"Information deemed Reliable but not Guaranteed." It's a fair bet that most people who would read this column have seen that disclaimer more times than they could count. It is found on flyers, brochures, advertisements, and, most notably, multiple listing (MLS) reports and property descriptions. Who knows when that language first came into use? Whenever it was, if the person who devised it had been able to register the phrase and collect royalties on it, he or she would be fantastically wealthy by now.

Indeed, the disclaimer "Information deemed Reliable but not Guaranteed" is so common, one has to wonder if its value is lost. It seems an ever-present part of the real estate verbal landscape. Does it really provide any protection? A recent memo from the legal department of the National Association of Realtors® (NAR) points to a case which indicates that there is more than a little significance to the common disclaimer. The case, Crawford v. Mintz, comes out of North Carolina.

In 1997, Thomas and Lois Proctor engaged Re/Max Property Associates agent Colon S. "Semi" Mintz to list their Raleigh, North Carolina, house for sale. As part of the process, Mr. Mintz entered information about the house into the MLS data base. Among the information that he entered was a statement that the Proctor's house was connected to the city sewer system. In fact, it was connected to a septic tank. At trial, Mr. Proctor could not recall Mintz ever having asked if the property was on the sewer system or a septic tank, and the record does not make clear why the misinformation was entered.

According to the court record, "the MLS report for the Proctors' house included the following disclaimer, set off by asterisks: 'Information deemed RELIABLE but not GUARANTEED.' The MLS report also included a notation stating that the listing was prepared by Judy & Semi Mintz on October 16, 1997."

Subsequently, Wayne and Lynn Crawford engaged real estate agent Lou Garrabrant to assist them in locating a suitable house to purchase in Raleigh. In January of 1998, the Proctors' house came to their attention. Ms. Garrabrant printed out a copy of the MLS report for them. However, quoting from the court record again, "the version of the listing Plaintiffs [the Crawfords] received was different in two relevant respects from the original MLS listing prepared by Defendant Mintz. First, the printout of the MLS report contained a notation stating that it was 'prepared by: Lou Garrabrant on January 26, 1998,' rather than by Defendant Mintz. Second, the printout of the MLS report did not contain the 'Information deemed RELIABLE but not GUARANTEED' disclaimer."

The Crawfords and Proctors entered into a purchase agreement in early February. The house was thoroughly inspected, including a basic examination of the sewage pipes and system, however the question of being connected to a septic system never arose. The Crawfords continued to believe it was connected to the city system. Title transferred in March of 1998.

In March of 2000, the sewage system malfunctioned, and it was then that the Crawfords learned of the septic tank. The tank had a leak. After being repaired, the tank overflowed in September of that year. Negotiations between the Crawfords, Re/Max, Mintz, and the Proctors were unsuccessful, and a lawsuit was filed in November of 2001.

The Proctors were dismissed out of the negligent misrepresentation lawsuit. At the close of the Plaintiffs' evidence, the Defendants moved for a directed verdict in their favor. The motion was denied and the jury subsequently found the Defendents liable to the Plaintiffs for a little over $7,000 -- the cost of repairs and connection to the city system.

The Defendants appealed, and the case went to the North Carolina Court of Appeals. There, the appellate court overturned the trial court, ruling that there should have been a directed verdict in favor of the Defendants. In so doing, they considered that "Defendants claim that the information they entered was altered and transmitted to Plaintiffs by a third part such that Plaintiffs received a materially different version of the MLS report than the version originally prepared by Defendants. Therefore, according to Defendants, Plaintiffs cannot claim they directly relied on information provided by Defendants."

The crucial difference, of course, was that the disclaimer was missing from the data sheet that the buyers' agent had provided to them. (There was speculation that it might have appeared on a second page which they did not receive.)

The appellate court wrote that "such disclaimers are material provisions in MLS listings that may have important consequences for the legal rights and responsibilities of real estate purchasers, sellers, and their agents." "Therefore, we hold that a buyer cannot demonstrate reliance on a representation made in an MLS listing unless that buyer relied on a version of the MLS listing containing the same qualifying language as was originally entered by the listing agent."

That tired old disclaimer that so many of us have seen a gazillion times: Guess what? It turns out to have some significance after all.