MAR Legal Staff put together a summary of this recent decision by the Massachusetts Supreme Judicial Court to answer questions Massachusetts REALTORS might have.
Court Cautions Brokers and Salespersons When Making Warranties and Representations about a Property
The Massachusetts Supreme Judicial Court (“SJC”) recently affirmed a 2011 Appeals Court decision ruling in favor of a buyer who had alleged that a listing broker misrepresented the zoning of the property he purchased. The case, DeWolfe v. Hingham Centre Real Estate, Ltd., reaffirms the principle that agents must exercise caution when making verbal or written representations about a property.
It is important to note that the Court declined to impose a duty on all real estate agents to verify the zoning classification and did not impose strict liability simply because the broker had made a misrepresentation about the zoning classification. Instead, it applied the long-standing principle that a broker must use “reasonable care” when providing information about a property in order to avoid liability if the information is found to be inaccurate.
- The buyer was looking to purchase a property to relocate his business, a hair salon.
- Information provided by the listing broker (who stated that the information was obtained from the seller) indicated that the property was zoned as “Business B” and that “hairdresser” was among the permitted uses in that zone.
- The property was located in what appeared to be a residential area.
- After the sale, the buyer was unable to secure proper permits from the town necessary to open his business and was informed by the town that the property was, in fact, located within a residentially zoned area.
- He also learned that “Business B” was not a zoning designation in the town.
- The Court reviewed the facts of the case and ruled that the broker did make verbal and written representations about the zoning classification upon which the buyer relied to his detriment.
- Those representations turned out to be inaccurate.
The SJC ruling is not the end of the case. It vacated the summary judgment entered by the superior court judge in favor of the broker. The SJC ordered that the case be sent back to the superior court for further proceedings. To avoid liability, the broker will need to prove that it had used reasonable care when passing along zoning information from the seller.
Caution Issued to Brokers
In finding against the broker, the Court decision serves as a caution for brokers and salespersons to use “reasonable care” when providing zoning information about a property in order to avoid liability. The standard of reasonable care applies to all claims for a negligent misrepresentation in Massachusetts (as well as to claims for violation of Chapter 93A based on a negligent misrepresentation), not just to zoning claims. Provided that the broker has relied on information from a “reputable source,” and has no reason to believe that the representation is inaccurate, the broker will generally be found to have acted reasonably. Consequently, as a messenger, the broker will not be liable for an “innocent” misrepresentation.
In DeWolfe, the SJC stated that what constitutes “reasonable care” depends upon the circumstances presented and an evaluation of all factors. The fact that the property was located within a visibly apparent residential area, and that the zoning designation did not actually exist, led the Court to rule that a reasonable jury could have found that the broker had not acted “reasonably” in relying on the seller’s assertions.
Steps to take to reduce your risk
As a real estate licensee, whenever you provide information to a buyer or seller on issues where there could be some level of uncertainty, it is always a good idea to:
- Identify the source of the information and encourage the buyer to perform his/her own due diligence and confirmation.
- Alert buyers to any discrepancy or inconsistency with any information you have.
- As an example, square footage calculations can lead to problems. Disputes over square footage calculations often arise due to conflicting calculations, or different standards, performed by the seller and buyer or the people they hire. It is recommended, but not required, that a broker who provides a square footage figure to a buyer should also let the buyer know where they received that information and encourage the buyer to conduct their own investigation.
- Brokers should also suggest that the parties consult with municipal departments or speak with their attorneys in order to resolve any question.
As you prepare to participate in REALTOR® Nationwide Open House Weekend this Saturday and Sunday (April 20-21), take a moment to view this week’s edition of “Real Talk” Video Thursday featuring nationally known personal safety expert Robert Siciliano. In this video, Siciliano provides tips and information that REALTORS® need to know to help stay safe.
About the Expert:
Robert Siciliano, CEO of IDTheftSecurity.com is fiercely committed to informing, educating, and empowering Americans so they can be protected from violence and crime in the physical and virtual worlds. His “tell it like it is” style is sought after by major media outlets, executives in the C-Suite of leading corporations, meeting planners, and community leaders to get the straight talk they need to stay safe in a world in which physical and virtual crime is commonplace. Siciliano is accessible, real, professional, and ready to weigh in and comment at a moment’s notice on breaking news.
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Today we released the results of the March REALTOR Market Confidence Index (RMCI) and REALTOR Price Confidence Index (RPCI) and both indexes hit all-time highs. While inventory continued to go down in March, activity remained strong and that is reflected in the survey results.
Here are the March 2013 Highlights:
- Both the RMCI and the RPCI hit all-time highs in March
- This is the second time that the RMCI was over the 70-point mark.
- The RPCI has been over the 60-point mark for 11 consecutive months
- This is the 20th straight month the RMCI was up over the same time last year and the 14th straight month for RPCI.
The March “hot topic” question asked REALTORS how prevalent multiple-bid offers have been through the first quarter of 2013 .
Click here to read the full release: March Realtor(R) Market Confidence Index and Realtor(R) Price Confidence Index
- REALTOR® Market Confidence Index in March was 75.52 Up 52% from the same time last year
- REALTOR® Market Confidence Index in March was UP 5% from February 2013
- REALTOR® Price Confidence Index in was 78.74. Up 36% from the same time last year.
- REALTOR® Price Confidence Index in March was Up 13% from February 2013.
The 4th Annual REALTOR Nationwide Open House Weekend is scheduled for this weekend (April 20-21). In support of the event, MAR will again advertise the event to potential buyers and sellers both on the radio and online. REALTORS click here for info and resources on how to participate.
Click player to hear radio ad.
The :15 second radio ad will run from Wednesday – Saturday
- Springfield- Mix 93.1, Kix 100.9, WHYN 560 AM
- Worcester- WXLO 104.5
- Cape Cod- 101.9 Classic Hits, 95 WXTK
- Boston- 98.5 Sports Hub, 101.7 WXLX, Magic 106.7, WROR 105.7, WBOS 92.9 and WKLB 102.5
Keep your eyes open for the ad below at the following sites:
- Boston.com Real Estate Section
- WickedLocal.com Real Estate
- NECN.com (New England Cable News)
Earlier today, 2013 President Kimberly Allard-Moccia and CEO Robert Authier sent a member-wide email about what the Association and its Charitable Foundation are doing to support those REALTORS who were impacted by the yesterday’s horrific bombings.
Whether you are a runner, spectator, volunteer or just a proud resident of Massachusetts, Patriot’s Day and the Boston Marathon is a part of our culture. And like everyone else, the REALTOR® community is shocked and deeply saddened by the events at the Boston Marathon yesterday.
We have heard from many members through the MAR Facebook Page and are monitoring information regarding the safety of members and their families.
However, we have heard of family members working as medical volunteers on the scene and the heroic contributions of a local REALTOR® as reported by Fox News.
The national and state Associations along with the MAR Charitable Foundation will continue monitoring the affects of this tragedy on the REALTOR® family and ready to act if warranted. Please share information if you know of anyone throughout our organization who was impacted by these horrific events or contributed in the lifesaving efforts after the explosions.
The entire REALTOR® organization sends its thoughts and prayers to all those who were injured and their families.
We would also like to say a special thank you to all of the first responders and volunteers on the scene who risked their own personal safety to help their fellow human beings in need.
If you would like to help, the MAR Charitable Foundation will accept contributions and distribute them to organizations and foundations supporting REALTORS® in need. Or you can make direct contributions to the American Red Cross or the Salvation Army.
This is going to be hard for all of us, but we will get through it together,
Kimberly Allard-Moccia, 2013 MAR President and Robert Authier, CEO & Executive Vice President
All of us here continue to feel sad, but we know that our city will come together and emerge stronger.Leave a Comment