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Where a plaintiff that purchased real property for $115,000 brought suit against the defendant seller for fraudulent misrepresentation and silent fraud, the defendant is entitled to summary disposition because the plaintiff has failed to explain how its reliance on the alleged misrepresentations or non-disclosures was reasonable under the circumstances.
“BCB alleges that in July 2023 Defendant John Larson (Larson), a licensed real estate agent with SCS, contacted BCB to see if it was interested in purchasing property on Stewart Avenue in Warren, Michigan. According to BCB, the property was owned by Defendant American Real Property Investments (ARPI) who had purchased it in April 2023 for $52,500. On July 28, 2023, BCB entered a purchase agreement with ARPI to purchase the property for $115,000. The purchase agreement provided, ‘Seller to provide passed certificate of occupancy prior to closing.’ … According to BCB, ARPI failed to obtain a certificate of occupancy before closing. But despite the lack of a certificate of occupancy, BCB and ARPI closed on the property on August 25, 2023.
“BCB alleges Larson and ARPI induced it to enter the purchase agreement by misrepresenting to BCB on July 23, 2023 that the property had been completely renovated and would have a certificate of occupancy prior to closing. BCB also alleges it ‘has been unable to rent the Stewart Property because of the absence of a certificate of occupancy,’ and claims it lost approximately $1,400 per month.
“ARPI argues that BCB’s fraudulent misrepresentation and silent fraud claims fail because there is no genuine issue of material fact that ARPI did not make any material misrepresentations or, as to the silent fraud claim, suppress any material fact that it was legally obligated to disclose. It also argues Larson’s alleged misrepresentations cannot be imputed to ARPI. It further appears to argue that by failing to perform its due diligence and inspect the property and by accepting the property ‘as is’, BCB cannot establish that it reasonably relied on the alleged misrepresentations and non-disclosures.
“Based on Baldwin and Karker’s testimony, where both agree that Larson was working as BCB’s real estate agent for the purchase of the property, no reasonable finder of fact could conclude anything other than that Larson was BCB’s agent at the time he made the alleged pre-closing misrepresentations concerning the status of the property and its viability as a rental property.
“Even assuming Larson was ARPI’s agent when he made the alleged misrepresentations to BCB, BCB has failed to explain how its reliance on the alleged misrepresentations or non-disclosures was reasonable under the circumstances.
“The purchase agreement included an ‘as is’ clause that states, ‘By closing this transaction, Buyer shall be deemed to have accepted the Property in ‘AS IS’ condition and it shall be deemed by closing this transaction that Buyer is satisfied with the condition of the property.’ … The purchase agreement also included a standard ‘property inspection/due diligence’ clause that ‘recommend[ed] that Buyer conduct independent private inspection(s) of the property at Buyer’s expense.’ … In addition to these provisions in the purchase agreement, the seller’s disclosure completed by ARPI on July 28, 2023, and read and acknowledged by Baldwin, repeatedly indicated that ARPI (as seller) did not know the condition and history of the property because ‘Seller never lived in [the] property.’ … The disclosure stated that it ‘is not a substitute for any inspections or warranties the Buyer may wish to obtain.’ … It further stated, in bold and all caps, ‘BUYER SHOULD OBTAIN PROFESSIONAL ADVICE AND INSPECTIONS OF THE PROPERTY TO MORE FULLY DETERMINE THE CONDITION OF THE PROPERTY.’ … The cumulative effect of these provisions, combined with the fact that BCB knew at the time of closing that no certificate of occupancy had been received, put BCB on notice that it needed to further investigate both the condition of the property and why no certificate of occupancy had been received. Instead, BCB chose to proceed with the closing. Under these facts, it was unreasonable for BCB to rely on Larson’s pre-closing emails regarding the condition of the property and the certificate of occupancy and fail to get its own, independent inspection of the property.
“The same holds true for BCB’s reliance on the alleged non-disclosures by Larson and ARPI regarding the condition of the property and failed inspections.
“In sum, BCB has failed to provide evidence the creates a genuine issue of material fact whether Larson was ARPI’s agent for BCB’s purchase of the property. It has further failed to show that, even if Larson was ARPI’s agent, there is a genuine issue of material fact whether BCB reliance Larson and ARPI’s statements and non-disclosures was reasonable in light of the facts of this case. Nor has it demonstrated that ARPI’s representations in its July 28, 2023 seller’s disclosure are actionable fraudulent misrepresentations. Accordingly, ARPI is entitled to summary disposition on BCB’s claims of silent fraud and fraudulent misrepresentation against it.”
