Madison - Home buyers who believe a seller has lied to them cannot sue for fraud to recover damages, a divided Wisconsin Supreme Court said Tuesday.
The decision is bad news for homeowners and sellers and makes Wisconsin the only state barring civil fraud cases in real estate transactions, Justice Ann Walsh Bradley said. She was one of three justices who broke with the four-member majority.
The opinion opens the door for a home seller to “look the buyer in the eye, lie about the condition of the home, and escape legal consequences,” Bradley said.
Those in the majority said home buyers, as well as real estate brokers and agents, should be “assured” that lawsuits alleging breach of contract and false advertising can still be filed.
“It kind of creates a world where it’s buyer beware a bit more,” said Debbie Conrad, attorney for the Wisconsin Realtors Association.
The decision is bad for home buyers, said Steve Meili, outgoing director of the Consumer Law Litigation Clinic at the University of Wisconsin Law School in Madison.
Barring fraud lawsuits means ripped-off home buyers can’t be awarded punitive damages, he said. That threat served as a deterrent to possibly unscrupulous sellers, Meili said.
Vicki Zick, the attorney who won the case, said the court’s decision still leaves buyers with recourse.
“It really just says we’re not going to let you sue for huge punitive damages,” she said.
Until now, disgruntled home buyers who felt they were ripped off most commonly sued for fraud, Brookfield attorney Rudolph Kuss said. His client, Shannon Below, claimed the sellers of a home she bought in Milwaukee committed fraud by not telling her about a broken sewer line.
“The vast majority of defrauded home owners are still going to be able to seek legal remedies for the wrongs that have been committed,” Kuss said.
Bradley noted that while lawsuits making other claims can be brought, in some instances a fraud lawsuit is the only option. She accused the justices in the majority of making law from the bench by expanding the state’s economic loss doctrine.
That doctrine is designed to bar civil claims for economic losses in cases involving a contract for a product. It had been applied to commercial real estate sales, and Tuesday’s decision expands it to residential sales.
First, it is and always has been a buyer beware kind of world. People need to take responsibility for something as huge as a home purchase and do the things they need to do and do it right. As evidence, the whole sub prime loan fiasco. To think you can buy a $250,000 earning $50,000 a year is ludicrous. Not having a home properly inspected is the buyers fault.
Second, what this means, really, is that Doris Dingbat can't go to the courts and claim that "because of the roof leak, my 6 year old daughter thought she wet the bed and has now been traumatized. She goes to therapy now and needs medication and won't sleep in her bed. Not to mention the strain this has put on us. I need 50 millions dollars for the suffering!"
You can still get the roof fixed. Which is all anyone should ask for. I don't doubt there are unscrupulous sellers out there. But like anything thing else, it's really up to the buyer to be sure not only the product checks out, but the seller as well.