Innocent & Intentional Misrepresentations: What are the repercussions for a seller who misrepresents the condition of the property?

This will likely depend on whether or not the seller’s false claims about the property were intentional. The SDA protects a seller against claims for innocent. In other words, a seller will not be held liable for a making a false statement about the property if the seller did not know that their statement was false and had no intent to deceive the buyer. If the seller does not have personal knowledge of a property defect, then that seller cannot be held liable for an inaccurate answer on the disclosure statement. A seller will, however, be held liable for an “error, inaccuracy or omission” if they have actual personal knowledge of the error, inaccuracy or omission. This means that a seller cannot knowingly make a false statement about the condition of the property (fraudulent misrepresentation) or knowingly withhold or conceal information about the property that the seller is obligated to provide (silent fraud). Fraudulent misrepresentation and silent fraud claims are very similar except that silent fraud is based on the suppression of material information rather than an affirmative misrepresentation. A silent fraud claim also requires the seller to have had a duty to make a disclosure (This could be either the duty to answer the questions on the seller’s disclosure statement or the duty to provide a truthful answer if a buyer makes a specific inquiry about the property). For example, let’s say that a seller knows that their roof leaks. When completing the disclosure statement, the seller either answers “no,” or skips the leaky roof question altogether. This is not an “innocent misrepresentation.” If (when) the buyer discovers the undisclosed leaky roof after closing, the buyer may pursue legal action against the seller for either fraudulent misrepresentation (purposefully making a false statement about the condition of the roof) or silent fraud (purposefully avoiding a question on the disclosure statement that they were obligated to answer). Note, however, that in order to successfully bring forth a claim of fraudulent misrepresentation or silent fraud, a buyer must be able to show that they reasonably relied on the seller’s omission or misrepresentation. This can be a difficult element to prove, especially if the buyer obtained and relied upon information from an independent inspection. As a general rule, a listing agent will not be held liable for misrepresentations made by their seller-client so long as the agent did not “knowingly act in concert” with the seller to violate the SDA. To “act in concert” means to work together to accomplish a common goal. For example, a listing agent who knowingly distributes a seller’s disclosure statement that they know to be false may be found to have “acted in concert” with the seller to misrepresent the property. In that scenario, the listing agent would likely be held liable, along with the seller, for fraudulent misrepresentation. Of course, a listing agent will also be held liable if they make their own purposeful misrepresentations about the property.