REAL ESTATE AGENT'S MISREPRESENTATION RESULTS IN DAMAGES FOR EMOTIONAL DISTRESS

In a situation in which a real estate agent misrepresented a potential buyer's financial ability to purchase the sellers' home, the jury's award of $200,000 to the sellers for emotional distress has been upheld by the Michigan Court of Appeals. Coincidentally, the potential buyer was the mother of the real estate agent.

According to the case, decided on November 23, 2004:



In March 2001, plaintiffs received an offer for the Birmingham home consisting of an initial lease period of up to eighteen months, followed by the purchase. This offer was below plaintiffs' asking price. But by this time, plaintiffs were living apart and, having owned two houses for several months, felt that they needed to get the house sold for financial reasons.



Thompson [the real estate agent] advised plaintiffs that the buyer (who was Thompson's mother) would require a mortgage, but did not need to sell her current home in order to complete the purchase. Thompson also advised plaintiffs that the buyer would make a $20,000 deposit, which would serve as liquidated damages in the event the buyer did not complete the transaction. Thompson further advised plaintiffs that the buyer did not want to provide a credit report, but Thompson assured that she was a qualified buyer and presented a letter from the buyer's bank to substantiate this. Plaintiffs accepted the offer.



Although the buyer made an initial deposit of $1,000, she failed to make the remaining deposit of $19,000 as required by the purchase agreement. Following the buyer's breach of the purchase agreement, plaintiffs filed a demand for arbitration against her and were awarded $20,000. Plaintiffs attempted to collect on that award, but were unable to do so. Plaintiffs eventually sold their house to another party in December 2001. The jury found, and defendant does not contest, that Thompson misrepresented that the buyer was a "qualified buyer."