As of January 22, 2017, Mr. Millar is no longer accepting new clients.



Consumer Protection Lawyer

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Consumer Protection Blog

Providing an Opinion is not Consumer Fraud

Plantation Bay, LLC, v. Stewart Title Guaranty Co., 2016 WL 4508228 (DNJ Decided August 29, 2016) 

 In 2004, plaintiff Plantation Bay LLC purchased an 150 acre 18-hole golf course in Somers Point, New Jersey for $9,100,000. Plantation intended to develop the property by replacing the golf course with 550 homes, including affordable housing and a hotel. 

 The golf course was originally constructed in 1923. It was transferred to a new owner in 1927. The 1927 deed contained a restriction which provided that the property “shall be used for no other purpose than a Golf Course." 

 Prior to closing, Plantation engaged a title insurance broker, The Title Company of New Jersey, and a title insurer, Stewart Title Guaranty Company. Stewart provided a title commitment and offered to insure the title for up to $6,752,500. Stewart informed Plantation that the deed restriction was not enforceable and would not prevent development of the property because the deed restriction was a personal covenant between the grantor and the grantee and did not run with the land. Stewart removed the deed restriction from the Schedule B list of exceptions to the title insurance policy. 

 After the closing, in 2004, Plantation applied to the City of Somers Point to develop the property. The development was opposed by a local organization of residents who claimed that the development violated the 1927 deed restriction. Somers Point took no action on Plantation’s application. 

In 2006, Plantation sued Somers Point in the Superior Court as a way to force the City to act on its development application. Stewart title retained counsel to represent Plantation’s interests in the litigation. In 2009, the Court ruled that the deed restriction ran with the land and had not been abandoned. In 2011, the Court ruled that the deed restriction was enforceable. The parties entered into a settlement with the Court modifying the deed restriction to provide that the golf course could be reconfigured to fit on 120 acres and that Plantation could develop the remaining 30 acres. Further, a conservation restriction would be placed on the golf course property ensuring that it could not be developed in the future. 

 Plantation demanded that Stewart pay $6,000,000 in title coverage alleging that the defect in title prevented them from utilizing the property as they intended and that it reduced the value of the property by that amount. Stewart refused to pay. Plantation then sued in the Federal District Court claiming breach of contract, bad faith and a violation of the New Jersey Consumer Fraud Act. 

 Stewart filed a motion to dismiss the Complaint claiming that the contract (the title insurance policy) excluded defects created by the insured and that since Plantation had agreed to settle the Superior Court case with the condition that 120 acres could not be developed, it had created the defect. The District Court rejected this claim and allowed the breach of contract and bad faith claims to go forward. Stewart also moved to dismiss the New Jersey Consumer Fraud Act claim. Plantation alleged that Stewart’s statements that the 1927 deed restriction was not enforceable and did not prevent development of the property were statements of fact found to be false. Here, the District Court disagreed. The District Court found that the statements were opinions and not facts and therefore were not actionable. 

 The District Court stated: 

Defendant’s statement about the enforceability of the 1927 Deed Restriction, while undeniably material to Plaintiff’s decision to purchase its title insurance policy and therefore complete its purchase of the Property, is not a "fact” for the purposes of fraud claims. “[N]ot just any erroneous statement will constitute a misrepresentation prohibited by the [NJCFA]. The misrepresentation has to be one which is material to the transaction and which is a statement of fact, found to be false… .” Gennari 691 A.2d at 366. “[S]tatements of opinion are not misrepresentations prohibited by the CFA.” Baughman v. U.S. Liability Ins. Co., 662 F. Supp. 2d 386, 401 (D.N.J. 2009). The New Jersey Appellate Division summarized the distinction between a representation of fact and an opinion as follows: 

 The distinction between fact and opinion is broadly indicated by the generalization that what was susceptible of exact knowledge when the statement was made is usually considered to be a matter of fact. Representations in regard to matters not susceptible of personal knowledge are generally to be regarded as mere expressions of opinion, and this is held to be so even though they are made positively and as though they are based on the maker’s own knowledge. Usually, also, to say that a thing is only matter of opinion imports that it is unsusceptible of proof. 

 Joseph J. Murphy Realty, Inc. v. Shervan, 388 A.2d 990, 993 (N.J. App. Div. 1978) (quoting 37 Am.Jur.2d, Fraud and Deceit, 46 at 74). As in Baughman, where this Court found “statements of opinion regarding the scope of the insurance policy” insufficient to state a consumer fraud claim, Defendant’s statements regarding the enforceability of the Deed Restriction was not “susceptible of exact knowledge when the statement was made” or a “matter susceptible of personal knowledge.” Defendant’s statements were more akin to legal opinions about enforceability requiring application of principles of law to factual circumstances, but the statements are not themselves facts for the purposes of a consumer fraud claim. Accordingly, the Court will grant Defendant’s motion to dismiss Count III of the Amended Complaint under the NJCFA. 

 Plantation Bay is the rare case where affirmative statements have been found to be non-actionable opinions under the New Jersey Consumer Fraud Act.


Petrosino v. Ventrice, A-0020-13T1 (August 27, 2015)


The Seller and the Listing Broker Do Not Disclose a Prior Death in the Home.

In 2011, Mr. and Mrs. Ventrice listed their Colts Neck home for sale with Coldwell Banker. The listing agent was the Ventrice’s daughter. The home came equipped with an elevator. In 2002, a caretaker’s two young daughters were crushed to death when they became trapped between the cab and the wall of the elevator shaft. Prior to listing the home, the listing agent asked her broker if her parents, the sellers, had to disclose the deaths. She was told that the deaths did not have to be disclosed because they represented a “psychological impairment”. The agent passed this advice onto her parents. The buyers, Mr. and Mrs. Petrosino, were represented by Better Homes Realty. The Petrosinos had four small children between the ages of four and eight. Prior to the purchase, Mr. Petrosino met the Coldwell Banker agent and Mr. Ventrice at the home. Petrofina asked Mulligan if the elevator was safe. Ventrice told Petrofina that the elevator posed no risk and demonstrated its operation. The Coldwell Banker agent said nothing.

The Petrosinos purchased the home in November 2011. Six days after the closing, the Better Homes agent told the Petrosinos that he had just learned of the prior accident and the deaths of the girls in the elevator shaft. The Petrosinos had the elevator inspected, moved out of the house, later moved back in and then had the elevator removed. They sued the sellers and both brokers.


The Trial Court Dismissed the Case Due to Destruction (“Spoliation”) of Evidence.

The trial court dismissed the action because the Petrosinos, by removing and disposing of the elevator, had destroyed evidence that was central to the case and which prejudiced the defendants’ ability to defend the action.

The trial court denied a motion made by Coldwell Banker to dismiss the claims for consumer fraud and negligence arguing that there was no duty to disclose the prior deaths because they were not a physical condition of the property.

The Appellate Court Rules That The Deaths Should Have Been Disclosed by the Realtors for Two Reasons: (1) The Deaths Occurred Due to a Physical Condition of the Property and (2) Realtors® Have a Duty to Disclose all Material Facts Known to Them.

On appeal, the court reversed the dismissal for destruction of evidence and remanded for the trial court to determine if there was a less drastic remedy other than dismissal.

As to the trial court’s denial of the broker’s motion to dismiss the negligence and consumer fraud counts, the Appellate Division upheld the denial of the motion, stating:

Underlying their position that the complaint fails to state a cause of action as to each of these claims is the broker defendants’ contention that the children’s deaths in the elevator in 2002 represented only a “psychological impairment” to the Colts Neck property, which they were under no duty to disclose. We conclude they misapprehend both the nature of the condition and their duties to plaintiffs.

The Appellate Division started with a review of the regulation governing realtor® duties - N.J.A.C. 11:5-6. That regulation requires the disclosure of all “material information” concerning the physical condition of the property either known to the realtor or discoverable after making a reasonable inquiry of the seller and a visual inspection of the property. See N.J.A.C. 11:5-6(b). However, the regulation contains an exclusion for disclosure of “psychological impairments”. Id. (“Information about social conditions and psychological impairments as defined in (N.J.A.C. 11:5-6(d)) is not considered to be information which concerns the physical condition of a property.”). Psychological impairments are defined to include, among other things, murder and suicide. See N.J.A.C. 11:5-6(d). However, the rule further provides that if a specific inquiry is made concerning a psychological impairment, the realtor® has a duty to disclose it. See N.J.A.C. 11:5-6(d)(3) (“(U)pon receipt of an inquiry from a prospective purchaser or tenant about whether a particular property may be affected by a … psychological impairment, licensees shall provide whatever information they know about the … psychological impairments that might affect the property.”).

Turning to the facts of the case, the Appellate Division reasoned that the request made by the Buyer as to whether the elevator was “safe” was an inquiry regarding a physical condition of a major mechanical system of the home - and a system that the court characterized as having “a history of dangerously defective operation”. Thus, the court reasoned, the realtors® had a duty to disclose any history of issues related to that system. Further, although the deaths of the two girls in the elevator shaft in 2002 might be a “psychological impairment”, the realtors® nevertheless had a to disclose all material facts known to them when asked a direct question concerning the event.


The Petrosino case represents a good reminder for New Jersey realtors® of the law regarding disclosure. of both “material facts” and “psychological impairments”. A realtor has a duty to make a reasonable inquiry of the seller, and to perform a visual inspection of the property, to determine material facts related to the property. N.J.A.C. 11:5-6(b). A fact is material if a “if a reasonable person would attach importance to its existence or non-existence in deciding whether or how to proceed in the transaction, or if the licensee knows or has reason to know that the recipient of the information regards, or is likely to regard it as important in deciding whether or how to proceed”. N.J.A.C. 11:5-6(b)(2). Further, although a realtor does not have to disclose psychological impairments such a murder or suicide at the property (See N.J.A.C. 11:5-6(d)), the realtor does have a duty to disclose that information when a specific inquiry is made (See N.J.A.C. 11:5-6(d)(3)).

If there is a “twist” to the Petrosino case, it is that a “psychological impairment” may be so intertwined with a physical condition of the property that it must be disclosed. It is unlikely that a murder or suicide would create such a problem. However, an accident death in a home caused by some physical condition there, may require disclose even absent a specific inquiry about the event.

The Duty to Disclose When a Home is Sold "As is" in New Jersey

Can A Seller Refuse to Provide Information Concerning the Condition of the Seller’s Home When the Home is Sold “As is”?

A homeowner wants to list her home for sale. She states that because she is listing her home in an “as is” condition, she does not have to reveal any information concerning the condition of the home. “As is” means you get what you get - is she correct?

The answer, in a nutshell, is that the homeowner is wrong. In New Jersey, the law requires a seller of residential real estate to disclose all latent material conditions known to the seller and which are not readily observable to a buyer.

Background: Caveat Emptor and the Doctrine of Merger

At one time, there were two legal concepts which largely prevented lawsuits against sellers of real estate who failed to disclose known defects. The first of these was “caveat emptor” – let the buyer beware. Under caveat emptor, property is presumed to be sold as-is and the buyer has the burden, and the legal obligation, to reasonably examine the property before purchase to satisfy himself of its condition. See Freedman v. Kensica Realty Co., 99 N.J.Eq. 115, 118 (Ch. Div. 1926) (“The doctrine of caveat emptor is applicable to the purchase of New Jersey real estate, and is applied as well in equity as at law.”).

The second legal concept was “merger”. Under the doctrine of merger, any promises contained in the contract of sale were said to “merge into the deed” so that the only remedies available to a buyer were those warranties – if any - found in the deed. The term “merger” is probably not an accurate description – it is not that the contract and the deed merge into one document, but rather that the deed replaces the contract. See Bogert v. Citizens First National Bank & Trust Co. of Ridgewod, 131 N.J.L. 218, 222 (E&A 1944) (“It is the general rule that the acceptance of a deed for land is to be deemed prima facie full execution of an executory agreement to convey and that thenceforward the agreement becomes void and the rights of the parties are to be determined by the deed, not by the agreement.”).

Thus, the first doctrine presumed that property was sold “as is” and placed the burden on the buyer to find any hidden defects and the second provided that the only relief available to a buyer after the closing was that provided for in the deed.

The Law Evolves to Place the Burden of Disclosure on the Seller and to Provide Statutory Consumer Protections to Buyers.

Over time, the courts created certain, limited exceptions to the application of caveat emptor and merger to residential real estate transactions. For example, actual fraudulent misrepresentations or intentional concealment of known defects were exception to both caveat emptor and merger. McDonald v. Mianecki, 159 N.J.Super. 1 (App. Div. 1978) aff’d 79 N.J. 275 (1979). In McDonald, a Buyer purchased a newly constructed home and discovered after the closing that the water was not potable (i.e., it was not fit for human consumption). The McDonald court recognized that “the policy reasons … to support the traditional doctrines of merger and caveat emptor are no longer viable” and ruled that the sale of a home comes with certain implied warranties, including the warranty of habitability.

The McDonald case did not address the situation where a Seller knows of a defect but neither makes any misrepresentation concerning it nor takes any action to conceal the defect. That issue was addressed by the New Jersey Supreme Court in Weintraub v. Krobatsch, 64 N.J. 445 (1974). In Weintraub, the Buyer sued the Seller and Seller’s broker for their failure to disclose a roach infestation. The Seller argued that she was under no obligation to disclose defects. The Court rejected the Seller’s argument and created a new rule finding that a Seller has a duty to disclose a latent defect that is “not observable by the the purchasers on their inspection”. Importantly, the Court noted that “silence may be fraudulent” Id. at 455. In 1981, relying on Weintraub, one New Jersey court ruled that caveat emptor was no longer the law of New Jersey. Berman v. Gurwicz, 189 N.J.Super. 89, 93 (Ch.Div.1981) cited with approval in Strawn v. Canuso, 140 N.J. 45, 53 (1995). The courts equate merger with caveat emptor.

Thus, the law in New Jersey today is that a Seller has an affirmative duty to disclose latent material defects. Silence is fraud by omission when the Seller knows of a material defect but fails to disclose it. “Even when selling property ‘as is,’ a seller may not deliberately conceal or fail to disclose a latent condition material to the transaction.” Hackerman v. Larusso & Tozour, LLC, 2015 WL 3476587 (App. Div.)


The concept of caveat emptor is not applicable to residential real estate transactions. The concept of merger does not preclude a claim based on a misrepresentation or a failure to disclose a latent material condition that is not discovered until after closing.

A Seller of real estate in New Jersey has a duty to disclose all known latent, material conditions. A Seller cannot avoid that duty by selling the property “as is”.

Michael T. Millar, Esq.

98 East Water Street • Toms River, N.J. 08753

T: 732-914-9114 • F: 973-457-0269 • E:

A contractor has filed a lien against my home, what can I do?

Homeowner Rights Under the New Jersey Construction Lien Law.

I. Introduction

You hired a contractor to make home improvements - perhaps you were re-doing a kitchen or bathroom - or you hired someone to make substantial repairs after Hurricane Sandy - or you had to entirely replace your home with a stick-built or modular home. Whatever your circumstance, at some point, you had a disagreement with the contractor about the pace or quality of the work. Despite the problems, the contractor kept asking for more money. You told the contractor either that you would not make a payment or that he was fired. Then, the contractor filed a construction lien against your home. What can you do?

II. Background: Understanding the New Jersey Construction Lien Law 

Occasionally, you will hear of a “mechanic’s lien”. In New Jersey, we do not have “mechanic’s liens”, we have “construction liens”. The mechanic’s lien law was replaced with the construction lien law more than 20 years ago. As to residential construction liens, the New Jersey Construction Lien Law establishes a 3 step process that must be followed in order to have a valid construction lien.

(1) The NUB The contractor must file a Notice of Unpaid Balance and Right to File Lien within 60 days of when the contractor last performed work or delivered materials at the subject property. This document is known by the acronym “NUB”. The NUB must also be served on the homeowner.

(2) Arbitration After filing and serving the NUB, the contractor must apply for arbitration with the American Arbitration Association and notify the homeowner of the arbitration. The arbitration will be completed in 30 days or less. The arbitrator will determine if the contractor is entitled to file a construction lien and if a lien is permitted, the arbitrator will determine the amount of the lien. Note that the arbitration does not decide the underlying dispute - it is not a decision that the contractor is entitled to any money. Rather, it simply decides if the contractor is permitted to file a lien. In order to get paid, the contractor must sue the homeowner in the Superior Court after the lien is filed and within one year of the date that the contractor was last on site.

(3) The Lien Only after filing a NUB and completing arbitration, may the contractor file a residential construction lien. The lien must be filed within 120 days of when the contractor last performed work or delivered materials at the subject property. The construction lien must be served on the homeowner.

III. How To Attack A Construction Lien Claim

A. Did The Contractor First File A NUB And Complete Arbitration?

A construction lien is illegal and may be discharged if the contractor did not follow the required procedure. If the contractor did not file a NUB or complete arbitration the lien is illegal and unenforceable. County recording officers do not require proof that a contractor has followed proper procedure before filing a lien. Thus, your first area of inquiry should be to investigate whether a NUB was filed and whether arbitration was completed. You can often determine this by simply looking at the construction lien document itself. There are areas on the form that request the contractor to fill in the date the NUB was filed and the book and page number where it is recorded. If those lines are left blank, it is a good indication that a NUB was never filed. Likewise, there is an area on the construction lien form that requests that the contractor fill in the date of the arbitration and the amount of the arbitration award. Again, if these lines are left blank, it is a good bet that the contractor did not complete the required arbitration prior to filing the lien. Several New Jersey counties have their land records online. You can search these websites to see if there is a NUB filed against your property. If your county’s records are not online, you could go the clerk’s office and perform a search or ask that a title company do a search for you for a nominal cost. See: []

B. Is The Construction Lien Time Barred?

A construction lien is valid for one year from the date when the contractor last performed work or delivered materials at the subject property (not from the date of the filing of the lien). Given that it can take up to 120 days to file a lien, this means that a filed lien may only be effective for approximately 8 months before it expires and is no longer valid. If the contractor has not filed a lawsuit against you in the Superior Court, the second step should be to investigate the date that the contractor claims he last performed work or delivered materials at the subject property. This date is found right on the construction lien itself. If more than one year has passed, then the lien is no longer valid. Further, you do not have to accept the contractor’s claim of when he was last on the job site. If you have evidence that the contractor had not been on the job for more than 120 days from the filing of the construction lien claim, you may assert that the lien is void because it was filed out of time. If the contractor has not filed a lawsuit to foreclose on the lien, the Construction Lien Law imposes an affirmative duty upon contractors to file a discharge of lien after the on year period has elapsed.

C. Was There a Written Contract?

A contractor can only assert a construction lien for money owed pursuant to a written contract. If there was no written contract, then the contractor may not file a construction lien claim. Pursuant to the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., verbal contracts for home improvements in excess of $500 are illegal in New Jersey.

The three challenges set forth above are not an exhaustive list of the possible challenges to a construction lien claim. There are other challengers to a construction lien. However, the three set forth above represent the most common challenges to a residential construction lien.

IV. How Can I Have a Construction Lien Removed?

A construction lien can interfere with your ability to sell the property, to obtain a mortgage or to get certain grants associated with storm repair (e.g. RREM). Thus, you do not want a construction lien - even an expired one - to remain on your property. There are four ways to have a construction lien removed: (A) post a bond, (B) make a deposit into court, © file an Order to Show Cause, and (D) sue the contractor in Superior Court.

A. Posting a Bond

Posting a bond requires that you go to a licensed bonding company to pay 110 per cent of the lien plus the bonding company fees. In the residential context, this method is rarely used due to the costs involved. However, in certain circumstances it makes sense - for example, when you need to get a mortgage, a government grant (e.g., RREM), or sell the home. In those circumstances, posting a bond may be the fastest way to clear the title to your home. Once the bond is posted, the bonding company will receive a document from the Clerk of the Superior Court in Trenton stating that the lien may be discharged of record. To get your money back from the bonding company, you will then have to go to court to get an Order discharging the lien (the lien will be previously discharged by the bond, the order permits the bond to be released so that you can get your money back). The turn around time from the filing of the bond to the discharge of the lien is typically 2-3 weeks.

B. Depositing Funds into Court

You can avoid bonding company fees by depositing 110 per cent of the lien amount with the Clerk of the Superior Court in Trenton. Not everyone has the ability to do this. For example, if the lien is for $50,000. You would have to write a check for $55,000 to the Clerk of the Superior Court - and pay, by a second check, a $25 transaction fee (as of 2015). Depositing funds into court may the fastest way to release a lien - but it is so rarely used that it has been my experience that the Clerk’s office is unfamiliar with the process. In every other circumstance, to deposit funds into court requires a pending lawsuit and corresponding docket number. The Construction Lien Law permits you to deposit funds into court without first filing a lawsuit against the contractor. Like posting a bond, depositing funds into court will result in a document issued by the Court Clerk, which permits the lien to be discharged. The funds will remain on deposit with the Court Clerk until you get a court order discharging the lien or the contractor gets a judgment against you. The turn around time from the depositing of funds into court to the discharge of the lien is typically 2-3 weeks.

C. Filing an Order to Show Cause

If the facts show that either the line was filed with first either filing a NUB or completing arbitration, or if more than 12 months have elapsed from when the contractor claims he was last on the property, then you may apply in the Chancery Court to discharge the lien in a summary proceeding known as an “Order to Show Cause”. In an Order to Show Cause, you file both a motion and a Complaint seeking discharge of the lien. On the return date - typically 4-6 weeks - the Court has the ability to enter an order discharging the construction lien and awarding you attorney fees and costs. If the lien is invalid and if the contractor counter - sues for breach of contract, the Court will discharge the lien and transfer the contract action to the Law Division of the Superior Court to proceed as any other lawsuit would.

D. File a Lawsuit

If you are not time pressed to remove the construction lien, and if you have other claims against the contractor, you may simply file a lawsuit against the contractor. Depending on the amount in controversy and the complexity of the facts and law, it typically take 1 - 3 years for the dispute to be resolved. As indicated above, if the lien was wrongly filed, you are entitled to attorney fees and court costs to have it removed.

V. Conclusion

So, a contractor has filed a construction lien against your home. You have options. You have rights. If there was no NUB or no arbitration, the lien is void. It is illegal. If more than one year has elapsed. The lien has expired and is no longer valid. It is illegal. If the lien is defective, the law provides that the contractor must pay your reasonable attorney fees and costs to have it removed. If you are time pressed, you can either bond over the lien or deposit funds into court to discharge the lien. If you have a few months, you can file an Order to Show Cause to discharge the lien in the Chancery Division of the Superior Court. If time is not an issue, you can sue the contractor in the Law Division of the Superior Court.

Michael T. Millar, Esq.

98 East Water Street • Toms River, N.J. 08753

T: 732-914-9114 • F: 973-457-0269 • E:

Huston v Lieber

Bankruptcy and the New Jersey Consumer Fraud Act

Is a judgment obtained under the New Jersey Consumer Fraud Act dischargeable in bankruptcy?


Can a Consumer Fraud Act judgment be discharged in bankruptcy?


Violations of the New Jersey Consumer Fraud Act

To violate the New Jersey Consumer Fraud Act, a person must commit “an unlawful practice”. Unlawful practices fall into three general categories: affirmative acts, knowing omissions, and regulation violations. The first two are found in the language of N.J.S.A. 56:8–2, and the third is based on regulations enacted under N.J.S.A. 56:8–4. A practice can be unlawful even if no person was in fact misled or deceived thereby. The capacity to mislead is the prime ingredient of all types of consumer fraud. The New Jersey Supreme Court has stated:

When the alleged consumer-fraud violation consists of an affirmative act, intent is not an essential element and the plaintiff need not prove that the defendant intended to commit an unlawful act. However, when the alleged consumer fraud consists of an omission, the plaintiff must show that the defendant acted with knowledge, and intent is an essential element of the fraud.

Cox v. Sears Roebuck & Co., 138 N.J. 2, 17–18 (1994) (internal citations omitted).

Affirmative acts include unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation. N.J.S.A. 56:8–2. Concealment, suppression, or omission of any material fact constitute acts of omission. Id. The principle distinction between the affirmative act and knowing omission categories is that intent is not a requirement for establishing an affirmative act of consumer fraud, but for acts of omission requires proof that a defendant had knowledge and acted with intent. *Cox, supra, *138 N.J. at 17–18; *see also, Fenwick v. Kay American Jeep, Inc., *72 N.J. 372, 377–378 (1977).

Discharge of Judgments in Bankruptcy

The Bankruptcy Code provides that a debtor may not obtain a discharge “for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.” 11* U.S.C.* § 523. In order to prevent a discharge, § 523(a)(2)(A) requires proof of actual fraud. One objecting to a discharge must establish the following elements:

(1) the debtor obtained money, property or services through a material misrepresentation; (2) the debtor, at the time of the transaction, had knowledge of the falsity of the misrepresentation or reckless disregard or gross recklessness as to its truth; (3) the debtor made the misrepresentation with intent to deceive; (4) the plaintiffs reasonably relied on the representation; and (5) the plaintiffs suffered loss, which was proximately caused by the debtor’s conduct.

In re Cohen, 185 B.R. 180, 182 (Bankr.D.N.J.1995) aff’d, 191 B.R. 599 (D.N.J.1996).


Common Law Fraud versus Fraud Implied in Law

The New Jersey Consumer Fraud Act (CFA) is wrongly named. A better name for the law would be the New Jersey Consumer Protection Act. That is because the CFA has the word “Fraud” in its name when the CFA does not require that a fraud be committed in order to violate it. The use of the word “Fraud” in the name of the law has confused many.

As indicated above, the CFA may be violated in any one of three ways: affirmative acts, omissions or the violation of a regulation promulgated pursuant to the CFA itself (i.e., not all regulatory violations are CFA violations — rather, it only those that are promulgated pursuant to N.J.S.A. 56:8-4 that will give rise to a per se violation of the CFA). An “affirmative act” may be a negligent misrepresentation of fact. So, for example, in Vagias v. Woodmont Properties, LLC, 384 N.J.Super. 129 (App. Div. 2006), a realtor was held liable under the CFA for wrongly stating to a buyer that a home was located in the “Montville section” of Montville when it was located in a different section of the town. The facts indicated that the realtor did not know that the statement was incorrect and that she had no intent to deceive the buyer — i.e., it was a negligent misrepresentation. Similarly, a violation of regulations promulgated pursuant to the CFA, do not require a showing any intent or improper motive but instead impose strict liability for their violation. See, for example, Huffmaster v. Robinson, 221 N.J.Super. 315, 320-321 (Law Div. 1986) (auto repair) (“Robinson’s failure to comply with (N.J.A.C. 13:45A-7.2) violated the Consumer Fraud Act. His good faith makes no difference.”); Allen v. V and A Brothers, Inc., 208 N.J. 114 (2011) (home improvements) (“The ‘Home Improvement Practices’ regulations set forth a variety of acts or omissions that, by definition, ‘shall be unlawful,’ N.J.A.C. 13:45A-16.2(a), and that therefore constitute violations of the CFA. The first of the regulations at issue in this appeal relates to the requirement that home improvement contracts, and all changes to those contracts, be in writing, be signed by the parties, and include specific information”).

At least one court has opined that common law fraud is always consumer fraud, but the opposite is not true — consumer fraud is not always common law fraud. See In re Iannelli, 2009 WL 3230774 (Bankr.D.N.J.) (“While a finding of common law fraud … will almost always support a finding of a violation of the Consumer Fraud Act, the reverse is not always true”). The strict liability imposed for violation of a CFA regulation, and the imposition of CFA liability for a negligent act or misrepresentation, are known as a “fraud implied in law”. The distinction between common law fraud and fraud implied in law is important when it comes to bankruptcy. That is because common law fraud is non-dischargeable, whereas fraud implied in law is dischargeable.

In bankruptcy court, the burden of proof is on the party challenging the dischargeability of a debt. The party challending the discharge must prove five elements: (1) the Debtor obtained money, property or services through a material misrepresentation; (2) the Debtor, at the time of the transaction, had knowledge of the falsity of the misrepresentation or reckless disregard or gross recklessness as to its truth; (3) the Debtor made the misrepresentation with intent to deceive; (4) the Plaintiff relied on the representation; and (5) the Plaintiff suffered loss, which was proximately caused by the Debtor’s conduct. De La Cruz v. Cohen (In re Cohen), 185 B.R. 180, 186 (Bankr.D.N . J.1995), aff’d, 191 B.R. 599 (D.N.J.1996); aff’d, 106 F.3d 52 (3d Cir.1997); aff’d, 523 U.S. 213 (1998).

Practice Pointer

As a practical matter, in order to avoid a discharge in bankruptcy, the best course of action starts in the trial court and prior to the entry of judgment. The Complaint must plead CFA violations in the alternative — i.e., the CFA claim must plead not only a negligent misrepresentation or a regulatory violation but also the five elements set forth in the In re Cohen matter. Furthermore, at trial, the jury verdict sheet and the form of judgment should reflect a finding of that the five elements are present. In re Santos, 304 B.R. 639, 651 (Bankr.D.N.J.2004) (“Exception to discharge based upon 11 U.S.C. 523(a)(2)(A) requires a showing of actual fraud, not merely fraud that would be implied in law”); See See In re Iannelli, supra, (discharging a CFA judgment obtained where the debtor was a home improvement contractor who failed to procure written change orders in violation of CFA regulations).


Is a CFA judgment dischargeable in bankruptcy? It depends. If the judgment is for a negligent act or premised upon a regulatory violation, then it may be dischargeable. If the CFA judgment is premised upon an intentional bad act — i.e., it is based on act that would establish the elements of common law fraud, then it may not be dischargeable.

Court Rules That A Realtor® May Be Sued Under Fair Debt Collection Practices Act For Collecting Rents

Greaves v. Ann Davis Associates, Inc. , 2015 WL 668227 (NJ District Court)

In a decision released on 17 February 2015 by the United States District Court for the District of New Jersey, the court ruled that Realtors® may be subject to the Fair Debt Collection Practices Act if they are regularly engaged in collecting rents on behalf of a landlord.


ERA Central Realty Group, and its agent Anjani Kumar, listed a rental home in Bordentown, New Jersey. On 5 August 2012, Patricia Greaves and her spouse rented the property for a term of two years.

Ms. Greaves was a US Army officer. In 2013, she received a mobilization order which included an annual salary of $84,000.

In August 2013, Ms. Greaves was ten days late with the rent. She was contacted by both the landlord and the rental agent, who sought the rent and a late fee. The real estate agent also called Ms. Greaves’ military superiors and informed them that Ms. Greaves was late on her rent and communicated to them that they needed to “handle” Ms. Greaves and the issue of her failure to pay rent. The military superiors told Ms. Greaves that given the information supplied by the real estate agent, they questioned her ability to handle her finances and her ability to complete the tasks required by the mobilization order. Soon thereafter, Ms. Greaves’ mobilization order was revoked along with the $84,000 salary.

The Lawsuit

Ms. Greaves sued both the broker and the agent under the Fair Debt Collection Practices Act (FDCPA). 15 U.S.C. Sec. 1692 et seq. To bring a FDPCA claim, a plaintiff must show that: (1) the defendant is a “debt collector,” and (2) the defendant engaged in prohibited practices in an attempt to collect a debt. A “debt collector” is defined under the FDCPA as:

[A]ny person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due [to] another.

15 U.S.C. Sec. 1692(a)(6).

The broker and agent filed a motion to dismiss the complaint alleging that they were not a “debt collector” under the FDCPA. They maintained that the “principal purpose” of their business was not debt collection but was brokering real estate transactions.

While it is clear that the FDCPA does not apply to an isolated instance of collecting a debt for another, it is equally clear that the FDPCA does apply to businesses and individuals who “regularly engage” in debt collection evem when debt collection is not the “principal purpose” of the business. Thus, for example, banks and law firms have been held liable for the FDCPA when it has been shown that they regularly attempt to collect debts of another. See Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489 (1995) (FDCPA applies to attorneys who regularly engage in consumer-debt-collection activity); Oppong v. First Union Mortg. Corp., 215 F. App’x 114, 119–120 (3d Cir.2007) (FDCPA applies to bank even where debt collection represents an extremely small portion of its business).

The Court’s Decision

The Court held that a Realtor® could be held liable under the FDCPA if the Realtor® regularly engages in debt collection on behalf of a client. Thus, the court denied the Realtors’ motion to dismiss the complaint. The court permitted the plaintiff to conduct discovery to determine if the broker and agent were regularly engaged in debt collection on behalf of their landlord clients.

###What This Means For NJ Realtors®

The Greaves case stands for the proposition that if a real estate broker or agent is regularly engaged in collecting rents on behalf of their landlord clients, they may be subject to the requirements of the federal Fair Debt Collection Practices Act.

Prior case law appears to indicate that one who acts as a “property manager” for an owner of real property is not a “debt collector” under the FDCPA - this is so even where the property manager regularly collects rent and back rent. In Greaves, it appears that the real estate agent was not acting as a property manager but was instead attempting to “help” a client collect rent where the agent had no contractual duty to do so. It is the real agent’s alleged zeal in helping the client collect a debt owed to the client that has placed the agent - and the agent’s broker - in hot water.

Is a NJ Realtor® Required to Disclose a Murder or a Suicide at a Listed Property?

The PA Supreme Court rules that there is no duty to disclose a murder or suicide that occurred in a residential property listed for sale.

Every New Jersey Realtor® has a duty to “make [a] reasonable effort to ascertain all material information concerning the physical condition of every property for which he or she accepts an agency.” N.J.A.C. 11:5-6.4(b). A “reasonable effort” has two requirements”: (1) inquiries of the seller or the seller’s agent concerning physical conditions that affect the property, and (2) a visual inspection of the property to determine if there are any readily observable conditions that affect the property. N.J.A.C. 11:5-6.4(b)(1). “[I]nformation is ‘material’ if a reasonable person would attach importance to its existence or non-existence in deciding whether or how to proceed in the transaction, or if the [Realtor®] knows or has reason to know that the recipient of the information regards, or is likely to regard it as important in deciding whether or how to proceed.” N.J.A.C. 11:5-6.4(b)(2). Finally, New Jersey Realtors® have a duty to “disclose all information material to the physical condition of any property which they know or which a reasonable effort to ascertain such information would have revealed”. N.J.A.C. 11:5-6.4©.

In a nutshell, every Realtor® has a duty to investigate a property for physical conditions that a reasonable person would find important when deciding to purchase the property, and if the Realtor® has reason to know of any special needs or concerns of a client, the Realtor® must investigate for those concerns too. Furthermore, a Realtor® has a duty to divulge those material facts in his or her knowledge to potential buyers.

Is a murder, a suicide or a murder-suicide a “physical condition that affects the property” so that a Realtor® must disclose the event to a potential buyer?

No New Jersey court has ruled on the issue. However, in the Summer of 2014, the Pennsylvania Supreme Court addressed this very issue. Milliken v. Jacono, 103 A.3d 806 (PA 2014).

In Milliken, in February 2006, a prior homeowner shot and killed his wife in the home and then turned the gun on himself and committed suicide. In September 2006, Mr. and Mrs. Jacono purchased the home from the estate of the prior owners for $450,000 - which amount represented a savings of over $100,000 from the fair market value. The Jaconos then invested several thousand dollars to clean and renovate the home. They listed the property for sale in June 2007. At the time of the listing, they informed the broker of the prior murder-suicide. The Jaconos also asked their attorney and the Pennsylvania Real Estate Commission if they were legally obligated to disclose the murder-suicide. Both the attorney and the Real Estate Commission informed the Jaconos that a murder-suicide was not a “material defect” that had to be disclosed. The real estate broker also contacted the Real Estate Commission and was told the same thing. After receiving the opinion of their attorney and the Real Estate Commission, the Jaconos completed and signed a Seller’s Property  Disclosure Statement, which did not disclose the prior murder-suicide.

Also in June 2007, Ms. Milliken, a resident of California who was unfamiliar with the murder-suicide at the property in Pennsylvania, viewed the home and received a copy of the Seller’s Disclosure. She entered into a contract to purchase the home. She asked her real estate agent about why the Seller had paid only $450,000  just a year and a half before her contract for $610,000 to purchase the same home. The agent stated that perhaps the Jaconos had purchased the property from a mortgage foreclosure. Despite being provided with title documents showing that the Jaconos had purchased the home from an estate, Ms. Milliken made no further investigation concerning the prior owners. After the closing of title, and after moving into the home, Ms. Milliken was informed that there had been a murder suicide in her home less than two years prior to her purchase.

Ms. Milliken sued the Jaconos and the real estate brokers for the non-disclosure of the murder-suicide. Both the Jaconos and the real estate broker filed motions to dismiss the claims on the grounds that a murder-suicide was not a “material defect” of the property. The trial court granted the motions and dismissed the claims. Ms. Milliken then appealed the trial court’s decision. The appeal eventually made its way all the way up to the Pennsylvania Supreme Court, which stated they would review the trial court’s decision to determine “whether the occurrence of a murder/suicide inside a house constitutes a material defect of the property” that must be disclosed to potential buyers.

The Pennsylvania Supreme Court ruled that a murder-suicide is not a material defect that had to be disclosed to potential buyers. The Court reasoned:

“Regardless of the potential impact a psychological stigma may have on the value of property, we are not ready to accept that such constitutes a material defect. The implications of holding that non-disclosure of psychological stigma can form the basis of a common law claim for fraud or negligent misrepresentation, or a violation of the [Consumer Protection Law’s] catch-all, even under the objective standard posited by appellant, are palpable, and the varieties of traumatizing events that could occur on a property are endless. Efforts to define those that would warrant mandatory disclosure would be a Sisyphean task. One cannot quantify the psychological impact of different genres of murder, or suicide — does a bloodless death by poisoning or overdose create a less significant "defect” than a bloody one from a stabbing or shooting? How would one treat other violent crimes such as rape, assault, home invasion, or child abuse? What if the killings were elsewhere, but the sadistic serial killer lived there? What if satanic rituals were performed in the house?
It is safe to assume all of the above are events a majority of the population would find disturbing, and a certain percentage of the population may not want to live in a house where any such event has occurred. However, this does not make the events defects in the structure itself. The occurrence of a tragic event inside a house does not affect the quality of the real estate, which is what seller disclosure duties are intended to address. We are not prepared to set a standard under which the visceral impact an event has on the populace serves to gauge whether its occurrence constitutes a material defect in property. Such a standard would be impossible to apply with consistency and would place an unmanageable burden on sellers, resulting in disclosures of tangential issues that threaten to bury the pertinent information that disclosures are intended to convey.“

Milliken v. Jacono, 103 A.3d at 810.

In New Jersey, the duty to disclose is not limited to Real Estate Commission regulations. Rather, New Jersey courts have also imposed upon New Jersey Realtors a common law duty to disclose. In Weintraub v. Krobatsch, 64 N.J. 445 (1974), the New Jersey Supreme Court quoted with approval, a holding by the Tennessee Supreme Court, which stated that: a real estate broker or agent “is not only liable to a buyer for his affirmative misrepresentation and intentional misrepresentations to a buyer, but he is also liable for mere non-disclosure to the buyer of defects known to him and unknown and unobservable by the buyer.” Id. at 454 quoting Simmons v. Evans, 185 Tenn. 282, 206 S.W.2d 295 (1947). The Weintraub case dealt with an insect (roach) infestation, and the Simmons matter dealt with limited water service to the home. Thus, both cases dealt with a “physical condition” of the property. Arguably, the Weintraub case does not broaden the Real Estate Commission disclosure requirement found in N.J.A.C. 11:5-6.4 to conditions that are not “physical”.

The ruling of the Pennsylvania Supreme Court in Milliken v. Jacono, supra, is not binding on New Jersey courts. Until a New Jersey court decides the issue, the safest course of action is to disclose any adverse fact regarding a listed property that is known to the Realtor®.

Does a Realtor® Violate the New Jersey Consumer Fraud Act When He or She Provides a Seller’s Property Condition Disclosure Statement to a Buyer, Which Contains a Misrepresentation Made by a Seller?

Holt v. Laube, 2011 WL 6141466 (App. Div., Dec. 12, 2011) (NO. A-1331-10T2) certif. den. 210 N.J. 108 (2012).

By: Michael Millar, Esq.


The most common claim made against real estate brokers and agents in New Jersey is an alleged violation of the New Jersey Consumer Fraud Act (the “CFA”). [EN1]

The CFA provides for a mandatory award of treble (3X) damages and payment of the plaintiff’s attorney fees and costs when the plaintiff proves both a violation of the Act and damages arising from the violation. [EN2] New Jersey courts have created an exception to the CFA, finding that homeowners are not liable under the CFA when they sell their own home. [EN3] However, the courts have further ruled that real estate brokers and agents are subject to the CFA and that they may be liable for repeating a misrepresentation of fact first communicated to them by the seller. [EN4] Thus, the real estate broker and agent may be liable when the seller is not – and where the seller is the source of the alleged misrepresentation.

The CFA’s promise of enhanced, punitive damages and attorney fees against real estate brokers and agents provides a powerful incentive to sue the broker and agent in any dispute between a buyer and a seller of real estate.

One issue facing New Jersey Realtors® is whether, simply by providing a Seller’s Property Condition Disclosure Statement to a buyer, a Realtor® commits an act of consumer fraud if the seller has made a misrepresentation of fact in the disclosure.

The Three Types of CFA Violations

The CFA provides, in relevant part, that:

“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 … real estate, … is declared to be an unlawful practice…”


CFA violations fall into three basic categories.

The first category is an affirmative misrepresentation of fact. An affirmative misrepresentation violates the CFA even when made without knowledge that the statement is untrue and when made with no intent to mislead. [EN6]

The second category is a “knowing omission” or concealment of a material fact, accompanied by the intent that others rely upon the omission or concealment. [EN7]

The third category is a violation of a specific regulation promulgated under the CFA. In this last category, the unlawful practice may be proven without the need to show intent. [EN8] The third category of CFA violation, a regulatory violation, is only applicable to regulations enacted by the New Jersey Division of Consumer Affairs (“DCA”) under the CFA. [EN9] The regulations setting forth the duties of New Jersey Realtors® - e.g., N.J.A.C. 11:5-6 - are not enacted by the DCA and are not enacted under the CFA. Rather, the New Jersey Real Estate Commission is responsible, under its own rule making authority, for enacting regulations governing the duties of Realtors®. [EN10] Therefore, violating a regulation enacted by the New Jersey Real Estate Commission is not a violation of law and is not an act of consumer fraud. [EN11]

Having eliminated the third category - regulatory violations - as a means of CFA liability for Realtors®, leaves only the first two categories - affirmative misrepresentations and knowing omissions. Virtually every case brought against a New Jersey real estate broker and/or agent involves either a claim that the broker/agent misrepresented some fact to the plaintiff or that the broker/agent had knowledge of a material fact but failed to disclose it. [EN12]

The CFA Safe Harbor

Because, among other reasons, a Realtor® may be found liable under the CFA for repeating a statement made by his or her client - and the client has no CFA liability for making the statement - the New Jersey Association of Realtors® successfully lobbied the New Jersey legislature to pass an amendment to the CFA - a Realtor® “Safe Harbor” - which shields the Realtor® from treble damages and attorney fees for conveying information supplied by a Seller to the Buyer if the Realtor® follows certain steps. [EN13] The CFA Safe Harbor led to the creation of the Seller’s Property Condition Disclosure Statement (the “Seller’s Disclosure”). From the perspective of real estate brokers and agents, the primary purpose of the Seller’s Disclosure is to shield them from CFA punitive damages if they are sued. To qualify for the CFA Safe Harbor, the Realtor® must meet the following four conditions:

  1. Does not know of the defective condition. (A Realtor® always has a duty to disclose all material facts known to the Realtor® [EN14]);

  2. Obtains a Seller’s Disclosure completed solely by the seller;

  3. After obtaining the Seller’s Disclosure, performs a visual inspection of the property and the home to see if anything differs from what is represented by the seller in the Seller’s Disclosure;

  4. Provides the Seller’s Disclosure to the buyer prior to the conclusion of attorney review.


What Happens to the Realtor® When the Seller’s Disclosure Contains a Misrepresentation of Fact Made by the Seller?

The Seller’s Disclosure contains over 100 questions. The Seller’s Disclosure is both a blessing and a curse. It is a blessing because it may shield a New Jersey Realtor® from punitive damages and attorney fees under the CFA. It may be a curse because it may expose the Realtor® to CFA liability for misrepresentations made by a seller concerning a myriad of issues that the Realtor® would otherwise make no representation whatsoever.

Some plaintiff’s attorneys have argued that the mere conveyance of a Seller’s Disclosure is an act of consumer fraud made by the Realtor® if the Seller’s Disclosure contains a misrepresentation made by the seller. The law is unsettled on this point. There is no published decision by any court in New Jersey - as of January 2015 - that provides guidance. There is, however, an unpublished decision, made by the New Jersey Appellate Division that discusses the issue. [EN16]

New Jersey, like the federal government, has three levels of courts - the Law Division (trial court), the Appellate Division (mid-level appellate court) and the Supreme Court (highest court). The decision of a higher court on an issue is controlling on a lower court. A trial court must follow a decision made by the Appellate Division. However, there is a difference between a published and an unpublished decision. A published decision must be followed. An unpublished decision is merely “persuasive authority” - i.e., it is instructive, but it does not have to be followed.

The Holt v. Laube Case

In October 2002, plaintiffs, Mr. & Mrs. Holt, expressed an interest in purchasing a home owned by Mr. & Mrs. Laube. Coldwell Banker represented the seller. Re/Max represented the buyer. A Contract of Sale was completed and Coldwell Banker provided a Seller’s Disclosure to plaintiffs. In December 2002, while the contract with the Holts was pending, Mr. & Mrs. Laube conveyed the property to a relocation company – Primacy. Primacy completed a second Seller’s Disclosure and provided it to the Holts along with the original Seller’s Disclosure prepared by the Laubes. The Primacy Seller’s Disclosure stated Primacy was a relocation company, had not lived in the property and that it made no representations or warranties concerning the property. After the purchase, a retaining wall on the property collapsed. The Holts sued alleging the Laubes had made misrepresentations in their Seller’s Disclosure concerning the construction of the retaining wall and that both Coldwell Banker and Primacy had committed consumer fraud by providing them with a copy of the Laubes’ Seller’s Disclosure. As to Primacy, the trial court dismissed the CFA claim finding the statements made in the Seller’s Disclosure were not made by Primacy. The Appellate Division upheld that ruling. [EN17] The Appellate Division stated:

“Plaintiffs nevertheless allege that Primacy is liable under the CFA for affirmative misrepresentations allegedly made by the Laubes in their SDS, which Primacy had provided to plaintiffs. However, those statements were made by the Laubes, not Primacy. Here, Primacy did not make any representations as to whether the Laubes had obtained all permits required for the construction of the retaining walls. Although Primacy furnished plaintiffs with a copy of the Laubes’ SDS, Primacy never indicated that the Laubes’ statements were accurate or acceptable. … We therefore conclude that the trial court correctly determined that Primacy was entitled to summary judgment.”


In Holt, after affirming the summary judgment order dismissing the CFA claim against Primacy, the Appellate Division next turned to the consumer fraud claim asserted against the real estate broker – Coldwell Banker. The plaintiffs argued both that the real estate broker had an obligation to investigate inconsistent statements made in the Seller’s Disclosure and that the real estate broker had made a misrepresentation to the plaintiffs by conveying the Seller’s Disclosure to them. The Appellate Division rejected both arguments stating:

“We next consider plaintiffs’ contention that the trial court erred by dismissing their CFA claims against Coldwell. Plaintiffs assert that the Laubes made inconsistent statements on their SDS and Coldwell had a duty to investigate those inconsistencies. Plaintiffs claim that these inconsistent statements constitute affirmative material misrepresentations by Coldwell that violate the CFA. We are not persuaded by these arguments.


… Furthermore, there is no basis for a claim against Coldwell based on a failure to disclose material facts regarding any deficiency in the retaining walls. As the trial court noted, there was no evidence that Coldwell was aware of any problem with the retaining walls and acted to conceal it. We are therefore convinced that the trial court correctly determined that Coldwell was entitled to summary judgment.”


In Holt, the Appellate Division ruled that a Realtor® does not make a “representation” by conveying a Seller’s Disclosure to a buyer. Rather, a plaintiff must show either that the Realtor® made a representation, found to be false, independent of the Seller’s Disclosure or that the Realtor® had actual knowledge of a defective condition that was not disclosed.

Other Reasons a Seller’s Disclosure Should Not Create Realtor® Liability.

In Holt, the Appellate Division ruled that a Realtor® does not make a representation in a Seller’s Disclosure - and that without a representation there can be no misrepresentation. However, that is not the only argument that could or should be advanced for why a Realtor® should not be found to have violated the CFA by providing a Seller’s Disclosure to a buyer.

(1) The Seller’s Disclosure Expressly Provides that the Realtor® Does Not Make a Factual Representation in the Form.

The text of the Seller’s Disclosure expressly provides that all answers are provided solely by the seller. A buyer cannot read the Seller’s Disclosure and then claim they reasonably believed the representations made in the disclosure were made by the Realtor®.

The Sellers Disclosure states on the first page:

The purpose of this Disclosure Statement is to disclose, to the best of Seller’s knowledge, the condition of the property…. Seller alone is the source of all information contained in this form…

While it is true that a Realtor® signs a Seller’s Disclosure, the Realtor does so in order to further inform the Buyer that the information in the Disclosure is provided solely by the Seller.


The undersigned Seller’s real estate … salesperson acknowledges receipt of the Property Disclosure Statement form and that the information contained in the form was provided by the Seller.

Thus, a plain reading of the Seller’s Disclosure indicates that all of the representations concerning the condition of the property are made by the Seller alone.

(2) The CFA Safe Harbor Does Not Create a New Type of CFA Violation

Plaintiffs may argue that the CFA Safe Harbor speaks of a Realtor's® liability for communicating false information provided by a seller to a buyer. However, the CFA Safe Harbor does not create a new class of consumer fraud violations. The CFA Safe Harbor does not define what acts or omissions constitute a violation of the CFA.

CFA violations are defined at N.J.S.A. 56:8-2 (misrepresentations and knowing omissions) and N.J.S.A. 56:8-4 (certain regulatory violations). There are no CFA violations defined in N.J.S.A. 56:8-19.1 (the CFA Safe Harbor),

In context, N.J.S.A. 56:8-19.1 supplements N.J.S.A. 56:8-19, which defines damages. N.J.S.A. 56:8-19.1 - the CFA Safe Harbor - defines an exception to the damages required by the CFA.

The CFA Safe Harbor sets forth what steps a Realtor® must take to be shielded from punitive damages and attorney fees - if the Realtor® has committed a violation of N.J.S.A. 56:8-2 (affirmative misrepresentations and knowing omissions). The CFA Safe Harbor does not state that by complying with the requirements of the CFA Safe Harbor - _ i.e._ , by providing a Seller’s Disclosure - a Realtor® has committed an act of consumer fraud. Rather, the CFA Safe Harbor merely defines what steps must be taken to be shielded from the punitive damages mandated by the CFA.

(3) A Finding That the CFA Safe Harbor Creates Liability Requires an Illogical Interpretation of the Statute.

In enacting the CFA Safe Harbor, the New Jersey Legislature created certain requirements – e.g., the seller alone must complete the Seller’s Disclosure and that the Realtor then must provide the Seller’s Disclosure to the buyer - that a Realtor® must follow to avoid punitive damages. A plaintiff who argues that a Realtor has committed an act of consumer fraud by providing the Seller’s Disclosure to the Buyer, is arguing that the New Jersey Legislature intended and required that Realtors® commit acts of consumer fraud against New Jersey consumers so that the Realtor® can then be shielded from punitive damages for their acts of consumer fraud. That makes no sense. The purpose of the CFA is to reduce instances of consumer fraud and to punish those who commit acts of consumer fraud. It is illogical to interpret the CFA Safe Harbor so that it is intended to require that more acts of consumer fraud be committed and that those who commit acts of consumer fraud should then be shielded from the punitive damages required by the CFA.

A court must interpret a statute in such a way that it does not lead to illogical or absurd results. [EN20] It makes no sense to interpret the statute - the CFA Safe Harbor - to mean that the New Jersey Legislature intended that a Realtor® must first commit an act of consumer fraud before a Realtor® can be shielded from punitive damages. It is an illogical and absurd reading of the statute. A more logical reading of the statute would be that providing a Seller’s Disclosure - which is required by the CFA Safe Harbor - is not an act of consumer fraud.

A Seller’s Disclosure Should be Used in Every Transaction.

Regardless of how the issue plays out in the courts, New Jersey real estate brokers and agents are advised to use a Seller’s Disclosure in every transaction. The Seller’s Disclosure is required to obtain the CFA Safe Harbor - to be shielded from treble damages and attorney fees. Without the CFA Safe Harbor, for a successful CFA claim, $35,000 in damages could be worth over $200,000 when that amount is trebled and attorney fees are added in.


So, does a New Jersey Realtor® commit a violation of the Consumer Fraud Act when he or she provides a Seller’s Property Condition Disclosure Statement, which contains a misrepresentation made by the seller, to a buyer?

The answer, at this point, is unclear. No reported court decision has directly decided the issue.

However, the unreported decision of the New Jersey Appellate Division in Holt provides some guidance. The Appellate Division, in Holt, indicated that a Realtor® does not make a representation in a Seller’s Disclosure - only the seller does. If the courts eventually follow the Holt decision, a Realtor would not have liability for providing the Seller’s Disclosure to a buyer.


[EN1] N.J.S.A. 56:8-2.

[EN2] N.J.S.A. 56:8-19.

[EN3] DiBernardo v. Mosley, 206 N.J.Super. 371 (App. Div. 1986).

[EN4] Arroyo v. Arnold Baker & Assoc., 206 N.J.Super. 294, 296-97 (Law Div. 1985).

[EN5] N.J.S.A.* 56:8-2.

[EN6] Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997).

[EN7] Chattin v. Cape May Greene, Inc., 124 N.J. 520, 522 (1991) (Stein, J., concurring)).

[EN8] Cox v. Sears Roebuck & Co., 138 N.J. 2, 18-19 (1994).

[EN9] N.J.S.A. 56:8-4.

[EN10] N.J.S.A. 45:15–16.49.

[EN11] Stoecker v. Echevarria, 408 N.J.Super. 597, 624 (App. Div.) (violating Realtor® duties found in N.J.A.C. 11:5-6 is not a violation of law and is not a violation of the Consumer Fraud Act) certif. den. 200 N.J. 549 (2009). [EN12] See, for example, Vagias v. Woodmont Properties, LLC, 384 N.J.Super. 129 (App. Div. 2006) (affirmative misrepresentation - agent liable under CFA for telling buyer that home was located in Towaca section of Towaca Township when it was not, even though agent did not know that her statement was incorrect); Ji v. Palmer, 333 N.J.Super. 451 (App. Div. 2000) (knowing omission - plaintiff claimed that broker knew that home marketed as a multi-family home was zoned only for single family use).

[EN13] N.J.S.A. 56:8-19.1.

[EN14] N.J.A.C. 11:5-6.4(b)

[EN15] N.J.S.A. 56:8-19.1.

[EN16] Holt v. Laube, 2011 WL 6141466 (App. Div., Dec 12, 2011) (NO. A-1331-10T2) certif. den. 210 N.J. 108 (2012).

[EN17] Holt, supra at 7.

[EN18] Holt, supra at 7-8.

[EN19] Holt, supra at 8.

[EN20] See American Fire and Cas. Co. v. New Jersey Div. of Taxation, 189 N.J. 65, 81 (2006) (Courts must “construe statutes in a manner that avoids unreasonable results unintended by the Legislature.”); State v. Lewis, 185 N.J. 363, 369 (2005) (“[A] court should strive to avoid statutory interpretations that lead to absurd and unreasonable results.”) (citation and quotation omitted).

A Quick Introduction to the New Jersey Consumer Fraud Act.

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