Seattle’s Indemnity Agreement.

Many people who are interested in buying real property take solace from the fact that a building meets city code, that the city has inspected the structure and finally approved it. This is particularly true with buildings that might be affected by a landslide. Usually city approval of the project in a landslide-prone area is a part of the sales pitch. People in Seattle who are comforted by this are being badly deceived. Permitting by the City of Seattle areas with a risk of landslide exposes people to greater risk of liability, not less.

Before Seattle will issue a building permit for a project in a “sensitive area” it requires that an indemnity agreement be signed. It requires such an agreement even for a permit to conduct repairs. The agreement is recorded and purports to bind everyone who late comes into ownership. These agreements are harshly anti-consumer and shift risk from the city to homeowners and other property owners.

An example of this occurred in a case called 1515Lakeview Boulevard Association, where the developer built a condominium on a hillside consisting of landfill. He recorded the indemnity agreement but did not mention this to the unit buyers. When the condominium was destroyed in a landslide the city pulled out the agreement and figuratively waived it in the buyers’ faces. The developer had sold the units and for practical purposes was gone from the scene.

The terms of the indemnity agreement are in my mind unconscionable. For a developer who is going to sell the project to consumers the agreement is not a big problem because the burden will fall on the buyers. Residential condominia that are damaged by a landslide cannot be repaired without the owners signing an indemnity agreement. The consumers have the choice of signing the agreement or abandoning their homes, which will subject them to other liability.

If they sign the agreement, they among other things are bound to pay all the City’s expenses if it is sued and not solely responsible. They become liable if they do not keep the City informed of subsequent developments. In this way the economic burden of an avoidable disaster is shifted from the City (and the developer) to the innocent purchaser who has had no involvement or opportunity to protect himself or herself.

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