FACTS:                    

The agent represented the buyer and a reputable builder/developer as a fully disclosed dual agent in the transaction for a home to be constructed.  The buyer and builder/developer executed a contract selecting the model to be constructed and the price.  Six months after the contract was signed, the builder/developer advised the buyer that due to “supply chain” problems, the cost of construction materials had increased 300%.  The builder/developer advised the buyer that he could not construct the house for the agreed upon price and gave the buyer the option of either cancelling the transaction and receiving the return of all monies paid to date, or amending the contract.  The buyer refused both options.  The builder/developer ultimately filed bankruptcy and is no longer in business and has no funds.  The buyer has demanded that the agent and his brokerage firm “make arrangements to build the house originally planned” at their expense because they were dual agents and misrepresented/omitted the builder/developer’s ability to perform.

ISSUE:                      

Are the agent and brokerage firm required to build the house at their expense?

ANSWER:                

No. 

DISCUSSION:         

Based on the facts presented, the buyer’s real claim is against the builder/developer.  Licensees are not guarantors of a builder’s performance.  Additionally, as to the alleged misrepresentation/omission, the standard of care for real estate licensees does not include predicting future events.  See Denbo v. Badger, 18 Ariz. App. 426, 503 P.2d 384 (1972); McAlister vs. Citibank, 171 Ariz. 207, 215, 829 P.2d 1253, 1261 (App. 1992).  The buyer’s contention that agent and brokerage were obligated to predict a 300% increase in materials costs, that was to occur at some time after the contract was signed, resulting in a reputable builder refusing to perform, is not a viable legal claim.  The agent and brokerage have no obligation to build the house at their expense as demanded by the buyer.