Misrepresentation Lawsuit Dismissed

Read the full decision: Beckman v. Wells Fargo Bank, N.A.,

Minnesota appellate court rules that real estate professional did not make a misrepresentation when he based his statements about the property on information obtained from the county’s website.

Wells Fargo (“Bank”) foreclosed on a property in 2010.  Following the foreclosure, the Bank had the property appraised, and the appraiser estimated that the property needed approximately $22,000 in repairs.  A real estate broker (“Broker”) hired by the Bank to list the property for sale told the Bank that the property had “potential but boy what a mess.”  The Bank spent $75,000 on property repairs.

The Broker listed the property for sale in the MLS “as is” with a “lake view.”  The Broker later reduced the price and added “1,500 feet of lakeshore located across the road” to the property description.

An Ohio couple (“Buyers”) were interested in Minnesota properties and saw the Broker’s listing.  The Buyers retained a local licensee to represent them (“Buyer’s Representative”) and they visited the property twice.  The Buyers did question the Buyer’s Representative about the 1,500 feet of lakeshore property.  The Buyer’s Representative contacted the Broker and the Broker forwarded her a link to the county’s website, which showed the property as having 900 feet of lakeshore access and 600 feet on a flowage.

The Buyers made an offer for the property in its “as-is” state.  The Buyers did not have the property surveyed or inspected, and they did not conduct a final walk through.  Following their purchase, the Buyers discovered a number of issues including mold, urine-stained walls, and dead animals in the walls.  These issues were not discovered until they began pulling up the carpeting and moving appliances.  A neighbor also told the Buyers that they only owned half of the 900 feet of lakeshore.

The Buyers brought a lawsuit against the Bank and the Broker alleging fraudulent misrepresentation over the failure to accurately disclose the condition of the property and the size of the property’s waterfront access.  The court entered judgment in favor of the Broker and Bank, and the Buyers appealed.

The Court of Appeals of Minnesota affirmed the trial court’s ruling.  The Buyers argued that there were fact issues that precluded judgment on the fraudulent misrepresentation claims.  In order to plead a fraudulent misrepresentation claim, a party must allege a false statement of a material fact that was made with knowledge of the statement’s falsity, an intention to cause the other party to rely upon the statement, the other party relied upon the statement, and this reliance caused the other party harm. 

The court determined that there was no false statement made about the property’s lakeshore access size.  The Buyers argued that the property’s legal description showed that the access was less than 900 feet and the Broker had served as the listing broker in a previous transaction.  However, the Buyers failed to show that the Broker had knowledge that the access was less than 900 feet.  The Broker had obtained the information about the lakeshore access size from the county’s website, and the property taxes for the property were based on 900 feet of lakeshore access and the appraisal also stated that the property had 900 feet of lakeshore access.  The court affirmed the trial court’s judgment.

Next, the court considered the allegations concerning the condition of the property.  The purchase contract stated that the property was being sold “as-is.”  The Buyers claimed that the Broker misrepresented the property’s condition, but did not present any evidence that the Broker knew of the defects nor that the Broker even made any representations to the Buyers about the property’s condition.  Therefore, the court affirmed the trial court’s rulings.

Beckman v. Wells Fargo Bank, N.A., No. A15-1819, 2016 WL 5640664 (Minn. Ct. App. Oct. 3, 2016).  [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information.

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