Must Information in the Public Record be Disclosed to Buyers of Residential Real Property and May it be Misrepresented?

This article discusses the laws in Florida related to hiding or lying about important information when selling a house. This can include things like structural problems, pests, flooding, zoning, and environmental issues. It can also involve not telling buyers about things in the public records that could affect the property. There have been a lot of lawsuits about this because Florida is growing so fast. In Florida, public records include a wide range of documents and materials related to official business of government agencies. This can include information about land use regulations and potential issues with properties, such as soil surveys, protected species, wetlands, and environmental contamination. When buying a property, buyers are generally expected to be aware of these regulations, but if a seller makes false statements about the property, the law may not expect buyers to investigate every public record to verify the information. In Johnson v. Davis, the Florida Supreme Court ruled that sellers of residential property must disclose all important information about the property to the buyers. In the case, the buyers discovered water damage in the house they were going to buy, and sued the sellers for fraud and misrepresentation. The court ruled in favor of the buyers, awarding them money back and saying the sellers should have told them about the roof problems before they bought the house. The Florida Supreme Court said that if a seller knows of important problems with a house that the buyer can’t easily see, the seller has to tell the buyer about them. In this case, the sellers didn’t tell the buyers about roof problems, so they had to give the buyers back their money. The court also said that buyers don’t have to look through public records to find out about problems with a house. In Solorzano v. First Union Mortgage Corp., the Fourth District Court of Appeal said that a homeowner could sue a bank for not telling them about a big fine for not following city rules when selling them a house. The homeowner said the bank knew about the fine but didn’t tell them, and that the fine made the house less valuable. The bank said the homeowner should have known about the rule violations because they were easy to see. The court said that the homeowner might not have noticed the rule violations and should have time to check public records before buying the house. Judge Gross was worried that the majority opinion in Solorzano could limit the decision made in a previous case, Johnson. He argued that in cases where the truth of a statement can be easily seen, like in the case Besett v. Basnett, there shouldn’t need to be a lot of research done to prove it. He thought that just a quick look or a quick investigation should be enough to show whether something was true or false. A couple bought a house in a flood-prone area and the seller didn’t tell them about the flooding. The court said the buyers should have known about the flooding because they were experienced in south Florida and could have looked up the information. The court also said that a buyer can rely on what a seller tells them, unless the buyer knows it’s not true. The buyers of a fishing lodge sued the sellers for lying about the size of the property, the income it generated, and the condition of the roof. The sellers argued the buyers could have found out the truth if they had looked into it. But the court said the buyers can believe what the sellers tell them, unless it’s obviously untrue. The case was later used in other court decisions. A buyer bought a house in the Florida Keys, but the previous owners lied about the house meeting flood regulations and getting cheap insurance. The buyer found out after buying the house and ended up having to pay a lot more for insurance. The buyer sued the sellers and the real estate agent, but the court ruled in favor of the sellers and agent because insurance wasn’t specifically mentioned in the contract. The court ruled in favor of the buyer because they were not told important information about the property before buying it. The court said that even if the buyer could have figured out the information on their own, the seller still had a duty to be honest. In another case, buyers were misled about a property being lakefront and ended up purchasing it based on false information given by the seller’s salesperson. The buyers thought they were buying a property right next to a lake, but found out before closing that there was a conservation area between the property and the water. They sued the seller for lying, and the court said the lie was important enough for them to cancel the sale. This shows that if a seller lies about something outside the property, the buyer may still have a case. It also said the buyers didn’t have to check public records themselves, if the seller lied about something that could be checked in public records. This rule was shown in another case where a developer lied about what was going to be built near the property the buyers were interested in. When the buyers found out the truth, they were able to cancel the sale and get their money back. The court threw out the case because of a previous ruling that says you can’t sue for fraud based on things in public records. However, the appeals court said the buyers can still sue for fraud because they showed that the seller lied about something important, knew it was a lie, wanted the buyers to believe it, and the buyers got hurt because they believed it. In a case involving a property sale, the court ruled that fraudulent nondisclosure of physical defects in the property itself is different from nondisclosure of off-property issues. The court also said that whether a buyer exercises ordinary diligence in discovering the falsity of statements about property is a case-by-case determination. The court approved a decision that stated whether a cause of action for fraudulent misrepresentation exists where the misrepresented information is public record is a factual question. The court also reaffirmed that whether the recipient of a misrepresentation is justified in relying on its truth is a factual determination. The court also said that information contained in a property’s chain of title is imputed to the purchasing party, and intentionally using false information to induce a transaction is prohibited by Florida law. In a specific case, buyers sued a developer for nondisclosure of material defects in a condominium property, seeking damages or rescission. The buyers didn’t get what they wanted from the trial court, but then a higher court said the jury was given the wrong instructions. They only needed to prove that the developer knew about the problems with the property and didn’t tell them, not that they intentionally hid them. So now the case will go back to court to be tried again. When someone sells a house, they have to tell the buyer about any important problems with the property. If they don’t, the buyer might be able to cancel the sale. This is different from regular lying, where the seller has to know they are lying and intend to make the buyer believe it. This rule applies even if the seller isn’t sure if they need to tell the buyer something. If the seller intentionally hides something important about the property, the buyer might be able to cancel the sale. For example, if a condo has a noise problem and the seller knows about it but doesn’t mention it, the buyer might be able to cancel the sale. In this case, a seller gave the buyers a document with false information about the zoning of a property. The buyers relied on this information and later found out it was incorrect. The court said that the buyers can only sue for negligent misrepresentation if they had a good reason to believe the false information was true and if they weren’t negligent in checking the information themselves. So, the buyers may not be able to get compensation if they should have checked the zoning themselves. In general, sellers or brokers of residential property don’t have to disclose facts from public records to a buyer if the buyer could have easily found them. However, they should still disclose important facts that affect the value of the property, unless the information is already in the property’s records. Noncompliance with land use regulations should also be disclosed. If a buyer asks about something specific about a property, like if it’s quiet, the seller has to tell the truth, even if it’s not a big deal. If a seller says something about a property, they have to tell the whole truth, not just part of it. A buyer doesn’t have to do a ton of investigating, they just have to ask about things they care about. And if it’s something that can be found in public records, the buyer can’t rely on what the seller says if it’s obviously not true. If someone gives you wrong information and you rely on it, they might be responsible for any problems that result. But if you should have checked the information yourself, you might also be responsible. Figuring out whether the information was just a mistake or someone was trying to trick you usually requires knowing things that aren’t obvious. It’s probably a good idea to check important information before making big decisions. We want all of our members to understand the importance of doing their job well and helping the public. We also want to make sure that the legal system works well and keeps getting better.

Source: https://www.floridabar.org/the-florida-bar-journal/must-information-in-the-public-record-be-disclosed-to-buyers-of-residential-real-property-and-may-it-be-misrepresented/