DeWolfe v. Hingham Centre, Ltd.
464 Mass. 795, 2013 WL 1442543, 985 N.E.2d 1187 (2013)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A real estate broker has a duty to exercise reasonable care when making representations to a buyer. A broker may be liable for negligent misrepresentation if they convey false information from a seller without further investigation when circumstances suggest the seller's information might be unreliable.
Facts:
- Paul and Lauren Tribuna retained broker M. Eileen Richards of Hingham Centre to sell their property.
- Mr. Tribuna informed Richards that the property was zoned either 'Residential Business B' or 'Business B'; 'Residential Business B' is not a valid zoning designation in the town of Norwell.
- Richards, an experienced local broker, knew the property had no prior business use and was surrounded by houses, not businesses.
- Richards advertised the property in newspapers and on the Multiple Listing Service (MLS) as being zoned 'Business B.'
- Robert DeWolfe, a hairdresser seeking a location for a six-station salon, saw the advertisements and an MLS listing stating the property was 'zoned Business B.'
- DeWolfe informed Richards of his intent to use the property for a salon, a use permitted under 'Business B' zoning.
- DeWolfe and the Tribunas executed a standard purchase and sale agreement which included a clause stating the buyer had not relied on warranties or representations 'not set forth or incorporated in this agreement or previously made in writing.'
- After purchasing the property, DeWolfe discovered it was actually zoned 'Residential B,' which did not permit a six-station hair salon as he intended.
Procedural Posture:
- DeWolfe filed an action against Richards and Hingham Centre in the Superior Court, alleging misrepresentation.
- The defendants moved for summary judgment.
- The Superior Court judge granted the defendants' motion for summary judgment.
- DeWolfe, as appellant, appealed to the Massachusetts Appeals Court.
- The Appeals Court vacated the judgment and remanded the case for further proceedings.
- The defendants, as petitioners, were granted further appellate review by the Supreme Judicial Court of Massachusetts.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a real estate broker who conveys a seller's false information regarding a property's zoning designation shielded from liability for negligent misrepresentation by either (1) a lack of a duty to independently investigate the information or (2) an exculpatory clause in the purchase and sale agreement?
Opinions:
Majority - Lenk, J.
No. A real estate broker is not automatically shielded from liability for negligent misrepresentation. A broker has a duty to exercise reasonable care when making representations about a property's zoning. While a broker may ordinarily rely on information from the seller, that reliance becomes unreasonable if circumstances put the broker on notice that the information may be incorrect. Here, the seller providing a non-existent zoning designation ('Residential Business B'), combined with the broker's own knowledge that the property was surrounded by residences and had no history of business use, created a question of fact as to whether the broker should have investigated further. Additionally, the standard warranties and representations clause, which disclaims reliance on representations 'not set forth or incorporated in this agreement or previously made in writing,' permits, rather than precludes, reliance on prior written representations like the MLS listing and advertisements. Therefore, the broker is not entitled to judgment as a matter of law.
Analysis:
This decision clarifies that real estate brokers in Massachusetts have an affirmative duty of reasonable care that extends beyond simply relaying a seller's statements. It establishes that brokers must conduct further inquiry when 'red flags' suggest that information provided by a seller, particularly on a crucial matter like zoning, may be unreliable. The ruling shifts some of the due diligence burden from the buyer to the broker in such circumstances. Furthermore, the court's grammatical interpretation of a standard contractual exculpatory clause narrows its protective scope, preventing brokers from easily contracting away liability for their own prior written misrepresentations.
Unlock the full brief for DeWolfe v. Hingham Centre, Ltd.