Last Update: 04/18/16
What Happens When Buyers are Hurt by Misrepresentations by a Florida Real Estate Agent or a Florida Seller?
Florida real estate has had its ups and downs over the past few years, with the housing market still recovering from all of the Foreclosures, Short Sales, and Mortgage Fraud issues. Still, there’s always been and continues to be an interest in Florida homes and condos, especially in the South Florida area. It’s beautiful here, and people come from all over the world to buy a piece of our oceanfront paradise.
With a steady stream of buyers interested in Florida homes — single family dwellings, condos, townhomes, duplexes, etc. – there’s always the risk that a seller or real estate agent and/or broker will engage in the sale of property where they are less than above-board in representing the condition of the property (especially related to flooding and water leaks).
Water Leaks and Flooding Can Cause Serious, Permanent Damage to a Florida Home
Water is a big issue in Florida. That same sunny sky and ocean view can turn into a very real problem for homes here in Florida. We have severe storms, the risk of hurricanes and very humid conditions. Roofs leak happen all of the time here because of our strong and steady heat as well as the ocean winds – these factors work together to limit the lifespan of most roofs.
Compensation and Relief Available to Buyers Under Florida Law Who Discover Water Leaks or Flooding
Florida real estate buyers who discover they have been duped by their seller or the real estate agent have legal recourse under Florida law. They can seek both to erase (”rescind”) the deal as well as ask for money damages from those who misrepresent or conceal the true condition of real property. For example, in Syvrud v. Today Real Estate, Inc., a 2003 Florida case, the buyer sued the sellers, as well as both the listing real estate broker and the selling real estate broker, for rescission of the purchase contract and damages after the buyers discovered mildew damages, water leaks, and other structural defects in the property.
Rescission or damages
In the landmark Florida Supreme Court case of Johnson v. Davis, Davis signed an agreement to buy the Johnson’s home, put down a deposit to purchase the home, but before they were to close on the transaction, Mrs. Davis asked about some peeling plaster in the family room around a window frame, as well as stains on the ceilings of the family room and kitchen. Mr. Johnson, the seller, told her no worries — the problems were either minor and already fixed or simply stains from the wallpaper glue.
So, Davis moved in. Then it rained. It rained a lot. And water was soon “gushing” from around that window frame as well as from the family room ceiling, the kitchen stove, the glass doors, and the light fixtures. Scary, right?
Davis sued Johnson. It was a big fight, going from a trial in the local district court through the Florida circuit appeals court and up to the highest court in the state. There, the Florida Supreme Court ruled that while there was not enough evidence to support the Davis’s request to rescind the contract, Davis would get their money back (which would be more than enough to fix the problems):
The evidence adduced at trial shows that after the buyer and the seller signed the purchase and sales agreement and after receiving the $5,000 initial deposit payment the Johnsons affirmatively repeated to Davis that there were no problems with the roof. The Johnsons subsequently received the additional $26,000 deposit payment from Davis. The record reflects that the statement made by the Johnsons was a false representation of material fact, made with knowledge of its falsity, upon which Davis relied to their detriment as evidenced by the $26,000 paid to the Johnsons.
.. where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. This duty is equally applicable to all forms of real property, new and used.
In the case at bar, the evidence shows that the Johnsons knew of and failed to disclose that there had been problems with the roof of the house. Mr. Johnson admitted during his testimony that the Johnsons were aware of roof problems prior to entering into the contract of sale and receiving the $5,000 deposit payment. Thus, we agree with the district court and find that the Johnsons’ fraudulent concealment also entitles Davis to the return of the $5,000 deposit payment plus interest. We further find that Davis should be awarded costs and fees.
The lesson here, is to have a real estate lawyer involved in your real estate transaction, no matter what your real estate agent tells you. A good real estate lawyer will be more concerned with protecting his/her client’s interest, than others will be in collecting their commission.
A good piece of advice is to at least speak with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
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