What is the duty of a real estate developer to disclose to prospective residential purchasers information about the neighborhood that may adversely impact property values? Apparently none if the developer is not in privity with the homeowners, according to the Eleventh Circuit.
On May 21, 2012, Law 360 reported on the Eleventh Circuit’s decision in Luis Virgilio v. Terrabrook Vista Lakes L.P., et al. , Case No. 11-11027 (5/18/12). We have discussed in a past article the circumstances under which a commercial real estate broker may be found have a duty to disclose environmental liabilities to a prospective purchaser. Here, the court was clearly troubled by the question of how far the developer’s potential liablity to disclose “inside information” would extend and how an obligation to disclose this information could be satisfied..