need help!- Do you think a judge determined that Betty Broker is liable for the diminished value of the home?

Question

Broker Betty advertises that the famous architect Art Chitect designed Wanewright House. Peter Purchaser enters into a purchase agreement to buy Wanewright House. A further-approval contingency that allows the buyer to either confirm the broker’s representation or cancel the transaction is not included in the purchase agreement. The Betty Broker’s representation is considered fact.

Before closing escrow, the Peter Purchaser learns that no evidence exists to prove that Art Chitect designed Wanewright House. Betty Broker recommends the buyer cancel escrow, which the buyer refuses to do. After escrow closes, Peter Purchaser seeks to recover money from the broker for the diminished value of the home due to the misrepresentation concerning the design of Wanewright House.

Betty Broker claims that Peter Purchaser is not entitled to recover any money since he proceeded to close escrow with the knowledge that no proof existed that the architect designed the home.

Answer 1

Agents have been sued successfully over less, all material facts whether known or otherwise but could be known by a diligent search are under the passive fraud description. Betty was acting on or sharing unverified information. A decent agent would have made the owner provide proof of such a claim before using it to entice a buyer. Peter assumed he could close and go after recourse but will fail. Sort of like going on a green light before the last car clears the intersection and assuming its their fault for running a red light. Still it is unclear that Art Chitect did or did not design the house because you said no proof exists but did not state whether there is proof of who actually did design the residence. In closing I would point out that many real estate agents are over embellishes of the truth and are lucky people don't go after them for the rampant fraud they do commit. A Realtor with decency would have cleared up this issue and protected themselves with proper contingency addenda. A typical real estate agent might not be so skilled however. There is big a difference between being an agent and a Realtor, besides the obvious membership in the NAR.

Answer 2

No.

Peter Purchaser had an opportunity to make the broker representation survive the sale and closing by making the broker representation a part of the contract. He didn't. A material fact that would affect the value of a property should be included in a contract.

Peter Purchaser also did not prove that there was intentional misrepresentation or that Betty did not rely on a competent source for her information. Betty Broker may have relied upon a professional source for her representation. An unintentional misreprentation might have left her open to some liability, but it would not rise to the level of fraud. She also changed her position, which is a partial defense against any possible claim.

"Peter Purchaser seeks to recover money from the broker for the diminished value of the home"

Good luck with that. Peter was well aware of the possibility of diminished value when he went ahead with the closing. His entire claim reeks of unjust enrichment for lack of a better term. He sought neither confirming evidence nor disconfirming evidence, and now seeks to profit from not exercising even the most basic fiduciary responsibility to himself.

Answer 3

Betty broker made an erroneous statement but did recommend to Peter purchaser that he not close escrow. He refused so many will think he is now in a shared blame situation. Betty does not remove her fraudulent actions by her recommendation. She should have placed into the contract that contingency but failed to do so. Peter does not become entitled to a claim as he did choose to continue the deal. There is a case of fraud but the damages aren't based upon that. Had he chosen to rescind his offer Betty would have been responsible for any Ernest deposit lost. The case against Betty is a legal matter not a civil issue.

Answer 4

"Betty Broker recommends the buyer cancel escrow, which the buyer refuses to do."
It is obvious by the above statement that Betty Broker did not know of the misrepresentation and attempted in good faith to do "reasonable care" once it was discovered.
Peter Purchasers attempt to take advantage of the misrepresentation made to the broker and consequently passed on but then discovered and attempted to be rectified by the broker is hereby moot and Peter Purchaser and Betty Broker have a cause of action against the party which made the orginal misrepresentation in their attempt to benefit from it.
Just a little opinion. lol
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