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Niemiec v. Village Peddler Real Estate

SSX-L-90-07 (N.J. Super. Law Div. 2010) (Unpublished)

CONSUMER FRAUD ACT; BROKERS —When a broker represents that a property is “good for subdivision,” it means that the property has the possibility of being subdivided, even if a variance is required to do so; therefore, where a property buyer has not even attempted to obtain subdivision approval, it cannot sustain its Consumer Fraud Act action against the broker because there has been no showing that the broker intended to deceive the buyer.

An investor planned to purchase a house and renovate it for resale. She engaged a real estate broker, who provided a multiple listing data sheet for a house. The investor bought it. The property had been listed for sale through a different broker who had prepared the listing to contain the following language, “good for subdivision.” The buyer’s broker allegedly explained the language meant the property could be split into two properties. In preparing the sales contract, the broker discussed whether the contract should include a contingency that made the purchase subject to subdivision approval of the property. The buyer allegedly rejected the suggestion. The broker said the buyer explained that “maybe some day, she might subdivide the property.”

After completing the renovations, the buyer allegedly learned that the property could not be subdivided without a variance because the resulting lot size would have been substandard. The buyer never filed an application for a subdivision or variance. Instead, she sued both brokers under theories of fraud and negligence deriving from the language “good for subdivision.” Each broker filed a motion for summary judgment to dismiss the complaint.

The Court first concluded that the phrase “good for subdivision” meant having the possibility of being subdivided, even if a variance was required to do so. It also observed that the buyer never sought to have the purchase contract include any reference to subdivision approval, either as a condition of the contract, or as an affirmative representation from the sellers of the property that the property was “good for subdivision.” Then, the Court dismissed a claim raised under the New Jersey Consumer Fraud Act (CFA) of a violation by way of an affirmative misrepresentation, as the buyer had provided no competent evidence that “good for subdivision” was a false statement. The buyer failed to provide any proof that the property could not be subdivided other than by way of a “self-serving” certification and through its own deposition testimony. Further, the buyer neither completed nor submitted an application for minor or major subdivision approval, with or without variance relief, which would certainly have tested her theory.

The Court also dismissed a claim raised under the CFA of a knowing omission of a material fact. Under the CFA, this type of claim requires proof that a seller, by withholding information, intended to deceive the buyer. In this matter, the buyer failed to show that it was a fact that the property could not be subdivided. According to the Court, even if it could be demonstrated that the property could not be subdivided, the record did not support any finding of an intent to deceive by either broker. Both brokers and the buyer had testified that they believed the property could be subdivided.

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