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Real Estate Contract Dispute

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Case: Brenda Benz-Elliott v. Barrett Enterprises, L.P. et al

Issue:  Should case be governed by statute of limitations for injury to property, or breach of contract?

Facts:  Seller and Buyer were longtime friends who entered into a real estate sale in 2004.  The contract provided that the Seller had to reserve Buyer’s ownership of a strip of land for a road within the property.  In 2007, Seller became concerned that her access road had not been built, and learned from her former attorney that the warranty deed did not include the reservation of land.  In 2008, Buyer sued Seller for breach of contract, negligent misrepresentation, and fraud.  The trial court found in favor of the Plaintiff, determining that there had been a breach of contract and awarding damages for diminished access.

Appellate Decision:  The intermediate court reversed, holding that the case was barred by the statute of limitations for injury to property:  “[Seller] seeks damages for the decreased value of her remaining property due to the [Buyer’s] failure to provide access to her property as contemplated in the contract. Thus, the gravamen of her complaint is damage to real property.”  The court determined that Seller reasonably should have discovered the problem before she learned about it through her attorney in 2007, notwithstanding the trust she had in Buyer.

Review Granted:  December 11, 2013.

Prediction:  Ben thinks the Supreme Court will affirm.  The trial court found the delay in Seller’s discovery was reasonable because she trusted the deed would be consistent with the contract, but there was nothing stopping her from examining the deed at any time. David disagrees. This is an action in contract with the longer statute of limitations since the property was subject to a contract which had not been performed.