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.
Do
not hesitate to contact me to receive more information on this topic or
to suggest topics for future editions of 'A Legal Moment'. You may not
rely on this content as legal advice for any specific situation, but
should instead contact an attorney for specific advice.
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