© 2007 Dominic Bugatto
New Jersey has one of the toughest consumer protection acts in the country. Known as the Consumer Fraud Act (CFA) (Title 56, Chapter 8), it applies to the sale and advertisement of goods and services. The Act applies to real estate transactions, brokers and real estate agents— sales and rentals and advertisements for same (this may mean your blog offering properties for sale). And here’s what makes it so tough— if you are found liable under NJ’s Consumer Fraud Act you are responsible for paying treble (3x) damages to the buyer, PLUS the buyer’s legal fees. These are mandatory. Zowee!
Here’s how the CFA defines an unlawful practice:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice. (emphasis added)
What this means is a real estate agent can be held responsible if they mistakenly misrepresent a fact, even if the buyer did not rely on the misrepresentation and was not misled. This is pretty strong stuff. So, if a buyer in New Jersey asks an agent a question, they best be sure they have the answer or their head may be on the CFA chopping block. (Many states’ consumer protection laws attach similar liability.)
The lesson to be learned is that real estate agents should not answer questions if they do not know the answer OR couch the answers in terms of their OPINION, since opinions are not statements of fact subject to misrepresentation.
Read the full NJ Consumer Fraud Act here. [pdf]
Illustration by Dominic Bugatto (which appeared in the National Law Journal). Used with kind permission of the artist (check out his blog, The Leadsled).
