Coffman v. Rohrman: Brokerage Liable for Not Disclosing Easement Information

<p>An Indiana appellate court has considered whether a real estate professional was properly held liable for failing to tell purchaser all of the information he knew about an easement on the property that his client was in the process of acquiring.</p> <p>In 1999, Robert V. Rohrman ("Buyer") retained Charles S. Coffman ("Salesperson") of the Metropolitan Real Estate Corporation ("Brokerage") to help him locate property. The Salesperson made an offer on behalf of the Buyer to purchase property owned by Douglas Britt ("Seller"). The Seller rejected the offer, and his attorney ("Attorney") contacted the Salesperson to let him know about a "Mutual Easement Agreement" that the Seller had entered into with his neighbors. The easement agreement would require a purchaser of the property to share the costs with the neighbors of constructing and maintaining an access road. The Attorney then sent a letter to the Salesperson summarizing this conversation.</p> <p>Following this conversation, the Salesperson told the Buyer that he would need to pay the purchase price and half the cost of a traffic light. The Salesperson also told the Buyer that the access road was already constructed. The Buyer then accepted the Seller's counteroffer, which required him to assume all obligations of the easement agreement.</p> <p>A little over a year later, the neighbors filed a lawsuit against the Seller for breach of the easement agreement. The Buyer was later added to the lawsuit. During the trial, the Buyer learned of the Attorney's letter to the Salesperson for the first time. The trial court ruled in favor of the neighbors and ordered the Buyer to pay the neighbors $15,999.99.</p> <p>In 2002, the Buyer then filed a lawsuit against the Salesperson and the Brokerage, seeking to recover the judgment in the earlier case as well as his attorney's fees incurred in defending the case. A trial was held, and the Buyer was awarded $15,999.99 as well as his attorney's fees from the earlier case. The Brokerage appealed this award.</p> <p>The Court of Appeals of Indiana affirmed the award of the trial court. The court first considered whether the applicable statute of limitations barred the Buyer's lawsuit. The Brokerage argued that a two-year statute of limitations applied in this case. The statute of limitations does not begin running until the party knew or, in the exercise of ordinary diligence, could have discovered the tortious harm caused by another. The Buyer claimed he did not know of the Attorney's letter to the Salesperson until the first trial, while the Salesperson testified that he had discussed the costs associated with easement agreement with the Buyer prior to closing. The trial court had resolved this factual dispute by deciding that the Salesperson had not given the Buyer the letter nor had he told the Buyer about his conversation with the Attorney. The court ruled that the record supported the trial court's finding that the Buyer did not become aware of the Salesperson's negligence until the first trial. Thus, the court rejected the Salesperson's statute of limitations argument.</p> <p>Next, the court considered whether the Buyer had a duty to disclose the information about the easement agreement to the Buyer. Indiana law imposes duty upon licensees to disclose material adverse facts. The Buyer testified that if he had known about the costs associated with the easement agreement, he would have negotiated a lower purchase price. The court determined that the information about the easement agreement was a material fact. Since the trial court had found that the Salesperson had failed to inform the Buyer of the easement agreement, the court affirmed the ruling that the Salesperson had breached his statutory duty to disclose material adverse facts to the Buyer.</p> <p>Finally, the court considered the remaining issues. First, the court rejected the Salesperson's argument that the trial court should have assessed the comparative fault of the parties since the Buyer had alleged negligence, as the court stated such findings are not required for negligence allegations like those made by the Buyer. Second, the court rejected the Salesperson's argument that Indiana did not allow an award of attorney's fees, as the attorney's costs sought here were to reimburse the Buyer for costs incurred in defending another lawsuit, not this lawsuit. Thus, the court affirmed the rulings in favor of the Buyer.</p> <p>Coffman v. Rohrman, 811 N.E.2d 868 (Ind. Ct. App. 2004).</p> <p>TO COMPLY WITH CERTAIN U.S. TREASURY REGULATIONS, WE INFORM YOU THAT, UNLESS EXPRESSLY STATED OTHERWISE, ANY U.S. FEDERAL TAX ADVICE CONTAINED IN THE TEXT OF THIS COMMUNICATION, IS NOT INTEDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY PERSON FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER THE INTERNAL REVENUE CODE.</p>
Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.

Advertisement