Does a Real Estate Brokerage have to disclose an ongoing law suit that is attached to one of their listings

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Does a Real Estate Brokerage have to disclose an ongoing law suit that is attached to one of their listings

We have a client that made an offer on a property, and after the buyer’s inspection period had ended, the buyer and his agent, after further investigation, found out that the property is currently in a lawsuit regarding the boundary lines with the neighboring properties. The listing agent then disclose, after being questioned, that they were always aware of the lawsuit but this information was never disclosed to the buyer.

Asked on June 26, 2019 under Real Estate Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

It's not the brokerage that has to disclose this--it's the seller. The seller has an obligation to disclose all facts known to the seller but which are discernable by simply viewing the property which are material or significant. The broker simply lists those facts the seller provides to them and tells them to list. A lawsuit regarding the boundaries would certainly be material or significant and would not be readily or casually apparent on viewing the property; thus, the seller had a duty to disclose this and the failure to disclose is fraud. Fraud provides a basis to vacate, or undo, the transaction and cover the deposit. If the seller will not voluntarily release it, the buyer could sue the seller for a court order for the release and for additional compensation flowing out of the fraud--such as the cost of the legal proceeding.


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