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
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 […]'"
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.
Carefully Reviewing Property & Contracts
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.