Blog & News

Negligent Misrepresentation? Or Not?

July 26, 2017 Posted in Blog

In real estate, “negligent misrepresentation” usually occurs when someone, whether a seller or the seller’s agent, describes an attribute of a property or answers a question about the property which turns out to be wrong.

The “representer” may be liable, even if he or she did not know the representation was false.

A negligent misrepresentation involves a false statement that the representer should have known was false. The recipient of that information then relies on the details to his or her detriment. Liability for negligent misrepresentation has been found even when the person relying on the representation could have discovered the true facts by a review of the public records.

Read about these cases for insight into how the courts evaluate negligent misrepresentation claims. These cases are valuable to know because they offer keys to the law today.

In Specialty Marine & Industrial Supplies, Inc. v. Venus [66 So. 3d 306 (Fla. 1st DCA 2011)], Specialty Marine sought damages for negligent misrepresentation. The defendant, Venus, previously had a boundary dispute with a neighbor over a strip of property 18 feet by 176 feet. Later, while Specialty representatives were viewing the property to assess whether to purchase it, Venus represented that the property was 18 feet deeper than it actually was.

boundaryThe Specialty representative, after learning from an acquaintance that about the boundary dispute, questioned Venus.

Venus informed Specialty “the neighbor was ‘crazy,’ that the problem was ‘not a big deal,’ and that there was a survey supporting his position.”

The parties entered into a contract and obtained a survey, which incorrectly showed the boundary line where Venus represented it to be. Tri–State's survey erroneously showed that the boundary lines were located as represented by Venus.

The court ruled for WHOM?

In its decision, the Court stated:

“We recognize that in other jurisdictions, where a buyer of property undertakes an independent investigation of the facts represented by the seller, as a matter of law, the buyer is not relying on the seller's representation and cannot recover for either negligent misrepresentation or fraud. Under Florida law, even though justifiable reliance is required, a recipient of information does not have to investigate every piece of information furnished, but instead is responsible for investigating that information which ‘a reasonable person in the position of the recipient would be expected to investigate.’ If a recipient of false information does undertake an investigation, the element of justifiable reliance does not fail as a matter of law.”

The Court continued: “there is no requirement that Specialty Marine's reliance on Venus' misrepresentations be the sole or even the predominant cause of Specialty Marine's decision to purchase the property ‘if his reliance is a substantial factor in determining the course of conduct that results in his loss.’”

* * *

Even where a buyer retained an attorney to review the seller’s title, and the attorney was negligent in failing to discover title defects, the seller could not avoid liability. Newbern v. Mansbach, 777 So. 2d 1044 (Fla. 1st DCA 2001).

With offices in downtown Pensacola, Pace and Pine Forest, Clear Title provides professional residential real estate closing services throughout the Florida Panhandle. If you are looking for a professional closing company with a long track record of successful, error-free closings, we invite you to get in touch. To speak with one of our professionals about your closing in Northwest Florida, inquire online or call Pace office (850) 994-3838Pine Forest office (850) 202-8518 or downtown Pensacola (850) 378-8765  today.

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