An Iowa appellate court has considered whether a listing broker and a seller were liable to a buyer when a commercial property's listing overstated the property's acreage.
The Estate of Henry C. Meyer ("Seller") listed a commercial property located in Cedar County, Iowa, for sale with Merlin Conrad of Petersen Realty Company (collectively, "Brokerage"). The listing information provided by the Brokerage stated that the property was 280 acres, and the listing price was $992/acre. The Brokerage obtained the property's acreage information from the county assessor's office. Randall and Nancy Kuehl ("Buyers") entered into an agreement to purchase the property. The purchase agreement did not set forth the property's acreage nor did it list a price per acre. Instead, the purchase agreement stated that the property was being conveyed as described in the property's abstract. The abstract did not list the property's acreage, and the warranty deed conveying title also did not describe the property's acreage.
Following the completion of the transaction, the Buyers discovered that the property was approximately 258 acres, not the 280 acres the Buyers thought they were getting. The Buyers filed a lawsuit against the Seller, alleging, among other things, breach of contract, negligent misrepresentation, and fraudulent misrepresentation. The Seller joined the Brokerage in the lawsuit. The trial court ruled in favor of the Seller and Brokerage, and the Buyers appealed.
The Court of Appeals of Iowa affirmed the trial court's ruling. The court first looked at the relevant facts. First, the Buyers were experienced purchasers of real estate, owning a car dealership as well as other agricultural land. Second, the court found that the Buyers had made no effort to verify the property's acreage. They did not have the property surveyed nor did they check with the county assessor about the property's acreage. Third, the Buyers' attorney had advised them to ascertain the boundary lines of the property. Finally, none of the purchase agreements specified the property's acreage.
The court then considered the breach of contract allegations. The Buyers argued that it was improper for the trial court to have ruled against them because there were fact issues about what information the Buyers were told about the acreage during the sale negotiations. The court rejected this argument, ruling that the acreage information was not contained in any of the purchase documents. Since the contract stated that the property described in the abstract was what the Seller was conveying and there was no mention of acreage in the abstract, the court affirmed the trial court's ruling in favor of the Brokerage and Seller on the breach of contract allegations.
The court next considered the negligent misrepresentation allegations. The Buyers argued that the listing statement's reference to 280 acres constituted a negligent misrepresentation. The trial court had ruled that the evidence did not support a negligent misrepresentation claim, as the Brokerage had justifiably relied on the information provided by the county assessor's office. The court found that the basis for recovery in a negligent misrepresentation action is that a party is harmed in dealings with third parties, based on false information provided by the defendants. Since there were no third parties involved in this transaction and there was no special relationship between the parties triggering heightened disclosure obligations, the court affirmed the trial court's ruling on the negligent misrepresentation claims.
Finally, the court considered the fraudulent misrepresentation claims. A fraudulent misrepresentation claim is based on the premise that a party knowingly conveys false information to the other party. The trial court had ruled that the Seller and Brokerage did not know that the information from the county assessor's office was not accurate, and thus there was no fraudulent misrepresentation made to the Buyers. The court affirmed this ruling, finding that the Seller and Brokerage did not have any knowledge that the acreage information was incorrect nor did they have any intent to deceive the Buyers. Thus, the judgment of the trial court in favor of the Brokerage and Seller was affirmed.
Kuehl v. Estate of Meyer, No. 1-808/01-0330, 2001 WL 1579967 (Iowa Ct. App. Dec. 12, 2001). ). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].