Protection from Claims of Fraud

   In North Carolina, a broker has a duty not to conceal from the purchasers any material facts and to make full and open disclosure of all such information.  This duty extends to sellers’ brokers in their communications with prospective buyers.  The consequences of violating this duty can be severe.  A finding of misrepresentation means personal liability for the broker, and may also impose liability on the broker’s company and the seller.  At the same time, buyers of real estate in North Carolina are expected to take reasonable steps to protect their own interest by inspecting property before purchasing it.  Knowing these rules, how can brokers avoid claims against them for misrepresentation?

    Courts are more likely to find misrepresentation when there is some specific action interfering with a buyer’s own inspection.  Examples include making inaccurate statements about acreage when the buyer is unable to conduct a personal inspection because of his health, or making inaccurate statements about a home’s square footage when the home is an odd geometric shape preventing the buyers from being able to ascertain the square footage themselves.  The lesson is not to interfere with, or take over, the buyer’s inspections.  This does not mean brokers have to remain silent about properties.  Courts do not find misrepresentation for brokers’ opinions.  Those opinions must not be expressed in a way that leads buyers to believe they are facts, or to dissuade buyers from completing their own inspections.