Published on: December 14, 2011
In DeWolfe v. Hingham Centre Ltd., the Massachusetts Appeals Court recently considered a Realtor’s duty to disclose and independently verify zoning information about a listing property. The agent, relying on what turned out to be erroneous information supplied by his client, listed a Norwell property on Multiple Listing Service (MLS) and newspaper advertising as “zoned Business B.” The property was not in fact zoned for business use; it was zoned residential, thereby prohibiting the hair salon the buyer wanted to open at the property.
Despite the general disclaimer on the MLS system and in the purchase and sale agreement, the Massachusetts Appeals Court held that the Realtor could be held liable for misrepresentation and Chapter 93A violations due to providing this erroneous information.
Daniel DeWolfe became interested in opening a hair salon after reading a real estate listing in a local newspaper about property available for sale in Norwell. The advertisement stated that the property was zoned as “Business B,” a designation which allowed for the opening of a hair salon. DeWolfe called the realtor and informed the listing broker that he would like to purchase the property to accommodate a six-station salon.
The broker gave DeWolfe a copy of the multiple listing service, which stated that the address was zoned as “Business B.” The listing contained a disclaimer that the information was gathered from third party sources and no representations or warranties were being made as to its accuracy. The broker also provided DeWolfe with the Norwell zoning ordinance, which included the word “hairdresser” as one of the permitted business uses. At no time did the broker verify the zoning classification with the Norwell Zoning Department.
During a viewing, DeWolfe testified that the broker informed him that he could purchase the property as a two-family residence and legally convert it to a hair salon. At some time before an offer to purchase was made in October 2004, DeWolfe consulted his attorney. His offer to buy was contingent on receiving approval of a hair salon by the town. In October 2004, a purchase and sale agreement was executed with the same contingency.
The parties then drew up their papers using a Greater Boston Real Estate Board standard form purchase and sale agreement, which contained the following warranty language:
“The BUYER acknowledges that the BUYER has not … relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing, except for the following additional warranties and representations, if any, made by either the SELLER or the Broker(s): NONE.”
DeWolfe obtained the permit required to install a special septic system for disposal of chemicals used in his business and was given approval for a six-station hair salon by the town board of health in November 2004. A deed for the property was transferred to DeWolfe in December 2004.
In early 2005, DeWolfe learned that the property was actually in a “Residential B” district and a six-station hair salon was not a permitted use. He filed suit against the broker and real estate company, but Superior Court Judge Charles J. Hely dismissed the case.
In reversing that ruling, Judge Rubin of the Appeals Court wrote that Judge Hely improperly relied on the Appeals Court’s holding in Quinlan v. Clasby to determine that the broker had no duty to inquire about the zoning classification. He distinguished Quinlan because the broker in that case had not made any affirmative representations to the buyer. In this case, however, the broker communicated to DeWolfe several times and in several manners that the property was zoned for commercial use and that DeWolfe would be allowed to operate his desired hair salon at the location. The broker not only stated in the newspaper advertisement and on the multiple listing service that the property was zoned for a hair salon, she also orally advised DeWolfe of its classification during the viewing.
The full text of the ruling can be found by clicking here.