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Lazar v. Braverman

A-2401-07T1 (N.J. Super. App. Div. 2009) (Unpublished)

CONTRACTS; CONSUMER FRAUD — Statutory consumer fraud claims apply to commercial sellers of real estate, but not to individual, isolated sellers.

A buyer and a property owner entered into a house sale contract. The buyer put $1,500 in escrow. It was to be released to the seller if radon levels, based on a test, were found to be safe. The agreement regarding the radon testing did not have a deadline for testing or for remediation if found to be necessary. The seller placed an additional $1,000 in escrow to cover the cost of remaining in the house one extra day and to cover any possible damage to the premises as a result of it remaining there. The buyer had the right to retain the second escrow deposit if the seller did not vacate the premises on time. The seller left the house on the agreed-upon date and the buyers moved in.

More than one year after closing, the attorney for the seller contacted the buyer’s attorney and suggested that since no word had been received regarding the radon testing, the $1,500 escrow should be released to the seller. The buyer’s attorney responded that he would not release the funds because radon remediation was required and that the buyer was planning to sue the seller. Another year passed without any suit or radon report being released, at which point the seller’s attorney demanded the release of both escrow amounts to the seller. The seller sued the buyer for the return of the escrow monies and, in response, the buyer brought a counterclaim for fraudulent concealment of the property’s condition and consumer fraud. The buyer sought punitive damages. The seller offered to have a judgment entered against it in the amount of $2,250 representing the escrow monies under the use and occupancy agreement and for the $1,250 spent on radon testing. The seller’s offer pointed out that in accordance with court rules, if the buyer was awarded less than the amount offered, the seller could seek legal costs, interest, and attorneys’ fees. The buyer accepted the offer, but also maintained a right to appeal its counterclaim for fraud.

The lower court awarded the seller $250. This represented the remainder of the escrow under the radon agreement. It found remaining factual issues under the use and occupancy agreement. It also dismissed the buyer’s counterclaim on both fraud counts.

On appeal, the Appellate Division pointed out that statutory consumer fraud claims apply to commercial sellers of real estate, but not to individual, isolated sellers and found that the lower court properly dismissed the consumer fraud claims. It also found that the buyer was able to establish that it expended considerable monies on the house after moving in but that it did not present any proof that the seller knew of, or in any way acted to hide, the condition of the house from the buyers or their home inspector. Based on its findings and conclusions, the Court affirmed the lower court’s award of $250 to the seller and its dismissal of the buyer’s counterclaim for fraudulent concealment and statutory consumer fraud.

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