Downs v. Hammett Properties, Inc.: Buyer’s Claim over Zoning Information Dismissed

A Louisiana court has considered whether a real estate company had a duty to inform buyer about zoning restrictions on a property, which prevented her from using the property in the way that she had intended.

Shirley Downs (“Buyer”) sought to purchase a piece of property which she could subdivide into four parcels, on which homes for her and her three children would be built. The Buyer allegedly told Timothy Hammett (“Hammett”), president of Hammett Properties, Inc. (“Company”), about her plan. In November 2001, the Buyer exchanged a property she owned for a 3.94 acre plot owned by the Company.

Following the exchange, the Buyer learned that the zoning for the property required a minimum of 1.25 acres per tract. When she learned that she was unable to subdivide her property into four plots, she filed a lawsuit alleging that Hammett knew of the zoning restrictions and did not disclose this to her. The Buyer sought to rescind the property exchange with the Company. The trial court rejected these allegations, and the Buyer appealed.

The Court of Appeal of Louisiana, Second Circuit, affirmed the rulings of the trial court. The trial court had determined that since the zoning ordinance was public knowledge, there was no obligation for Hammett to disclose this information to her and so these allegations could not serve as the basis of a rescission lawsuit. In Louisiana, an action for rescission (or for “redhibitory defects”, as it is known in the state) must allege a defect which makes the “thing useless, or its use is so inconvenient that it must be presumed that a buyer would not have bought the thing” had he/she known of the defect. If the property has such a defect, then the Buyer can legally rescind the sale. The Buyer argued that the zoning restrictions made the property unsuitable for her intended use and Hammett knew this but failed to inform her of this fact.

The court found that a zoning ordinance is not a “defect” within the meaning of the rescission statute, and so the court ruled that the trial court had properly rejected these allegations. An exception could exist if the Buyer had relied upon the “skill or judgment” of Hammett in selecting the property she bought, but the Buyer had not made such allegations in her lawsuit. Further, the regulations affecting the property were public records which the Buyer could have easily obtained and is not the kind of “redhibitory defect” needed to support a rescission lawsuit. Therefore, the court affirmed the trial court’s ruling in favor of Hammett and the Company.

Downs v. Hammett Properties, Inc., 899 So. 2d 792 (La. Ct. App. 2005).