## Facts

- More than 150 families bought newly constructed homes in a residential development in Voorhees Township, New Jersey, built and marketed by professional builder-developers and their real-estate broker.
- The development was located near the Buzby Landfill, an abandoned hazardous-waste site where large quantities of chemicals had been dumped years earlier.
- Toxic substances were alleged to have migrated from the landfill into groundwater and air, and regulators identified the site as an environmental concern with potential for significant remediation.
- Purchasers alleged the builder-developers and broker knew of the landfill’s existence and hazards before and during sales but did not disclose that information.
- Plaintiffs alleged they would not have purchased the homes, or would have paid less, had they known of the nearby hazardous-waste condition.
- Plaintiffs sued for common-law fraud, negligent misrepresentation, and violations of the New Jersey Consumer Fraud Act (CFA), including claims based solely on nondisclosure.
- The trial court denied class certification and granted summary judgment against families asserting only nondisclosure, reasoning there was no duty to disclose off-site conditions absent affirmative misstatements.
- The case reached the Supreme Court of New Jersey to resolve whether professional sellers and brokers must disclose a known, material, off-site hazardous condition.

## Issues

1. Whether a professional builder-developer and its real-estate broker have a common-law duty to disclose to prospective purchasers known, off-site, latent physical conditions that are material to the property’s value or desirability.
2. Whether nondisclosure of such material information by professional sellers and brokers can constitute an unlawful practice under the New Jersey Consumer Fraud Act.
3. Whether class certification should be reconsidered in light of the governing legal standard for nondisclosure claims.

## Decision

- The Supreme Court of New Jersey held that professional builder-developers and brokers selling new residential construction have a duty to disclose certain off-site conditions.
- The duty requires disclosure of off-site physical conditions that are (1) known to the professional seller or broker, (2) unknown and not readily observable by the buyer, and (3) sufficiently material to affect the property’s value or desirability.
- The Court concluded that a nearby hazardous-waste landfill qualifies as an off-site physical condition subject to disclosure when it meets that materiality and observability standard.
- The Court held that knowing concealment or omission of such material facts in connection with the sale of real estate may violate the CFA, even without affirmative misrepresentations.
- The Court reversed summary judgment entered against the purchasers whose claims were based on nondisclosure and remanded for further proceedings.
- The Court indicated that class certification should be revisited because common questions concerning defendants’ knowledge and nondisclosure could predominate under the correct duty standard.

## Legal Principles

- Professional sellers of residential real estate and their brokers must disclose known, off-site, latent physical conditions that are not readily observable and are materially likely to affect value or desirability.
- The disclosure duty is limited to objectively verifiable, physical conditions of sufficient materiality, not every external influence on a property.
- Information asymmetry between professional sellers/brokers and typical homebuyers supports imposing disclosure obligations in new-home marketing and sales.
- Under the New Jersey Consumer Fraud Act, an unlawful practice includes knowing concealment, suppression, or omission of a material fact in connection with a sale; silence can be actionable when there is a duty to speak.
- When nondisclosure claims turn on common proof of defendants’ knowledge, uniform sales practices, and materiality of the condition, class treatment may be appropriate and should be evaluated under the correct legal rule.

## Conclusion

The court required professional builder-developers and real-estate brokers to disclose known, material, off-site latent physical hazards such as a nearby hazardous-waste landfill, and held that knowingly omitting such information can support both common-law liability and statutory liability under the Consumer Fraud Act, warranting reversal of summary judgment and remand.


Strawn v. Canuso, 140 N.J. 43, 657 A.2d 420 (N.J. 1995)