No Relationship, No Failure to Disclose!

Filed under: Real Estate Law

Many factors are weighed before most buyers decide to proceed with a purchase of real estate. Many buyers, both commercial and residential, will seek information about the property from a variety of sources. Aside from consulting with their realtors, they may ask questions of insurance agents, home inspectors, or even neighboring owners.

Sometimes, buyers experience what we call “buyer’s remorse.” This usually happens when aspects of the property do not match their expectations. When those expectations are based on advice they sought before completing the purchase, the buyer can feel understandably tricked or even manipulated into the decision go forward with purchasing the property.

Occasionally the grievance is so serious that the buyer decides to pursue a “fraudulent nondisclosure” lawsuit. . What this means is that someone involved in the transaction, usually one who had a legal duty to disclose material information, either failed to do so or even outright lied.

If the person who failed to disclose information was the seller or the seller’s or buyer’s real estate agent/broker, there are statutory and case law standards that govern what must be disclosed during a residential real estate purchase, and by whom. When the failure to disclose is by someone not directly related to the transaction, such as a neighbor, usually such nondisclosures cannot be the basis for a lawsuit. For example, if the buyer obtained inaccurate information from a neighbor about easements across the property and then relied on the information obtained in making the decision to purchase the property, liability is very questionable.

Courts will generally find that a defendant cannot be held liable for nondisclosure when there is no transaction between the defendant and the plaintiff, or when no “relationship” between the defendant and the plaintiff exists. The bottom line is that before a buyer can file a lawsuit for failure to disclose, the buyer or buyer’s attorney must first establish whether the potential defendant even had a legal duty to disclose in the first place! This is an issue buyers should discuss with an experienced real estate attorney, before jumping to any conclusions.

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