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Court says seller's real estate agent not accountable for overstating comparable rents

Dasch, Inc. sued Signature Assocs., Inc., arguing that the defendant should be accountable for over-stating comparable rents in a "comps list."  The buyer-Plaintiff argued that it over-paid for rental office space because the Defendants negligently and falsely over-stated the likely rental value of the space.  In a bench trial, the judge ruled that although the Defendants prepared the "comps list without exercising reasonable care" the content was "merely opinion" and therefore not actionable.  The judge held that the seller's agent would be responsible for negligent misrepresentations only if the Plaintiff proved that the agent knew that the claims were false and they were relied upon by the Plaintiff.

The Court of Appeals agreed with the trial judge that under Michigan law, the Plaintiff could not hold the seller's agent accountable for negligence unless the Plaintiff could prove that the agent knew that his representations were false before the buyer knew.  Since the buyers here did not prove that the agent learned of the falsehood before the buyers, the buyers could not recover for the agent's lack of due care or negligent misrepresentations.

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