Neighboring Sex Offender May Leave Sellers Liable

(CN) - An Arizona couple who unwittingly bought a Scottsdale home next door to a sex offender can sue the sellers for fraud, an Arizona appeals court ruled.

Glen and Robynn Lerner sued DMB Realty LLC and the previous owners of the home, Jeff and Marissa Currier, in Maricopa County Superior Court. DMB had represented both couples in the sale of the Scottsdale home.

In the residential disclosure statement, the Curriers did not answer the question, "What other material information are you aware of concerning the property that might affect the buyer's decision-making process, the value of the property, or its use?"

That statement also included a notice, however, that the sellers were not required to disclose if the home was a site of a murder or suicide or located near a sex offender.

Though the Curriers said they were moving to be closer to friends, the Lerners complained that this was a pretext to distance themselves from a neighboring sex offender.

The defendants argued that the sales documents and state law barred their Lerners' claims of breach of fiduciary duty, fraud and misrepresentation.

A Maricopa County Judge dismissed the case, but Division One of the Arizona Court of Appeals said last week that the Lerners may have a case for fraud.

The Currier's stated reason for moving created an issue that should go to trial, the decision states.

"We do not mean to say that as a matter of law, the alleged misrepresentation was material to the transaction and or that the Lerners reasonably relied on it," Judge Diane Johnsen wrote for the court. "We only hold that the complaint states facts that are reasonably susceptible of proof of fraud and that the jury ultimately must decide whether the Lerners have proven materiality and reasonable reliance."

Judge Jon Thompson wrote in dissent that the appeals court should have affirmed dismissal of each claim.

"Plaintiffs have presented no authority for the proposition that there existed at common law an action for non-disclosure of stigmatizing facts as to off-premises conditions," Thompson wrote.

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