Disclose Before They Sign

New Jersey Superior Court, Appellate Division: Bunky Inc. v. Hammel, 2006

December 1, 2006

A New Jersey appeals court has decided that a listing broker’s initial failure to inform the sellers that the broker’s husband was the buyer of a property doesn’t void the purchase contract since the sellers knew about the relationship before signing.

In the case, Edward and Joan Hammel retained a salesperson, Eileen Karon, to help them sell their retail property. Karon’s husband, J.J. Laufer, made an offer below the listed price, which, after negotiation, was accepted by the sellers. Before the letter of intent to purchase was signed, the salesperson informed the Hammels that Laufer was her husband, and the Hammels amended the letter to reflect that Karon would be the co-owner.

After the buyers failed to appear for a rescheduled closing, the Hammels cancelled the purchase contract.

The buyers sued seeking specific performance of the contract as well as damages. The sellers countersued, seeking approval to sell the property to a third party. The sellers claimed that the salesperson’s relationship with the buyer harmed them and prevented them from receiving an independent professional evaluation of the offer. The salesperson contended that because the sellers had continued in the transaction after they learned of her marriage, they had waived an argument of being harmed.

The trial court ruled that the purchase contract was void because of the salesperson’s failure to disclose her marriage. However, the appellate court reversed the decision. It said by continuing the transaction after Karon’s disclosure, the sellers waived their right to void the contract.