Kjellander v. Abbott is an important Florida appellate decision that reinforces
the disclosure obligations of real estate agents and brokers to buyers
of residential properties and it shows that contracts frequently used
in residential real estate transactions do not insulate Florida real estate
agents and brokers from the duty imposed under Florida law to disclose
conditions materially affecting the value of residential properties that
are known to agents and brokers and unknown, not readily observable and
not disclosed to buyers.
The case was as follows: after closing on the residential home sale, the
buyers allegedly discovered that the home had numerous undisclosed material
defects, including water damage, mold, and problems with the HVAC system.
The buyers sued the sellers, the sellers' real estate agents, and
the buyers' home inspector, alleging that they misrepresented, concealed,
and/or failed to disclose the true condition of the home. The trial court
granted summary judgment in favor of the real estate agents on the
Johnson v. Davis claim (Johnson v. Davis, 480 So.2d 625 (Fla.1985) A nondisclosure claim under
Johnson has four elements: (1) the seller of a home must have knowledge of a defect
in the property, (2) the defect must materially affect the value of the
property, (3) the defect must be not readily observable and must be unknown
to the buyer, and (4) the buyer must establish that the seller failed
to disclose the defect to the buyer. ") and dismissed the buyers'
other claims against the agents for fraudulent misrepresentation, fraudulent
concealment, and breach of the duties of honesty, candor and fair dealing
alleged in other counts of the complaint.
The real estate agents' motion for summary judgment was based on language
in the purchase and sale agreement attached as an exhibit to the complaint
which the agents argued contradicted the buyers' claims in their complaint.
The buyers filed a timely appeal and the appellate court reversed. In
reversing summary judgment, the appellate court determined that while
the contract provided that the buyers agreed in the contract to rely solely
on representations of the sellers and third-parties other than the real
estate agents for verification of the home's condition, the paragraph
of the contract containing that agreement also states: "This Paragraph
will not relieve [the agents] of statutory obligations." Thus, claims
based on allegations that the agents violated their statutory obligations
were not "contradicted" by the terms of the contract.
Under Florida law, the real estate agents' statutory obligations include
a duty of honesty and fair dealing, a duty to disclose all known facts
that materially affect the value of the property and are not readily observable,
and a duty not to make misleading, deceptive, or fraudulent representations
in any transaction. See §§ 455.227(1)(a), 475.25(1)(b), 475.278(4)(a)1.-2.,
475.42(1)(e), (1)(n), Fla. Stat. (2012); see also
Zichlin v. Dill, 25 So. 2d 4 (Fla. 1946) (reversing dismissal of suit against real estate
broker for defrauding buyer and rejecting argument that broker owed no
duty to deal fairly with the buyer); Fla. Att'y Gen. Op. 96-20 (1996)
(explaining that "Chapters 455 and 475, Florida Statutes, clearly
make misrepresentation, concealment, and fraud by real estate brokers
and salespersons contrary to the public policy of this state" and
opining that any language in a real estate sales contract that purports
to relieve the broker or salesperson of liability for fraud, misrepresentation,
or other wrongdoing is void as contrary to public policy).
Because the buyers alleged in their complaint that the real estate agents
violated these statutory obligations, all counts of the complaint directed
to the real estate agents were sufficient to withstand the real estate
agents' motion to dismiss.
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