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"The 'Write' Stuff":  Appeals Court Decision with Implications for Real Estate Brokers

December 2011Advisories

The “Write” Stuff

The recent Appeals Court decision in DeWolfe v. Hingham Centre, 80 Mass. App. Ct. 765 (2011) is a cautionary tale for brokers and other sellers of real estate who make written representations about zoning (and arguably other matters) related to the property they are selling. The case brings to mind the old politician’s advice: “Why write it, when you can say it; why say it, when you can just nod?”

In DeWolfe, the plaintiff wanted to relocate a hair salon business and responded to a newspaper advertisement for a property described as “[z]oned Business B.” The realtor who was marketing the property put the plaintiff in touch with the listing broker, who provided the plaintiff with a written multiple listing service listing that also stated that the property was zoned as “Business B.” The broker also gave the plaintiff a copy of relevant portions of the “Business B” zoning ordinance, under which hair salon was an allowed use. At no point did the broker verify the property’s zoning classification.

The plaintiff buyer and the seller later signed the Greater Boston Real Estate standard form purchase and sale agreement, which expressly provided that the buyer “has not been influenced to enter into this transaction nor has he relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing, except for the following additional warranties and representations, if any, made by either” the seller or the broker. The agreement listed no such additional warranties or representations. The plaintiff later learned that the property was not zoned “Business B,” but was located in a zoning district where the operation of a hair salon was not a permitted use. The plaintiff sued the broker and realtor.

The trial court dismissed, finding that the exculpatory language in the standard purchase and sale agreement defeated the buyer’s claims.

The Appeals Court, in a split decision, reversed, holding that while the plain language in the agreement disclaimed reliance on oral representations, it explicitly did not disclaim reliance on previous written representations that the broker and realtor had made. Therefore the Court reasoned that the broker and realtor could be liable for such written misrepresentations. The Court also did not find it relevant that the buyer had engaged an attorney to review and negotiate the agreement because there was no evidence that the buyer’s attorney was asked to examine or confirm the zoning. 

The moral: the exculpatory language of the standard real estate purchase and sale agreement does not insulate one from liability for prior written representations (and, of course, the exculpatory language never insulates one from liability for intentional fraud or deceit—whether written or spoken).

For questions about the information contained in this Advisory, please contact your usual Goulston & Storrs attorney, any member of the G&S Litigation Group or:

Len Freiman
Director
(617) 574-4188
[email protected]

Kevin O’Flaherty
Director
(617) 574-6413
[email protected]

This advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.

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