A Connecticut court has considered the disclosure duties of a real estate licensee to a buyer about the property's boundaries and flooding on the property.
Steven and Maria Polletta ("Sellers") listed their home for sale with DeLaurentis Realty, Inc. ("Brokerage"). Terry DeLaurentis ("Salesperson") was the salesperson responsible for the listing. Prior to the listing agreement being signed, the Salesperson had toured the property with the Sellers. During her tour, the Salesperson had noticed that the basement of the home was recently repainted, had drains and troughs around the exterior walls, and contained only a washer/dryer. Upon questioning by the Salesperson, the Sellers stated that the property had experienced flooding problems in the past but the Sellers had hired a waterproofing company to address the problem and they had experienced no flooding problems since then.
Also during the tour, the Salesperson was generally directed to the property's boundaries by the Sellers, and those boundaries included the driveway and a parking area. The Salesperson was aware that the property was bordered by a "paper street," or a street that was designated, mapped, and named by the town but there was no existing plan to actually begin the process of creating the street. Following the signing of the listing agreement, the Salesperson asked the Sellers again about the flooding on the property and she was again told that since the waterproofing, the Sellers had experienced no flooding. The Salesperson then placed the listing into the MLS, using the metes-and-bounds description for the property.
Bernadette Solieri ("Buyer") was interested in purchasing the property. She was represented by Donald Wilcox of William Raveis Real Estate, Inc. ("Buyer's Representative"). The Salesperson spoke to the Buyer's Representative prior to the showing of the property to the Buyer by the Buyer's Representative, informing the Buyer's Representative that the Sellers had waterproofed the basement and had experienced no flooding problems since the waterproofing. The Buyer toured the property with the Buyer's Representative and inquired whether there was a water problem in the basement and the Buyer's Representative simply said there was not. The Buyer's Representative indicated that the driveway and parking area were both within the property's boundaries. The Buyer's Representative also informed the Buyer about the paper street.
The Buyer purchased the Seller's home. Two weeks after the closing, the basement flooded and the flooding continued to occur periodically. Eventually, the Buyer called one of the Sellers and learned that the Sellers had experienced similar problems until they had waterproofed the basement. Next, the Buyer commissioned a survey of the property. The survey revealed that the paper street included part of the parking area and driveway. The Buyer brought a lawsuit against the Sellers, the Brokerage, the Salesperson, and an inspection company, alleging fraudulent and innocent misrepresentation against both parties for failure to disclose the property's alleged flooding problems and failure to accurately disclose the property's boundaries. The Brokerage brought a cross-claim against the Buyer's Representative.
Following a bench trial, the Superior Court of Connecticut ruled in favor of the Salesperson and Brokerage. The elements for a fraudulent misrepresentation claim are that a party has made a false statement about a material fact that the party knew was untrue, the statement was made to induce the other party to act, and the other party acted in reliance upon the statement. An innocent misrepresentation occurs when, during a sales transaction, one party makes a representation of a material fact in order to have the other party to rely upon the fact and the statement is not made fraudulently or negligently.
Looking at the allegations against the Salesperson and the Brokerage, the court found that there were no misrepresentations made by the Salesperson. The Salesperson had communicated all information she was told about the property to the Buyer's Representative; had provided accurate information in the property's MLS listing; and had no direct conversations with the Buyer about the property. Thus, no misrepresentations were made by the Salesperson and so the court ruled in favor of the Salesperson and Brokerage (and also dismissed the cross-claim made against the Buyer's Representative, as those claims no longer had any basis).
The court next considered the allegations against the Sellers. The court ruled that the only possible misrepresentation made by the Sellers was the statement regarding the property's boundaries to the Buyer, and that misrepresentation was an innocent one because there was no evidence showing that the Sellers were aware of the actual property boundaries. But the court ruled that the Sellers were not liable to the Buyer for innocent misrepresentation because of a provision in the sales contract which stated that the Buyer had a chance to fully inspect the property and had not relied on any representations in making its decision to purchase the property. Based on Connecticut case law, such a provision is enforceable against a claim of innocent misrepresentation, so long as there is no showing of mistake, fraud, or unconscionability. Therefore, the court ruled in favor of the Sellers and so judgment was entered on behalf of the Sellers, Salesperson, Brokerage, and the Buyer's Representative.
Solieri v. Polletta, No. CV950128524, 2002 WL 450073 (Conn. Super. Ct. March 8, 2002). [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].