Missouri residents who put their homes on the market do everything they can to make their properties as attractive as possible to potential buyers, and they also take steps to conceal or minimize issues that could jeopardize a sale. Moving a piece of furniture to cover a torn carpet or hanging a picture to hide a stain are not likely to lead to a misrepresentation lawsuit, but concealing major defects like subsidence or foundation issues could. These matters rarely reach a courtroom because homes are thoroughly inspected before sales are finalized, but inspectors sometimes miss things.
Innocent and negligent misrepresentation
When property sellers or their representatives conceal defects and home inspectors fail to spot them, buyers may take legal action to seek compensation. The juries that hear these cases are then tasked with determining if the misrepresentation involved was innocent, negligent or fraudulent. Innocent or negligent misrepresentation occurs when a property owner or their representative makes an untrue statement that they did not know was untrue. What makes negligent misrepresentation more serious is the property owner or their representative should have known about the defect.
Fraudulent misrepresentation
Fraudulent misrepresentation is far more serious, and juries may award punitive as well as compensatory damages in cases where they believe the defendant acted intentionally or maliciously. This can lead to large awards in Missouri because the state does not cap punitive damages. Examples of fraudulent misrepresentation in a property sale that could lead to real estate litigation include lying about a defect, taking steps to conceal a defect or providing buyers or their representatives with false or doctored documents.
Caveat emptor
Misrepresentation during property sales can lead to lawsuits, and the damages can be significant if the defendant acted intentionally. The best way to avoid these problems is to take a “trust but verify” approach when buying a home. If you decide to buy a house, insist on a thorough home inspection.