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Adloo v. H.T. Brown Real Estate, Inc.: Lockbox Agreement Doesn't Exculpate Broker from Liability

A decision from the Court of Appeals of Maryland, Adloo v. H.T. Brown Real Estate, Inc., held that a lockbox agreement didn't protect a brokerage from liability for its own negligence.

The Adloos had entered into an exclusive listing agreement for the sale of their home with H.T. Brown Real Estate, Inc. (the Broker"). A clause in that agreement stated that neither the Broker, his agents or subagents "are responsible for vandalism, theft or damage of any nature whatsoever to the property."

In addition, the Adloos executed a lockbox authorization, which included this provision: "Seller further acknowledges that neither Listing or Selling Broker nor their agents are an insurer against the loss of personal property; Seller agrees to waive and releases Broker and his agents and/or cooperating agents and brokers from any responsibility therefore."

A man identifying himself as a salesperson with another brokerage called the Broker’s office saying he wanted to show the Adloos’ home and requesting the lockbox combination. The Broker’s office had a policy of verifying a licensee’s identity before divulging this information. However, in this case, without conducting any independent investigation to verify the caller’s identity, the Broker’s office attempted to verify his identity only by calling him back at the phone number he had provided, and gave him the combination.

The caller, an impostor, was not a licensee. Cash, jewelry, and other items totaling $40,000 were stolen from the Adloos’ home.

After filing and settling a claim with their insurance carrier, the Adloos sued the Broker for damages. The trial court awarded them $20,000. On appeal to the Court of Special Appeals, characterizing the lockbox authorization provision as an exculpatory clause, that court found it valid and enforceable and reversed the trial court.

On appeal to the Court of Appeals, the issue was whether the language in the lockbox agreement was enough to exculpate the Broker from liability resulting from its own negligence. The court stated the general rule, that contracts will not be interpreted to indemnify a party against his own negligence unless such intention clearly is expressed, and found that the lockbox agreement did not meet this test.

"Because it does not clearly, unequivocally, specifically, and unmistakably express the parties’ intention to exculpate the Broker] from liability resulting from its own negligence, the clause is insufficient for that purpose."

Moreover, the court found the same defect in the listing agreement clause regarding theft, and it reinstated the trial court’s judgment in favor of the Adloos.

Adloo v. H.T. Brown Real Estate, Inc. , 344 Md. 254, 686 A.2d 298 (Md. 1966).