Megan's Law

Despite court ruling, agents should abide by 'Megan's Law' requirements

New York State Supreme Court Justice Alpert has ruled in a Nassau County court that real estate agents are not required to inform prospective homebuyers about the backgrounds of their neighbors, even if one of their neighbors is a pedophile. In his ruling, the judge indicated that the law imposes no duty upon the vendor to disclose any information concerning the premises, unless there is some conduct on the part of the seller, which constitutes active concealment.

The ruling, of course, has brought about a flurry of comments and questions since Megan's Law does exist in the state of New York and real estate licensees have an obligation under that particular statute. In order to better acquaint everyone with this particular decision and what it means, we have asked NYSAR counsel Mike Wallender to review the matter and to provide us with his commentary.

The following is his commentary regarding the case of Glazer v. Loprest:

In Glazer v. Lopreste, New York State Supreme Court Justice Alpert dismissed a complaint against the sellers of real property (the Loprestes) and three individual sales associates (Mazzitelli, LeBoyer and Skvirsky) affiliated with the listing broker (Century 21 Marlene Goodman, R.E.), regarding claims of "fraudulent concealment" and "factual misrepresentation" based on the allegation that they knew or should have known that a convicted child molester resided across the street from the listed premises. The action against the listing brokerage firm (Century 21 Marlene Goodman, R.E.) was severed and continued. Evidently, the listing firm did not make a comparable motion to dismiss and/or for summary judgment.

The grant of the motions by the sellers and individual real estate licensees was based upon the Appellate Division decision in Stambovsky v. Ackley (169 A.D.2d 254, 259 [1st Dept.]), which states:

"[N]ew York adheres to the doctrine of caveat emptor and imposes no duty upon the vendor to disclose any information concerning the premises (London v. Courduff, 141 AD2d 803) unless there is a confidential or fiduciary relationship between the parties (Moser v. Spizzirro, 31 AD 537, affd 25 NY2d 941; IBM Credit Fin. Corp. v. Mazda Mfg. [USA] Corp., 152 A.D.2d 451) or some conduct on the part of the seller which constitutes "active concealment" (see, 17 E. 80th Realty Corp. v. 68th Assocs., __ AD2d __ [1st Dept., May 9, 1991] [dummy ventilation system constructed by seller]; Haberman v. Greenspan, 82 Misc2d 263 [foundation cracks covered by seller]). No such circumstances exist here."

The Court ruled that the offender's status was not particularly within the defendant's knowledge and applied the law as restated in Bando v. Achendaum (234 A.D.2d 242, 243, lv. den. 90 N.Y.2d 20):

"[i]f the facts presented are not matters peculiarly within the party's knowledge and the other party has means available to him of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentations."

It appears that this decision is an application of existing New York case law to both the seller and individual real estate licensees affiliated with the listing broker. The decision does not indicate why a comparable motion was not presented by the listing firm (with which the individual licensee defendants were affiliated). Presumably, the same principles would apply to the listing firm.

It should be noted that this case arises in its particular factual context and that variations in the facts could affect the outcome. Apparently, there was no specific inquiry made by the purchasers regarding the factual matter about which they now complain. In the event of such inquiry, the duty of the listing broker and licensees affiliated therewith would be to accurately respond to the question or indicate that if that matter is of concern to the purchaser, the purchaser should obtain the information it deems pertinent from local law enforcement officials (pursuant to New York's version of "Megan's Law," Corrections Law ?168 et. seq.).

It should be noted that a different result would likely obtain in the event comparable claims were made against at buyer's broker or its affiliated licensees. They would have the requisite fiduciary relationship which imposes a duty of disclosure to their buyer client as to material information regarding the transaction in which they were involved.

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