Last Update: 04/18/16
In Florida, real estate agents and brokers are seen as experts in their field (whether it be residential, commercial or industrial property) due, in part, to the fact they are licensed by the State of Florida to do business in our State. Licensure brings with it both the respect of being a licensed professional and also the legal duty to exercise care to protect those with whom these agents and brokers are dealing (”fair dealing”).
Misrepresentations: Negligent and Fraudulent
Florida law says if a real estate agent knew or should have known that a representation made to a buyer is not correct, whether or not the agent makes the representation or the seller does it, then that agent can be held liable for damages. In many instances, an agent has a duty to investigate whether or not his or her statements are true and to give all interested parties correct information. That’s being a professional. It’s also not being negligent under Florida law.
In Florida, a negligent misrepresentation occurs when a real estate professional provides inaccurate or wrong information in a residential real estate transaction, but does not do so intentionally. It’s a mistake. It can be spoken or written. It’s a mistake and even if it was an innocent mistake; if the real estate agent or broker knew or should have known the information was incorrect they will be held liable to the injured party if they have been damaged because of the mistake or omission.
A fraudulent misrepresentation occurs when it’s more than a mistake: the agent or broker is aware that something is being misrepresented, they knew the information was wrong, and that someone is relying upon that misinformation, allowing the person who relied upon the information to be hurt and damaged.
1. Buyer Beware?
Many people are surprised that there’s not any “caveat emptor” or “buyer beware” protection for sellers and their real estate agents in cases of negligent misrepresentation. After all, if the agent didn’t know and just made a mistake, then isn’t the buyer just as responsible for investigating the property’s condition? Yes they are, but the seller still has a duty to disclose (to address this duty, we recommend having a seller’s disclosure statement part of any residential purchase and sales agreement).
Here, the Florida Supreme Court has made it clear that the doctrine of “buyer beware” doesn’t apply to people who are buying homes here in the Sunshine State. Sellers and their agents have a duty to disclose facts that materially affecting the value of residential property which are not readily observable and are not known to a buyer. Here, it’s considered part of basic justice and fair dealing that there is a duty of disclosure. Johnson v. Davis, 480 So.2d 625, 629 (Fla. 1985).
2. Case Example: The Wrong Square Footage in the MLS Listing
Consider the case of Miller v. Sullivan, 475 So.2d 1010 (Fla. 1st DCA 1985). Mark and Patricia Sullivan decided to sell their home here in Florida, and signed a listing agreement with a licensed Florida real estate broker named Betty Hilgendorf to help them. The Florida real estate broker did what most everyone does here, which is list the home for sale in the MLS (Multiple Listing Service).
In the MLS listing for the Sullivan’s home, the square footage was shown as being “measured” at 1417 square feet. This was the number that Betty Hilgendorf was given by her clients, the Sullivans.
Meanwhile, another real estate broker, Edward Luce, had been hired by Robert Miller to help him find a house to buy. Luce found the Sullivan home in the MLS, showed the MLS listing printout to Miller, and Miller liked it. Miller liked it so much that he ended up buying the home.
According to trial testimony, Mr. Miller relied upon the MLS printout of the listing which stated that the house measured at 1417 square feet, and that he also relied upon his broker’s explanation to him that this square footage included the heated and cooled area of the house. When he agreed to buy the home, he thought he was getting 1417 square feet.
Mr. Miller then discovered that the 1417 was not an accurate number. The correct number was 1092. There was only 1092 square feet of heated and cooled area. There was an additional square footage of non-heated and non-cooled area which involved the garage and the utility room. That additional area was around 300 square feet.
So, the buyer got less square footage than he thought he had bought. Around 25% less. The square footage listed in the MLS was wrong.
Mr. Miller sued. He sued not just his broker, Mr. Luce, but also the seller’s broker, Ms. Hilgendorf, and the sellers, too. He sued the two brokers for breach of contract, fraud (fraudulent misrepresentation), and negligence (negligent misrepresentation). He sued the sellers for breach of contract and fraud (no negligence here).
In court, Mr. Miller lost his case against the sellers. The court ruled there was no evidence that Mr. And Mrs. Sullivan had made any representations, fraudulent or negligent, about the square footage to Miller. Additionally, there was no evidence that the listing agreement was incorporated into the sales contract between the seller and the buyer. The sellers were held to be not liable to the buyer for the misrepresentation of the square footage of the home. This was a “summary judgment” by the trial court judge that was approved by the appeals court.
However, the case could continue as to their real estate broker Betty Hilgendorf — no summary judgment for her. If the buyer could provide evidence to a jury that she had breached her duty of “honesty, candor, and fair dealing” to the buyer, then she would be liable for the misrepresentation in the MLS Listing.
Key facts here, according the the court, are:
- Whether the square footage figure on the MLS listing is understood in the real estate community to represent heated and cooled area or the total enclosed or covered area of a house.
- Whether Hilgendorf, as listing agent, had a duty to double-check by measuring the square footage figure provided by the Sullivans.
- Whether the representation in the listing agreement that the square footage had been “measured” means that such measurement had been made by the listing agent or simply by the seller.
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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