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Economic Loss Doctrine Applies to Residential Real Estate Transactions

The Wisconsin Court of Appeals recently held in Below v. Norton, that the economic loss doctrine bars common-law misrepresentation claims relating to the purchase of residential real estate.

The economic loss doctrine generally bars tort claims for purely monetary losses when the parties have a contract for a product and the parties have contractual remedies available to them.  In Below, the court decided that the purchaser had a breach of contract action for the seller’s alleged failure to disclose a defective sewer line on the real estate condition report, and so the purchaser could not maintain their common law misrepresentation claims based on the alleged failure to disclose. 

The court also confirmed prior case law, however, that the economic loss doctrine did not bar the purchaser's claim for misrepresentation under Wis. Stat. sec. 100.18, Wisconsin's false advertising statute, as long as the alleged misrepresentation was made prior to the acceptance of the offer to purchase.

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