Should I Sign this Contract? Not Without An Attorney
Should I Sign this Contract? Not Without An Attorney
In June 2023, the North Carolina Court of Appeals decided Mann v. Huber Real Estate, Inc., COA22-956, a case with important implications for both real estate agents and homebuyers, especially involving new construction contracts, disclaimers of warranties, and the interplay between an agent’s fiduciary duty and a client’s duty to read and understand documents.
Facts & Procedural History
Plaintiff, Galya Mann, moved from Bulgaria, pursued education in North Carolina, and eventually engaged a Realtor and broker to help sell her townhome in Clayton and purchase a new home in the Raleigh-Durham area.
Mann signed an Exclusive Buyer Agency Agreement, which contained a clause advising the buyer to seek other professional advice and included language whereby the buyer agreed to indemnify the firm for liability arising from the buyer’s selection or omission of such professionals.
Later, Mann and the Realtor engaged with a builder to purchase a new home. The sales contract used a builder-drafted standard contract that included:
disclaimers of implied warranties for merchantability, fitness, and habitability;
damage limitation clauses limiting remedy to repair and capping total damages to purchase price;
mandatory arbitration clauses; and
a limited warranty for defects.
Mann moved in and then discovered latent defects: drainage/lot grading issues, foundation cracks, gutter and shingle installation faults, missing moisture barrier, plumbing/electrical issues, water intrusion, and signs of biological growth. The estimated repair cost ranged between $83,894 and $90,594.
Mann sued and asserted against the Realtor claims including breach of fiduciary duty, unfair & deceptive trade practices (UDTP), negligence, unjust enrichment, and additional claims against other parties. The Realtor moved for summary judgment; the trial court granted it, dismissing all of Mann’s claims against the Realtor. Mann appealed to the North Carolina Court of Appeals.
Issues on Appeal & Court’s Decision
Mann appealed the dismissal, primarily challenging the summary judgment on breach of fiduciary duty and on unfair and deceptive trade practices.
Breach of Fiduciary Duty
Because a real estate agent has a fiduciary relationship with a client, the agent owes duties of reasonable care, full and truthful disclosure of material facts known or discoverable with due diligence, and to act in the best interests of the client.
Mann’s arguments included:
The Realtor misrepresented or downplayed the legal significance of the sales contract by calling it a “standard contract” which she claims led her to rely on him and forego a thorough review.
That Realtor failed to advise her verbally to obtain legal counsel when she questioned whether the contract was “standard.”
The Court, however, rejected both arguments as a matter of law:
Calling it “standard” did not amount to breach.
The Court found that even if the Realtor described the builder’s contract as “standard,” there was no evidence he claimed it applied to all builders or that he misled her as to its legal content. The Realtor’s explanation was he meant “standard for that builder.” Mann’s assumption that “standard” meant “standard across the board” was insufficient to raise a factual dispute. Moreover, under North Carolina law, a party who signs a written contract is under a positive duty to read and understand it, unless there is fraud, misrepresentation, or some special circumstance. Failing to read does not automatically excuse you. The Court held Mann had not presented evidence of being willfully misled or that the contract was withheld from her.Obligation to seek legal counsel satisfied by signed agreement.
The Exclusive Buyer Agency Agreement had a clause advising the buyer to seek professional advice including legal advice. The Court held that this written advice sufficed under the circumstances because Mann never inquired specifically about the legal or warranty/dispute provisions of the sales contract. She focused only on interior upgrades. Because she did not raise legal questions about the contract, the duty to verbally refer her to an attorney was not triggered.
Therefore, the Court affirmed summary judgment for the Realtor on the fiduciary duty claim meaning that Mann lost.
Unfair & Deceptive Trade Practices (UDTP)
Mann also asserted that Realtor’s referring to the builder’s contract as “standard” was misleading or deceptive conduct under North Carolina’s UDTP statute. To succeed, Mann had to show an unfair or deceptive act or practice, that occurred in commerce or affected commerce, and proximate injury. The Court treated whether a practice is unfair or deceptive as a question of law.
Because there was no evidence that the Realtor’s use of “standard” could be fairly interpreted as misleading regarding the contract’s legal terms or depriving her of the ability to question it, the Court held that the reference was not deceptive. Also, Mann did not argue that the Realtor misrepresented that the form was standard for all builders (only that she assumed that), and so the Court found no basis to overturn summary judgment on the UDTP claim. Thus, summary judgment was affirmed on that claim too, and Mann lost.
Key Takeaways & Implications
The Mann v. Huber decision sends several strong messages and raises lessons for real estate professionals, homebuyers, and attorneys alike.
Buyers have a strong independent duty to read and understand what they sign. One of the foundational principles emphasized by the court is that signing a written contract, especially one reasonably accessible to the signer, imposes a duty to read it. Absent fraud or trickery, a party cannot later claim ignorance of its terms. The court refused to excuse Mann’s lack of reading in this case. This underscores the risk for buyers who sign quickly or rely entirely on advisors without scrutiny. Prior to signing any contract, you should always seek legal advice.
Advisory clauses such as “seek legal advice,” can carry weight, but are not foolproof. The Exclusive Buyer Agency Agreement’s clause advising legal and professional advice played a crucial role in insulating Realtor from liability. Because Mann never asked detailed questions about legal provisions, the court held that having the advisory in writing fulfilled the agent’s duty in this instance. However, in circumstances where a buyer does ask pointed legal questions (e.g. “what does this limitation clause mean?”), relying solely on a boilerplate advisory clause might be insufficient. Thus, agents should remain cautious: if a client asks legally nuanced questions, the safe course is a referral to legal counsel (or at least a clear disclaimer you are not offering legal advice).
Using the term “standard contract” is risky. Labeling a contract “standard” can lead to confusion, and if unqualified it may mislead some clients. The Realtor in this case claimed he meant “builder standard,” not “standard across all transactions.” The Court accepted that interpretation, but had there been evidence he was representing it as universally standard, a jury might have found a genuine factual dispute. Agents and brokers should avoid vague or potentially misleading characterizations of contracts without clarifying context.
Contracts with warranty disclaimers, limitation clauses, and dispute-resolution provisions demand care. Builder contracts, especially for new construction, often are very one-sided and protect the builder, not the buyer, and include clauses that disclaim implied warranties, limit damage remedies, or mandate arbitration. Buyers should be alerted to these in plain language, so they understand tradeoffs. The presence of those clauses in Mann’s contract, along with extensive latent defects, underscores how critical it is for buyers to have legal eyes review the document.
Agents cannot relieve themselves entirely from risk via disclaimers. Even though the advisory clause was helpful, it does not give agents carte blanche. The fiduciary duty remains, and in some contexts, especially where client questions or vulnerabilities exist, courts may demand more. In addition, under different facts (e.g. if the buyer is unsophisticated, language barrier exists, or the agent has particular influence), courts might be less forgiving.
Real estate education and documentation matter. From a professional standpoint, this case underscores the importance of clear, documented communication between agent and client, especially when legal matters are involved. Agents should consider:
Explaining in plain language the risks of contract disclaimers, limitations, and arbitration, and especially draconian builder contracts.
Obtaining written acknowledgments when complex legal clauses are present.
Reserving space for noting whether the client asked legal questions.
Encouraging or even requiring independent legal review in transactions involving unusual or heavily burdened contract terms.
Conclusion: A Cautionary Tale, But Not a Blanket Win for Agents
Mann v. Huber Real Estate is a valuable case spotlighting the tension between an agent’s fiduciary duty and a client’s duty to read and understand contracts. It illustrates that even in the face of serious post-closing defects, the buyer may be limited in legal recourse if the buyer fails to understand the contract.
A buyer who asks pointed legal questions, is especially vulnerable, or receives misleading statements might fare differently under another fact pattern. Agents should take care not to over-rely on boilerplate disclaimers, and clients should always insist on reading, understanding, and seeking legal advice prior to signing.
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