Missouri Real Estate Lawyer

Can a real estate agent be sued under Missouri statute section 339.730? That statutes provides that a real estate licensee owes no duty to a customer, “except that a licensee shall disclose to any customer all adverse material facts [about the property] actually known or that should have been known by the licensee.”

Missouri statute 339.710(10) defines a customer as a potential seller or buyer with whom the licensee is involved but with whom the licensee has not entered into a brokerage relationship. For example, a listing agent represents the seller, who is the agent’s client, and each potential buyer of the property is a customer of the listing agent, even though the agent does not represent the buyers. So, in this example, section 339.730 obligates the listing agent to inform each potential buyer of “all adverse material facts known or that should have been known to the licensee” about the property listed by the licensee.

Lowdermilk v. Vescovo Building and Realty

In Lowdermilk v. Vescovo Building and Realty, 91 S.W.3d 617 (Mo. App., 2002), a new home was being built in Webster Groves. It was listed for sale by a real estate agent. During the construction of the house, a resident of the neighborhood where it was being built sent a letter to the listing agent, pointing out several defects in the construction of the house. In particular, the neighbor said in the letter that he did not believe that the builder had applied any waterproofing material to the exterior of the foundation of the house. The neighbor suggested in his letter that some of the dirt filled in around the foundation be removed so that a visual inspection can be made as to whether any waterproofing material had been applied to the exterior walls of the foundation.

The listing agent informed her broker of the letter and the mortgage company of the buyers. Ultimately the buyers did not purchase the house, for other reasons, and the house was eventually listed by a different broker. The neighbor then sent a copy of his letter to the new listing broker.

The Lowdermilks, husband and wife, made several visits to the house as prospective buyers. The Lowdermilks and their real estate agent met with the builder and the broker’s marketer. No one disclosed to the Lowdermilks the contents of the neighbor’s letter. Instead, the builder told the Lowdermilks that the house was well build and had no problems. The Lowdermilks then entered into a contract to purchase the house for $560,000.

Soon after moving into the house, the Lowdermilks received a letter from the neighbor informing them of various defects he observed in the construction of the home, including the apparent failure to waterproof the foundation. The Lowdermilks met with the neighbor, who provided them with a copy of the letter he had sent to the original salesperson and to the second listing broker. The Lowdermilks then met with the builder, who could provide no proof that they had waterproofed the foundation. The builder refused the Lowdermilk’s demand to take back the property.

The Lowdermilks sued the builder, and its owners, the second listing broker (both the company and the broker individually), and the broker’s marketer. The case was presented to a jury on one count against the builder for international misrepresentation and one count against the broker, asserting that she violated the requirements of section 339.730. Both counts were limited to the defendants’ failure to disclose the absence of the waterproofing. The jury rendered its verdict in favor of the Lowdermilks and awarded them $140,000 in actual damages and $280,000 in punitive damages.

Section 339.730 Cannot Support a Private Cause of Action

Defendants filed a motion for a new trial, asserting that section 339.730 cannot support a private cause of action. The appeals court agreed, holding that the Lowdermilks could not use section 339.730 to sue the broker. Instead, the Lowdermilks were required to plead and prove the common law cause of action of fraudulent misrepresentation, fraudulent omission, or negligent misrepresentation. Because the jury was not instructed on any of these common law causes of action, the court of appeals sent the case back to the trial court for a new trial.

MREC Enforcement of Section 339.730

This ruling in Lowdermilk v. Vescovo Building and Realty does not mean the section 339.730 is without any consequence to a real estate licensee. The Lowdermilks or their agent could have made a complaint with the Missouri Real Estate Commission, which has the authority to enforce section 339.730 and other provisions of Chapter 339. Section 339.170 provides that a violation of section 339.730, and certain other sections of Chapter 339, is a class B misdemeanor. As such, the commission can refer such complaint to the Missouri State Attorney General for prosecution of the violation and for the discipline of the agent or broker’s license. Accordingly, although section 339.730 will not support a private cause of action, a violation of section 339.730 can have a detrimental effect on the license of a real estate salesperson or broker.

This article is for general informational purposes only, and it is not intended as legal advice.

Michael Sewell has successfully litigated numerous Missouri real estate and business-related lawsuits since 2005. Prior to forming Sewell Law in 2015, Michael was a full-time litigator with the Clayton, Missouri law firm of Berger, Cohen, and Brandt. Please contact Michael at (314) 942-3232 or at michael@sewelllaw.net to discuss your litigation or other legal matters.

The choice of a lawyer is an important decision and should not be based solely upon advertisements.

© 2018 Sewell Law, LC