Mikkelson v. Quail Valley Realty: Utah Supreme Court Finds for Broker in Purchaser's Claims for Misrepresentation Based Upon MLS Error
In 1982, the Supreme Court of Utah addressed an alleged misrepresentation due to a MLS error. The court held that a purchaser could not recover where he: (1) inspected a house before buying it; and (2) before closing, signed and acknowledged receipt of documents which indicated the actual square footage of the house.
Quail Valley Realty (QVR) acquired a listing agreement for the sale of a house and was told by the seller that the house had 2,800 square feet. The footage was recorded in a listing sent to the MLS, which in turn was published in a multiple listing book. Subsequently, Mikkelson, a prospective purchaser, was shown through the house and given information on the listing. After negotiation, seller accepted Mikkelson's offer to purchase of $60,000. When Mikkelson applied for a FHA loan, he was informed that an appraisal would be required. The appraisal documents valued the house at $59,500 and included a form which indicated the square footage was just under 2,400. After acknowledging the receipt of the FHA appraisal information, Mikkelson signed the closing documents. One year later, while making preparations to sell the house, Mikkelson discovered the house contained approximately 2,394 square feet. Based on that information, Mikkelson sued the real estate broker for misrepresentation.
The Supreme Court of Utah held that Mikkelson could not have reasonably relied on his belief that the house contained 2,800 square feet since Mikkelson not only inspected the property, but also signed, prior to closing, loan documents acknowledging receipt of the FHA appraisal report wherein the correct footage was revealed. The court further stated that while Mikkelson may have initially received false information, he could not reasonably continue to rely on it once true and corrected information was furnished to him, particularly when that corrected information was contained in a document of the importance of an appraisal report.
Mikkelson v. Quail Valley Realty, 641 P.2d 124 (Utah 1982).