Summary
The Massachusetts Supreme Judicial Court held that a real estate broker may have a duty to exercise reasonable care before representing a property’s zoning classification, particularly when circumstances make reliance on the seller’s information unreasonable. The court also held that the purchase-and-sale agreement’s warranties and representations clause permitted reliance on prior written representations not incorporated into the agreement. The court vacated the summary judgment for the broker and agency and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether a real estate broker has a duty to exercise reasonable care, including a duty to investigate further when circumstances make seller-provided zoning information unreliable, before representing a property's zoning classification to prospective buyers.
- Whether the warranties and representations clause in the purchase and sale agreement precluded the buyer from relying on the broker's prior written representations concerning zoning.
- Whether the defendants established entitlement to summary judgment on the negligent misrepresentation and G. L. c. 93A claims despite disputed facts concerning reasonable care, causation, reliance, and waiver.
Holdings
- A real estate broker has a duty to exercise reasonable care in making representations about a property's zoning designation. The broker may ordinarily rely on information supplied by the seller, but must investigate further when the circumstances make reliance on that information unreasonable.
- The clause permitted the buyer to rely on prior written representations made by the seller or broker that were not set forth or incorporated in the purchase and sale agreement. It therefore did not relieve the defendants of potential liability for the broker's prior written zoning misrepresentations.
- Summary judgment for the defendants was improper because the record contained material factual disputes concerning whether the broker acted unreasonably and concerning waiver, causation, and justifiable reliance.
Key quotations
“We conclude that a broker has a duty to exercise reasonable care in making representations as to a property’s zoning designation.” (796)
“We further conclude that the exculpatory clause in the purchase and sale agreement does not preclude the buyer’s reliance on prior written representations.” (796)
“A trier of fact could find that Richards was on notice that the information provided by Tribuna might be unreliable, and that Richards acted unreasonably in representing the property as zoned “Business B” without first conducting further investigation.” (802)
“We thus read the warranties and representations clause as permitting reliance on prior written representations not set forth or incorporated in the agreement.” (806)
Factual background
A real estate broker advertised a Norwell property as zoned Business B after the seller gave her inconsistent zoning information, including the nonexistent designation Residential Business B. DeWolfe, who was seeking a location for a six-station hair salon, relied on the advertisements, the MLS listing, and a zoning ordinance marked Business B, then purchased the property. He later learned that the property was zoned Residential B and that a six-station hair salon was not a permitted use. The purchase and sale agreement contained a warranties and representations clause addressing reliance on representations not set forth in the agreement or previously made in writing.
Procedural history
DeWolfe sued the real estate broker Richards and her employer, Hingham Centre, Ltd., after purchasing property represented as being zoned Business B when it was actually zoned Residential B and could not lawfully be used for his intended hair salon. The Superior Court granted the defendants summary judgment. The Appeals Court vacated and remanded, and the Supreme Judicial Court affirmed the need for further proceedings by vacating the judgment and remanding.
Remand instructions
The judgment in favor of Richards and Hingham Centre, Ltd. is vacated, and the matter is remanded to the Superior Court for further proceedings consistent with the opinion.