Any party who is purchasing a piece of real estate has a right to know how the property’s price tag came to be, which is to say they are entitled to know about all of the property’s benefits and deficiencies. This is a process known as disclosure, and it should be completed in full before any real estate transaction is finalized. While this may appear to be an obvious business practice, dishonest real estate agents and sellers often take steps to hide problems with a property in a process known as fraudulent nondisclosure.
In a recent case, a Florida resident purchased a piece of real estate property under the pretense that it was in a condition as advertised. Some time after finalizing the transaction, the purchaser discovered deficiencies in the property that caused a clear and negative impact on the material value of the property. In addition to the problems being present, it was determined that they were prominent enough so that the seller, the real estate agent, or the broker who had managed the property should have known about them, and should have informed the buyer in full disclosure.
The case became complicated after it was revealed that the seller was their own real estate agent associated with their real estate broker. The question of liability for the fraudulent nondisclosure became tangled but a legal precedent set by Johnson v. Davis (Fla. 1985) helped straighten out the matter. Under that case result – as backed by subsequent cases Syvrud v. Today Real Estate, Inc., 858 So. 2d 1125, 1129 (Fla. 2d DCA 2003); Revitz v. Terrell, 572 So. 2d 996, 998 n.5 (Fla. 3d DCA 1990) – a seller’s fraudulent nondisclosure liability extends to their own real estate agent and broker; in this case, the agent was also the seller so only the broker was brought into liability. The broker’s liability was based on Florida law which provides that a "principal is civilly liable for the tortious acts of his agent that are within the scope of the agent’s employment, 'even where the agent’s acts or representations are fraudulent or deceitful […]'" (citation omitted).
This case was initially ruled in favor of the seller and broker but an appellate court overturned it. The appellate court determined that the broker was indeed exposed to liability for the seller/agent’s fraudulent nondisclosure because if the seller/agent withheld material information, this was done during the agent’s work as a real estate agent to facilitate a sale – a process that is in the direct interest of the broker, who earns commission on the sale.
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The buyer in the aforementioned case went into and even ended their real estate transaction fully believing that they had been given a fair deal. Only after the purchase was finalized did they come to realize that there were significant deficiencies and that fraudulent nondisclosure had occurred. The moral of the case is that it can happen to anyone, if a real estate agent and broker will it.
If you have found yourself in a losing situation due to the fraudulent actions of a real estate seller, broker, or agent, you need Boca Raton Real Estate Litigation Attorney Gregg H. Glickstein. Call 561.953.6662 for more information or to schedule a case evaluation today.