon as he’d hoped, and he sued the brokerage.

The Superior Court threw the case out before trial, agreeing with the brokerage that because Massachusetts courts have said previously that brokers didn’t have any responsibility to check on a property’s zoning status before selling it, DeWolfe didn’t have a case.

But the state appeals court recently reversed that decision. Since the broker and her agent had “communicated to DeWolfe several times and in several manners that the property was zoned for commercial use and that DeWolfe would be allowed to operate his desired hair salon at the location….she therefore had a duty to determine the proper zoning classification,” the court declared.

The ‘Wasteland Of But’

The court made its ruling despite the fact that the buyer and seller had used the standard purchase and sale agreement provided by the Greater Boston Real Estate Board as the basis of their contract, including a clause that the buyer hadn’t “relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing.”

But that was not enough to absolve the brokerage, the court ruled, saying that written materials such as the newspaper ad which advertised the listing could count as representation made in writing outside the terms of the contract.

The case will now return to the lower court; it remains to be seen whether DeWolfe will prevail.

“We intend to pursue it to its conclusion,” said Lawrence Rose, principal at Sweet & Rose in Stoughton and DeWolfe’s attorney. “I’ve spoken to my client, and he’s obviously happy, but we still have a long road ahead of us.”

But the appellate ruling – that the language in the standard purchase and sale contract didn’t automatically trump what was written in the ad or said in a conversation between the broker and the buyer – ought to inspire caution in agents.

“The Realtor isn’t really a party to the purchase and sale agreement,” said Rich Vetstein, principle of Framingham-based Vetstein Law Group and author of The Massachusetts Real Estate Law Blog. “The purchase and sale agreement may protect the seller, but not the [agent]. And the Realtor has expanded duties, in terms of disclosure….it’s always a better non-disclosure case against the agent than the seller.”

Linda O’Connor, broker/owner RealPro Assoc. in Beverly who often trains agents on professional ethics, said it was all too easy for agents to cross the line into making assurances about a property that could leave them vulnerable to a suit like DeWolfe’s. She described the practice as the inadvertent “assumption of but rights.”

“All too often we hear a licensee say the words ‘I don’t know, but…’. As far as I’m concerned, once you cross the line into the ‘wasteland of but’ you lose the right to assume,” O’Connor said. “You have to know your stuff and be prepared to articulate accurate information.”

The bottom line is that all agents involved in a transaction should familiarize themselves with all details personally, and not rely on third-party assurances.

“If you’re going to say anything related to the property, you have to independently investigate it,” Vetstein said. “Never rely on what the seller says.”