Are realtors who make representations about property liable if their facts are incorrect?

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A California court decision provides a cautionary tale for realtors who make representations about property without doing enough to confirm that they have their facts correct. In that case, a realtor was held liable to the purchasers for $175,000 because his description of the size of a lot was off by .003 of an acre.

A married couple engaged the realtor to find a piece of land which they could later subdivide and split evenly between their two children. Under a city ordinance, only property that was over one acre could be subdivided.

Knowing about this requirement, the realtor locked up the sale when he found a parcel described by the seller’s agent and in a multiple listing service as over one acre in size. He also thought he had satisfied himself that it was that size by “eye-balling” the property, taking into account a fence marking part of its boundary.

Years after the sale, a boundary dispute between the purchasers and their new neighbors revealed that the fence the realtor had seen was not on the true boundary. The lot was in fact .998 of an acre in size.

The purchasers sued the realtor because they could not subdivide the lot. Both the trial court and an appellate court ruled that the realtor was liable to the purchasers for the difference in value of the property which was attributable to the fact that it could not be subdivided.

The realtor had breached a duty owed to his clients by making representations which were not true and by not informing his clients that he had not independently confirmed that the property was large enough to be subdivided.