The Maryland Court of Special Appeals has upheld a jury's verdict against 3919 NEH, LLC, a real estate seller, for misrepresentation and breach of contract. The case, 3919 NEH, LLC v. Salinas, No. 0284, Sept. Term, 2024, centers on the seller's failure to disclose significant issues in a property sold to homebuyer Erick Galban Salinas. The ruling is significant as it reinforces buyer protections under Maryland's real estate disclosure laws.

In this case, Salinas purchased a single-family home in Columbia, Maryland, from NEH. After moving in, he discovered a serious infestation of animal waste in the attic, which had not been disclosed by the seller. This led Salinas to file a lawsuit against NEH, claiming breach of contract, misrepresentation, and violations of the Maryland Consumer Protection Act. The jury found in favor of Salinas, awarding him damages and attorney's fees.

Background

3919 NEH, LLC is a Maryland corporation involved in home renovation and resale. The company acquired the property on Canvasback Drive in August 2018 and hired a contractor to renovate it. Before selling the home, NEH completed a Maryland Residential Property Disclosure Statement, which stated that there were no known latent defects in the property.

Salinas made an offer to purchase the home in July 2019 and was provided with the Disclosure Statement. Prior to closing, he arranged for a home inspection, which revealed the presence of animal feces in the attic. Salinas informed NEH about the findings, and the seller agreed to address the issue before the settlement date. However, after moving in, Salinas discovered that the problem had not been adequately resolved.

The Ruling

The Court of Special Appeals affirmed the jury's verdict, which found NEH liable for intentional and negligent misrepresentation. The court ruled that the knowledge of the contractor hired by NEH was imputed to the seller, meaning NEH was aware of the ongoing animal infestation and failed to disclose it. The court stated, "One of the general principles of an agency relationship is that the knowledge of the agent is knowledge of the principal." This ruling underscored that even independent contractors can be considered agents in certain circumstances.

The court also upheld the trial court's decision to issue a protective order excusing Salinas' spouse from providing oral deposition testimony due to mental health concerns. Additionally, the court found that the trial court did not abuse its discretion in accepting the pest control technician as an expert witness, citing her extensive experience in the field.

Impact

This ruling has significant implications for both home buyers and sellers in Maryland. It reinforces the importance of full disclosure in real estate transactions and clarifies that sellers can be held accountable for the knowledge of their contractors. The court emphasized that common law and statutory consumer protections remain available to buyers, even in "as-is" sales. This case serves as a reminder that sellers must be diligent in disclosing any known defects or issues with a property.

The decision also vacated the trial court's award of attorney's fees and remanded the case for further consideration of the factors outlined in Maryland law. This aspect of the ruling could affect how attorney's fees are awarded in future cases involving real estate disputes.

What's Next

NEH may seek further appeal options following this ruling. The case highlights ongoing issues in real estate transactions and the legal responsibilities of sellers regarding property disclosures. As of now, there are no related cases pending that could impact this ruling.