The Court of Appeals of Indiana recently decided a case concerning a real estate broker’s misrepresentation as to the parcel of property that was for sale. Betty Jones Wood, a sales associate affiliated with Tri-Professional Realty Inc., saw a For Sale sign on a subdivision lot. She called the telephone number on the sign, and reached Barbara Yeryar, who agreed to list her property with Tri-Professional, and Wood placed a Tri-Professional For Sale sign on the front lot.
In fact, Yeryar did not own the front lot, but rather, owned another back lot in the subdivision. Neither Yeryar nor Wood were aware that the sign was on the wrong property.
Tara Hillenburg saw the sign, contacted Wood, and after they located the survey markers on the front lot, went to Tri-Professional’s office, where Wood showed her a plat and the location of the front lot. Purchaser offered to purchase the front lot, and Yeryar accepted. The legal description attached to the contract was for the back lot. Throughout the transaction, which closed, both the purchaser and Tri-Professional thought she was buying the front lot.
The purchaser began clearing the front lot for a building site, and built a shed on the property. When the true owners of the front lot learned of the purchaser’s actions, they confronted her. The purchaser then sued Tri-Professional on counts of negligence, negligent formation of the contract, rescission of contract and breach of warranty.
The trial court found for the purchaser, ordering Tri-Professional to pay her the contract price, plus interest, taxes and fees, upon receipt of which, she was to give a deed to the back lot to Tri-Professional.
On appeal, Tri-Professional argued that the purchaser’s negligence claim was without merit because, as the agent of the seller, it did not owe a legal duty to the purchaser.
The court disagreed, stating that while Tri-Professional did not owe the purchaser fiduciary duties, that does not mean that a seller’s agent owes no duties whatsoever to the buyer. The court also pointed out that the purchaser’s claim was not for breach of fiduciary duty, but rather, was for Tri-Professional’s misrepresentations as to the property offered for sale as well as its authority to sell it. Even though Tri-Professional represented Yeryar, no one had authorized Tri-Professional to sell the front lot.
The court stated that real estate licensees have a professional duty to identify correctly the property they claim to have authority to sell, and it found that Tri-Professional, having misrepresented both the property for sale and its authority to sell it, breached its duty to the buyer.
Tri-Professional Realty, Inc. v. Hillenburg, 669 N.E. 2d 1064 (Ind. Ct. App. 1996).
Editor's Note: To see pre-1990 Broker Liability cases organized by jurisdiction, click here.