Suing For Misrepresentation in Real Estate

Purchasing or selling a home or investment property can be an involved, emotional, and demanding process, which is the reason you hired a real estate broker to assist you. And, fingers crossed, you interviewed them previously, and hopefully, the broker is trustworthy. But when the trust is broken, what happens next.

Many of the legal issues real estate brokers face, lawsuits for misrepresentation are the biggest by far. So how can you know if the real estate broker you hired has made misrepresentations in the past, and when are you able to sue because of these misrepresentations?

Misrepresentations and Failures to Disclose

From a legal standpoint, a misrepresentation occurs when a real estate broker misreports some physical attributes of the property. Sometimes grouped with misrepresentations are disclosure failures, which is when a broker fails to divulge or uncover a physical attribute of the property entirely. Many times, misrepresentations regarding the property’s foundation or critical structural characteristics, property limits, or pest or insect issues. And the most common undisclosed issues can involve property easements, environmental issues, and title concerns.

The hardest part for home buyers and sellers is pinpointing these misrepresentations. We usually think of brokers as the professionals and are not usually able to correct or question what they mention to us. Unfortunately, it’s not until a lot later, after a home is purchased or stays longer on the market than expected, that we realize we may have been misled.

Misrepresentation Lawsuits

There are 3 types of misrepresentations:

1. Innocence — easy mistakes with no purpose and little detriment;
2. Fraudulence– deliberately deceiving a client or concealing a property problem so they can make a sale;
3. Negligence — failure to disclose considerable property issues due to ineptitude.

You cannot sue a real estate broker for having a bad point of view — in order to win a misrepresentation case, the misstatement is required to include some material fact concerning the property or the sale that would impact a rational person’s decision in regard to moving forward with the purchase.

For example, if the real estate broker had zero access to records, and physically never observed a failing roof condition—and that roof condition only rears its head a month or two after the closing, you likely do not have a viable claim against the broker.  However, if there was email traffic from the seller to the broker where the seller is 100% warning of the imminent failure of the roof—and that would be a material fact to the transaction—and should the broker fail to inform buyer of this fact, and the. Buyer relying on the broker closes the transaction—in that instance, the buyer most certainly would appear to have a solid case and claim against the broker for misrepresentation.  Every case is different.

If you are considering purchasing or selling a home, or have had problems concerning a real estate broker, you should speak with a knowledgeable real estate attorney near you.

Source:

1. Coble, Christopher. “When to Sue a Real Estate Broker for Misrepresentation.” Findlaw, 21 Mar. 2019, blogs.findlaw.com/law_and_life/2016/03/when-to-sue-a-real-estate-broker-for-misrepresentation.html.

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Disclaimer: This Post Is Not Legal Advice.

You should not ever depend on an online post for legal advice as the law and codes changes often, information sometimes might not be accurate, there can be exceptions to the rule, and wholesale reliance on such matters could be damaging. Always consult with experienced attorneys for current, effective, and factual legal advice.