An Ohio appellate court has considered whether a buyer’s action for misrepresentation against a brokerage and its salesperson could proceed when the salesperson incorrectly told the buyer that she could lease the property to third-parties after purchase.
In March 2010, Billie Levert-Hill (“Buyer”) contacted real estate professional Jason Caccamo (“Salesperson”) of Associated Holding Group, LLC, d/b/a Prudential Select Properties (“Brokerage”) about her interest in one of the Salesperson’s listings. She told the Salesperson that she planned to purchase the property as an investment and would lease the property following purchase.
The Salesperson’s listing was in a condominium complex, and the so the Salesperson showed the Buyer two other units in the complex as well. The Salesperson provided the Buyer with an agency disclosure form stating that he represented the seller, not the Buyer, in the negotiations for his listing. The Buyer submitted offers for each of the units, but only the Salesperson’s client accepted the Buyer’s offer. Because the Buyer was not represented by a real estate professional, the Brokerage retained the entire commission from the sale.
The Buyer requested the association’s bylaws from the Salesperson a number of times so that she could confirm that she had the ability to lease the property. The Salesperson never provided the Buyer with the bylaws and admitted that he forged her signature on a document which stated that she had received the bylaws. The Buyer had called the Salesperson in the midst of the closing to again confirm that she would be able to lease the property, and the Salesperson testified that he had told her that he had reviewed the bylaws and that she would be able lease the property.
Following the closing, the Buyer was told by an officer of the condominium association that she could not lease the unit. In fact, the bylaws stated that unless the unit had been registered in 1994, it could not be leased without prior, written approval from the association’s board. Because the Salesperson knew that the Buyer would have only purchased the property if she could lease it, he asked the Brokerage to intervene and help the Buyer because of the bad information the Buyer had received from him. The Brokerage refused to help the Buyer, causing the Salesperson to move to a different firm.
The Buyer filed a lawsuit against the Salesperson and Brokerage, alleging breach of contract, breach of fiduciary duty, and fraud. The trial court ruled in favor of the Salesperson and the Brokerage, and the Buyer appealed.
The Court of Appeals of Ohio, Eighth District, partially reversed the lower court and sent the case back to the lower court for further proceedings. The court first looked at the misrepresentation claims. While there was no evidence of intentional misrepresentation because the Salesperson had believed that the condominium complex allowed the leasing of units, the evidence could support a negligent misrepresentation claim.
A negligent misrepresentation claim can include allegations that a person who, during the course of his/her business, supplies false information to others and these individuals rely on this information to their detriment, if the person providing the information fails to exercise reasonable care or competence when communicating the information. Here, the Salesperson had failed to investigate whether units could be leased and had provided false information to the Buyer. Thus, the court ruled that a jury should consider the negligent misrepresentation allegations.
Next, the court looked at the breach of fiduciary duty allegations. The Salesperson had purportedly represented the Buyer in only two of three offers she had made, providing a form stating that he was not representing her while she made an offer for the Salesperson’s own listing. There was testimony from both the Buyer and the Salesperson that they thought, despite the form’s language, that the Salesperson was representing her in that transaction as well and thus acting as a dual agent. Therefore, the court ruled that a jury should consider these allegations as well and sent the case back to the trial court.
Levert-Hill v. Associated Holding Group, L.L.C., 975 N.E.2d 575 (Ohio Ct. App. 2012).