by David Cosgrove
A real estate agent has a duty to communicate accurate information. See Zimmerman, 156 Ill. App. 3d at 162. (“Real estate brokers and salespersons occupy a position of trust with respect to purchasers with whom they are negotiating and owe a duty to exercise good faith in their dealing with such purchasers even absent the existence of an agency relationship.”)(emphasis added).
In Illinois, the tort of negligent misrepresentation consists of: (1) a false statement of a material fact; (2) carelessness or negligence in ascertaining the truth of the statement by the party making it; (3) an intention to induce the other party to act; (4) action by the other party in reliance on the truth of the statement; and (5) damage to the other party resulting from such reliance when the party making the statement is under a duty to communicate accurate information. Capiccioni v. Brennan Naperville, Inc., 339 Ill. App. 3d 927, 938 (Ill. App. 2 Dist. 2003). “The test of negligent misrepresentation involves the breach of a duty to use due care in obtaining and communicating information upon which others may reasonably be expected to rely in the conduct of their economic affairs.” Zimmerman v. Northfield Real Estate, Inc., 156 Ill. App. 3d 154, 163 (Ill. App. 1 Dist. 1986). “The misrepresentations may result from failing to provide adequate information when there is a duty to do so, as well as providing information which is false. Id. As it relates to the present case, “[r]eal estate brokers and salespersons occupy a position of trust with respect to purchasers with whom they are negotiating and owe a duty to exercise good faith in their dealing with such purchasers even absent the existence of an agency relationship.” Id. at 162. As stated by the Illinois Court of Appeals:
The public is entitled to and does rely on the expertise of real estate brokers in the purchase and sale of its homes. Therefore there is a duty on the part of real estate brokers to be accurate and knowledgeable concerning the product they are in the business of selling that is, homes and other types of real estate. Courts have held in many cases that purchasers are entitled to rely on real estate brokers’ statements.
Lyons v. Christ Episcopal Church, 71 Ill. App. 3d 257, 264, 389 N.E.2d 623, 628 (Ill. App. 5 Dist. 1979) (emphasis added).
When real estate brokers holds themselves out as having a specialized knowledge, the representations made by the broker may be reasonably relied up. See Costello v. Grundon, 651 F.3d 614, 639 (7th Cir. 2011) (“Factors to be considered in determining whether a plaintiff reasonably relied on an opinion as though it were a statement of fact include ‘the access of the parties to outside information,’ the parties’ relative sophistication, and whether ‘the speaker has held himself out as having special knowledge.’”). “When a speaker claims special knowledge and then affirms what he does not know to be true, he should bear the loss for one who relies on the affirmation.” Evanston Bank v. Conticommodity Services, Inc., 623 F. Supp. 1014, 1028 (N.D. Ill. 1985) “[I]f it appears that one party has been guilty of an intentional and deliberate fraud, the doctrine is well settled that he cannot defend against such fraud by saying that the same might have been discovered had the party whom he deceived exercised reasonable diligence and care.” Roda v. Berko, 401 Ill. 335, 342, 81 (1948).
Now as to consumer fraud: to establish a claim under the Illinois Consumer Fraud Act (“ICFA,”) a plaintiff must show that (1) defendant committed a deceptive act or practice; (2) defendant intended for plaintiff to rely on the deception; (3) the deception occurred in the course of conduct involving trade or commerce; (4) plaintiff suffered actual damages; and (5) plaintiff’s damages were proximately caused by defendant’s deceptive conduct. DOD Technologies v. Mesirow Ins. Services, Inc., 381 Ill.App.3d 1042, 1050, 887 N.E.2d 1 (Ill. App. 1 Dist. 2008). Under the ICFA, a deceptive act or practice includes “misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact.” Randels v. Best Real Estate, Inc., 243 Ill. App. 3d 801, 805 (Ill. App. 2 Dist. 1993). Consumer Fraud and Deceptive and Business Practices Act protects consumers, including prospective purchasers of real estate, against deceptive acts or practices. Id.; see also Sohaey v. Van Cura, 240 Ill. App. 3d 266, 291 (Ill. App. 2 Dist. 1992)(“The Consumer Fraud Act applies to a real estate broker’s representations to prospective purchasers of real estate.”). The broker must know of the false, misleading or deceptive character of the information he communicates. Zimmerman, 156 Ill. App. 3d at 168. Finally, “The Consumer Fraud Act applies to a real estate broker’s representations to prospective purchasers of real estate.” Sohaey, 240 Ill. App. 3d at 291.
Sometimes there is a substantial lapse in time before one realizes that a real estate broker was negligent or deceptive. Section 613(d) of the Code (735 ILCS 5/2-613(d)), provides that “[t]he facts constituting any affirmative defense, such as . . . laches, . . . must be plainly set forth in the answer or reply.” Laches is such a neglect or omission to assert a right, taken in conjunction with a lapse of time of more or less duration, and other circumstances causing prejudice to an adverse party, as will operate to bar relief in equity. Meyers v. Kissner, 149 Ill. 2d 1, 12 (Ill. 1992) (emphasis added). “[A] mere lapse of time from the accrual of the cause of action to the filing of a petition is insufficient to sustain the defense of laches.” Negron v. City of Chicago, 376 Ill. App. 3d 242, 247 (Ill. App. 1 Dist. 2007). “The defendant must prove how the plaintiff’s delay caused a change in conditions and caused him to pursue a course different from that which he would otherwise have taken.” Id.
Food for thought if you are representing a buyer or real estate broker in Illinois.