Statute of Limitations for Fraud Claim Against a Real Estate Agent


Case Study Fraud Claim

Ohio’s Eighth District Court of Appeals issued a ruling last week that established when the statute of limitations begins to run for a fraud claim against a real estate agent. A statute of limitations is the time frame in which a claim must be filed against another, or be forever lost. In the case of fraud, Ohio has a four-year statute of limitations. This case looked at when that statute of limitations commences in the larger context of whether the Plaintiff’s four claims was filed within the four-year statute of limitations.

The underlying dispute involved Plaintiff’s sale of a home through his brother, Eral Foster, as a listing agent. Plaintiff agreed to sell the home, provided he would net a minimum of $35,000.00. About 5 months into the listing, Mr. Foster produced an offer for $83,000.00 with a net of $35,000.00 to Plaintiff, to which Plaintiff accepted. Thereafter Plaintiff learned that the buyer was having trouble finding financing, so found another buyer on his own, and instructed Mr. Foster to terminate the agreement with the first buyer. Mr. Foster told Plaintiff he could not terminate the contract and that only the buyer could terminate if he failed to obtain financing.

Several months later the Plaintiff and his wife went to a title company and signed all the closing documents. The title company disbursed $25,000.00 to Plaintiff. In trying to understand the discrepancy between the net minimum he was promised and the net minimum he received, Plaintiff discovered the house was sold to a different buyer, without Plaintiff’s knowledge.

A few months later, on May 30, 2007, the Plaintiff filed a complaint against Foster and his broker with the Ohio Division of Real Estate. Plaintiff’s complaint specifically outlined his allegations and summarized the transaction, the difference in the net proceeds and the switching of the buyer without his knowledge. The Division investigated and on April 6, 2011, the Commission concluded Mr. Foster violated several sections of license law.

On January 15, 2013, Plaintiff sued Mr. Foster and his broker (Defendants) and subsequently re-filed his suit on July 25, 2016. In response, Defendants filed a motion to dismiss because the lawsuit was outside the applicable four-year statute of limitations. The Plaintiff opposed arguing that he didn’t learn of the Commission’s sanctions until April of 2011, thus the January of 2013 suit was timely. Conversely, the Defendants argued that Plaintiff knew about the facts giving rise to the fraud claim in May of 2007 when he filed the complaint with the Division. Thus, the four-year statute started in 2007 and expired in May 2011.

The Court found that Plaintiff’s allegations asserted in the Division complaint demonstrated that Plaintiff had discovered Defendant’s fraudulent conduct in May 2007. Further, the Court referenced an Ohio Supreme Court case which held that the injured person need not be aware of the full extent of injuries to trigger the statute of limitations. Here even though the Commission had yet to rule on whether there was a license law violation, Plaintiff knew of his injuries when he filed the complaint with the Division. Thus, the Court upheld the trial court’s dismissal of Plaintiffs lawsuit, for failure to file within the applicable four-year statute of limitations.

This case reiterates the that a statute of limitations commences when a person has recognized that they have been injured (called a cognizable event), even though the person may not know the full extent of their injuries. For real estate licensees working with clients that are contemplating civil actions, it is important to encourage them to quickly consult with legal counsel. Any delay may result in the loss of the case due to the expiration of a statute of limitations.

The full text of the case can be read here.

Launch Your Career

Select your education program

Select your state

Select your course