Wisconsin court bars fraud lawsuits in home sales
posted by admin in home cleaning serviceHome 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 home owners and sellers and makes Wisconsin the only state in the country 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.
The decision is bad for home buyers, said Steve Meili, outgoing director of the Consumer Law Litigation Clinic at the University of Wisconsin-Madison Law School.
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.
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. However, time limits are more restrictive and it’s harder to collect penalties under some other options, he 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 previously had been applied to commercial real estate sales and Tuesday’s decision expands it to residential sales.
Bradley said she agreed with the Wisconsin Realtors Association, which filed a brief in the case, that applying the doctrine to residential real estate sales is “bad for the Wisconsin real estate market and bad for Wisconsin consumers.”
Justice Patrick Crooks wrote the majority opinion and was joined by Justices David Prosser, Pat Roggensack and Annette Ziegler. Chief Justice Shirley Abrahamson and Justice Louis Butler voted with Bradley.
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