Brief Fact Summary. Defendant Carrie Annino sold a multi-family apartment with eight apartments to Plaintiff Apostolos Kannavos, knowing that the building had been converted into apartments without a building permit and in violation of the city zoning ordinance. Defendant never disclosed this fact to Plaintiff.
Synopsis of Rule of Law. While a party is not required to speak at all regarding a transaction, if he does speak, he must speak honestly and divulge all material facts bearing on the point that lie within his knowledge.
Issue. Can Plaintiff rescind the contract for the purchase of the building?
Held. Yes. A seller of real estate is not required to disclose defective conditions in the real estate. However, if the seller elects to make representations, he must disclose all material facts. In the present case, Defendant, through her real estate broker, listed the building as a rental property knowing that it did not comply with the city zoning ordinance. The fact that Defendant chose to say anything about the character of the property leads to the requirement that what is said cannot be deceptive or fraudulent. Hence, Plaintiff may properly rescind the contract.
Discussion. If a seller chooses to speak, it must be a complete representation. No half-truths, deceptive, or misleading statements are permitted. However, there is no duty to disclose any defects in the condition of the real estate at all; only a duty to give complete information when any information is given.