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Fraudulent inducement – Real property sale — Action against seller and realtors by purchaser who discovered a week after closing that property was subject to fines based on three-page list of code violations

On January 3, 2003, the owner of a property in St. Petersburg  was served with a Notice of Hearing to appear, on January 22, 2003, before the City of St. Petersburg Code Enforcement Board regarding 14 cited code violations.   On February 22, 2003, he signed a contract to sell said property.  In the Seller’s Property Disclosure Statement, dated  March 3, 2003, owner answered three questions pertinent to this case: “(a) Is there any existing or threatened legal action affecting the property?,” to which the “No” box was checked; “(b) Do you know of any violations of local, state, or federal laws or regulations relating to this property?,” which was left unanswered, and; (c) “Is there anything else that you feel you should disclose to a prospective buyer because it may materially and adversely affect the value or desirability of the property, e.g. zoning violations, nonconforming units, set back violations, zoning changes, road changes, etc.?”, to which the “Yes” box was checked. In response to the follow-up to “explain in detail,” The owner  wrote, in part (the last several words are not discernible), “back room has code violations from original owner, due to it not having owner occupied license.”

The owner  did not attach to the Disclosure Statement, nor provide to the buyer, the three-page list of cited code violations. The buyer did not have a professional home inspection conducted and personally inspected the property only once. The closing and conveyance of the property took place on March 20, 2003. A week after closing, the buyer  was informed by the City of St. Petersburg that the property was subject to fines based on the three-page list of code violations.3

The Court held that “Florida law is clear that a seller has a duty of disclosure to the buyer of “facts materially affecting the value of the property which are not readily observable and are not known to the buyer.” See Johnson v. Davis, 480 So.2d 625, 629 (Fla. 1985) (emphasis added). This duty of disclosure extends to the seller’s real estate broker. See Syvrud v. Today Real Estate Inc., 858 So.2d 1125, 1129 (Fla. 2d DCA 2003).  This duty extends to the real estate broker.

* The code violations included: floor in bathroom peeling up; wiring in closet exposed; refrigerator and range not plugged in; door to storage area has rotten wood and not sealed; ceiling in living room has gaps; hole in wall under the sink; kitchen plumbing not to code; kitchen in disrepair; certificate of inspection required; kitchen floor missing tile and grout; after-the-fact permits required for work completed, and; garage apartment must be removed.

LIPP vs. ELY. Circuit Court, 6th Judicial Circuit (Appellate) in and for Pinellas County. Case No.04-0071AP-88B. UCN522004AP000071XXXXCV. November 9, 2005. Appeal from Summary Judgment, Pinellas County Court, Judge Walt Fullerton.

13 Fla. L. Weekly Supp. 119a