By
Blackwell M. Broaden, Jr.
Deputy Legal Counsel
North Carolina's increasing urbanization and the continuing development of its resort areas has given rise to a pattern of complaints alleging misrepresentations by real estate developers and their agents. The complaints frequently involve representations regarding amenities and design features of projects in which property is sold, the continuing development plans for particular projects, and the zoning and potential future uses of adjoining tracts of land.
Representations and misrepresentations in connection with sales in real estate developments may be made verbally as in the case where an agent told buyers that certain property adjoining a new subdivision had been farmed by the same family for three generations and they would never give it up; when, at the same time, the family was petitioning for a zoning change to place a major regional shopping center on the property. Another example of a verbal misrepresentation is where a broker knew but failed to disclose to a purchaser of vacant land that a major thoroughfare was being opened behind and on one side of the lot.
But, unlike other traditional real estate transactions, sales in large, multi-phased developments also frequently include visual representations in the form of promotional materials, site plans or models, and maps. Although these visual depictions and renderings may be intended merely for illustrative purposes, purchasers understandably believe that they constitute specific representations about the future use and development of the project and surrounding areas.
For example, in one case reviewed by the Commission staff, exterior lots in a residential subdivision were shown on a map distributed by a developer as bordering a "research campus" restricted to low-density office use. In fact, the developer had re-zoned the property for high-density apartment use and by the time the homes were occupied, the paving of the apartment parking lot was within a few feet of the single family homes.
Visual representations of "buffer zones" or "common areas" are also a frequent source of complaints where wooded areas, with plentiful trees in accurate scale are shown on a model of the development as separating residential and non-residential uses. But, as nonresidential uses are later built, the "wooded buffer zone" becomes a grassy strip a few feet wide between a residential unit and a dumpster.
Common sense and basic skills necessary for any real estate transaction can do much to avoid consumer dissatisfaction with the agent when the future does not bring what the buyer believes the agent promised. If the agent does not know the answer to a buyer's inquiry, he should admit he does not know. A buyer inquiring about future uses of adjoining property should be advised as to the present zoning but reminded that governmental restrictions on the use of real property are always subject to change.
And remember, 'visual" representations such as models, maps and other promotional materials are perhaps a more potent and effective form of representation than "verbal" or "written" statements; therefore, great care must be taken in their proper use in order to avoid misconceptions and misunderstandings as to the developer's future plans. Furthermore, developers and their agents should make clear that the models, maps and other promotional materials are not a guarantee or obligation of the seller under the contract with the buyer