2A — July 28 - August 10, 2017 — M id A tlantic Real Estate Journal
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M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Associate Publisher ......................................... Steve Kelley Associate Publisher ........................................... Kim Brunet Sales Intern .................................................Kevin Minassian Senior Editor/Graphic Artist ..........................Karen Vachon Production Intern .......................................... Erin Shepherd Office Manager ............................................. Miriam Buttrick Contributing Columnists ........................Rona Zucker Kaplan Postmaster send address change to: Mid Atlantic Real Estate Journal 350 Lincoln St, Suite 1105, Hingham, MA 02043 USPS #22-358 | Vol. 29 Issue 14 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 | Fax: 781-740-2929 www.marejournal.com Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices
Peter Gallicchio Broker/President pgallicchio@remcorealty.net 732-253-0888 ext. 102 370 Campus Dr., Suite #128 Licensed Real Estate Broker
Rona Zucker Kaplan
Realtors: Protect Yourself from Being Sued Under the Consumer Fraud Act I f you’re a professional seller of real estate, you regularly advertise your properties. Make sure your marketing materials don’t land you in court. The law is de- signed to protect the buyer. In this case, the Consumer Fraud Act (CFA) protects buyers from false promises. Realtors can be sued under the CFA for misrepresenting their properties — even acci- dentally. Here’s how it works. The lawsuit must allege the realtor engaged in unlawful conduct, the party sustained a loss and there was a causal relationship between the real- tor’s unlawful conduct and the party’s loss. There are three categories of unlawful conduct: 1. When realtors affirma- tively make material misrep- resentations; 2. When realtors omit mate- rial information; and 3. When there is a violation of an administrative regulation. This article will address the first two: material misrepre- sentations and omissions of material information. Material Misrepresenta- tions – Bending the Truth The difference between a misrepresentation and an omis- sion is that the latter requires proof that the realtor intended to mislead; the former does not. Said another way – realtors who innocently provide misin- formation can be sued under the CFA even if they believed they were providing accurate information. According to the CFA, “An as- sertion of fact about a property, not puffery, is a violation if the facts are false and material to the transaction. Proof that the false statements were made EAST PENNSBORO TWP., PA — A Utah-based investor recently purchased the Fresenius Kidney Dialysis Center at 390 East Penn Dr. in East Pennsboro Twp. for $1.9 million in a transaction han- dled by RSR, REALTORS ® . Fresenius, which opened the center in 2016, has a long-term
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The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
with knowledge of the falsity of the misrepresentation, neg- ligence, or the intent to deceive is not required.” That means you’d better check — and re- check — anything you put in writing that’s used to market the home. Examples of lawsuits against realtors for providing inac- curate information include (1) misinformation that appeared in Multiple Listing Service ad- vertisements, such as “Ready to build now,” when no permits had been obtained; “property suitable for a two-family dwell- ing,” when no approvals or permits had been obtained; a representation that a property was not in a flood zone – when it was; (2) a representation that the leased area was greater than the actual square footage; and (3) a representation that a dam was not on the property purchased – when it was. Omissions of Material Misrepresentations – Did You Leave That Out on Purpose? Examples of lawsuits against relators for omitting to provide information to a buyer include failing to tell buyers that the property purchased was se- verely constrained by wetlands and failing to tell buyers there were access easements. You might think you can rely on provisions in an Agreement of Sale for protection. That’s not always the case. If you fail to disclose a mate- lease in the 5,100 s/f build- ing and will continue serving patients at the site. RSR part- ners Bill Rothman and Sam Reed represented the seller, 150 Associates, and the buyer, RNP 4, LLC of Salt Lake City. The 5,100 s/f center opened in 2016 and will continue to serve patients. It’s Difficult to Avoid Liability
rial fact, such as an encroach- ment, you might try invoking contract provisions which shift the burden to the buyer. For example, there might be a clause that says a sale is subject to easements that could have been discovered on a survey. This still may not protect you from liability. You also may not avoid liabil- ity for your intentional omis- sion by relying on the buyer’s failure to discover it. Accord- ing to the CFA, “(A) party to an agreement cannot, simply by means of a provision in the written instrument, create an absolute defense … in an action based on fraud in the induce- ment to contract.” Similarly, a “no representations” clause does not preclude introduction of earlier explicit misrepre- sentations, if the facts were peculiarly within that party’s knowledge and were, in fact, intentionally misrepresented. Nor can a realtor necessarily rely on the fact that a party is sophisticated. “A party’s status as a sophisticated party does not immunize a realtor’s inten- tional or negligent facilitation of a fraudulent scheme,” accord- ing to the CFA. The moral to the story: trust your source before making rep- resentations. That’s your best chance at avoiding a lawsuit under the CFA. Rona Zucker Kaplan is a partner at Cooper Levenson Attorneys at Law, based in the firm’s Atlantic City office. n
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Rothman, who has handled the sale of numerous invest- ment properties throughout the area, said buyers are looking for buildings with long-term tenants with triple- net leases, where the lease is responsible for expenses as- sociated with the property in addition to rent and utilities. n RSR, REALTORS rep. seller in $1.9 million sale
Steve Kelley, Section Publisher Mid Atlantic Real Estate Journal skelley@marejournal.com
781-740-2900 ext.205 www.marejournal.com
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