New case holds that a guardian in New Jersey has an affirmative duty to disclose a conflict of interest involving the sale of real property owned by the ward

In a new published opinion, Burke et al. v. Sea Point Realtors et al., DOCKET NO. A-5652-06T1, App. Div. (May 30, 2008), the Appellate Division of the state’s Superior Court held that a guardian in New Jersey has an affirmative duty to disclose a conflict of interest involving the sale of the ward’s real property both to the judge who had been asked to approve the sale and to potential purchasers. This case was triggered by a guardian’s decision to retain defendant Sea Point Realty, a real estate broker, to market real property owned by the guardian’s ward. The guardian sought court approval to sell the property to defendants Thomas and Patricia Meyer without clearly disclosing to the probate judge that the Meyers were the principals of Sea Point Realty. The guardian also did not give notice of the court action to plaintiffs or any of the other disappointed offerors. The probate judge approved the sale. Plaintiffs, disappointed offerors, subsequently filed a lawsuit against the Meyers, Sea Point and the guardian alleging fraud and other similar claims and seeking damages. The trial court dismissed the complaint on summary judgment motions, holding that the probate proceedings conclusively established the legitimacy of the sale to the Meyers. The Superior Court, Appellate Division, reversed, concluding that the order approving the transaction was not entitled to preclusive effect because the guardian had not clearly indicated to the probate judge that the purchasers were the principals of the real estate brokerage firm, and because plaintiffs had not been given notice of the probate proceedings. The opinion also noted that even though the sale price paid by the buyers/realtors was, at first glance, the highest and best offer, the buyers/realtors got a commission on the sale of about $11,000, making the actual sales price paid that much less. The appellate court believed that the judge should have had that information when making her decision authorizing the sale.

Full case:5652-06.opn.html