Question

In 2020, defendant Sunshine Bank was the trustee of a 80,000-square-foot commercial building in DuPage County, Illinois. The building, however, wasn't generating any net income and was listed for sale.

To prepare for the sale, the building's broker provided the defendant with an inspection report indicating that the existing roof was leaking and needed to be replaced rather than re-covered.
The contractor who performed the work told the property manager Howard that the existing roof should be torn off because installing a new roof over the existing one, as opposed to tearing off the old roof, would leave the roof susceptible to wind and "uplift" but Howard told him that removing the damaged roof wasn't within the budget and instructed him to install a new roof over the existing one.
After the work was completed, it was impossible to tell what was under the new roof or whether the previous roof was torn off and replaced or covered. Howard hired a new real estate broker Tom to sell the building and, in response to a question by the broker said that he thought the roof was a "tear-off." Howard also approved a listing sheet prepared by the new broker that included the comment: "New roof in 2022 (tearoff)."
In 2023, plaintiff Blue Skies Corp. agreed to buy the building. The contract provided that the plaintiff was accepting the building in "AS IS" condition. The contract contained a 30-day due-diligence period and during that time, the plaintiff inspected the roof and found no evidence that it leaked. After moving into the building, the plaintiff discovered roof leaks. Next year, an entire section of the roof blew off during a storm.

Q1. The plaintiff Blue Skies Corp. filed suit against the Sunshine Bank, alleging non-disclosure and fraudulent misrepresentation. What is the likely result?
Q2. The plaintiff also filed the law suit against the real estate broker Tom, alleging non-disclosure and fraudulent misrepresentation. What is the likely result?

Answer 1

The Sunshine Bank could potentially face a fraudulent misrepresentation case due to false information approved in the building's listing. The 'as is' contract and plaintiff's due diligence inspection may affect the outcome. The real estate broker's liability depends on his knowledge of the roof's condition; if unaware, his liability may be lower.

Step-by-step explanation:

The plaintiff Blue Skies Corp. filed suit against the Sunshine Bank, alleging non-disclosure and fraudulent misrepresentation regarding the condition of the roof. Given the facts that the property manager Howard knew the roof was not a tear-off but represented otherwise, and the Sunshine Bank as trustee approved the listing containing false information, there is a potential fraudulent misrepresentation case against Sunshine Bank. However, the 'as is' clause and the due diligence period during which the plaintiff inspected the roof and did not discover the issue may complicate the plaintiff's ability to prevail on these claims.

Regarding the real estate broker Tom, if he was unaware of the true condition of the roof and relied on Howard's assertion, his liability for fraudulent misrepresentation may be less clear. The principle of caveat emptor (let the buyer beware) and the due diligence conducted by the plaintiff may also diminish the broker's responsibility, particularly if the broker had no reason to suspect the information provided by Howard was inaccurate. Yet if it is proved that he knowingly included false information in the listing, Tom could also be held liable for non-disclosure and fraudulent misrepresentation.