Associate Attorney
In Puleo v. Cohen (Fla. 3d DCA Mar. 11, 2026), the Third District Court of Appeal addressed an increasingly common issue in high-value real estate transactions: what happens when a seller is misled about who is really buying their property—and why.
What happened:
The seller agreed to sell his Miami Beach home for $13 million, believing the buyer was an individual who intended to live in the property with her family. Based on that understanding, he accepted a reduced price from his original $18 million listing and agreed to include furnishings in the sale.
In reality, the named purchaser was allegedly a “straw buyer.” A real estate developer—who intended to demolish or redevelop the property and resell it for profit—was the true party behind the transaction. The developer later assigned the contract to an LLC and ultimately resold the property for a significantly higher amount.
After discovering the resale, the seller sued not only the buyer, but also the brokers and other professionals involved in the transaction, alleging that they participated in or facilitated the misrepresentations regarding the buyer’s identity and intended use of the property.
The trial court entered summary judgment against the seller on the fraud and conspiracy claims. The Third District reversed.
The appellate court’s reasoning:
The key issue on appeal was whether the seller was required to prove justifiable reliance on the alleged misrepresentations.
The Third District clarified that under Florida law, justifiable reliance is not required to establish a claim for fraudulent misrepresentation. Instead, a plaintiff must show:
- A false statement of material fact
- Knowledge that the statement was false
- Intent to induce reliance
- Injury resulting from reliance
Importantly, the court emphasized that a party may rely on a representation even if its falsity could have been discovered through investigation, unless the falsity is obvious.
Applying that standard, the court found that:
- The seller was entitled to rely on representations about the buyer’s identity and intentions
- The existence of an assignment or later disclosures did not necessarily make the alleged deception “obvious”
- A reasonable jury could find that the seller relied on those representations to his detriment
As a result, the court held that the fraud claim should proceed to a jury. Because the underlying fraud claim remained viable, the court also reinstated the civil conspiracy claim, allowing the seller to pursue claims against multiple participants in the transaction.
Liability of brokers and transaction participants:
A key aspect of the case is that liability was not limited to the buyer alone.
The seller alleged that real estate brokers and other parties involved in the deal knowingly participated in or facilitated the misrepresentation of the buyer’s identity and intent. While the trial court initially dismissed those claims, the appellate court’s decision makes clear that:
Third parties can be held liable for fraudulent misrepresentation if they knowingly assist or participate in the deception
A party does not need to be the primary actor to face liability—participation in the scheme is enough. Civil conspiracy claims allow plaintiffs to pursue all parties who knew of the scheme and contributed to it in some way. In other words, brokers and professionals involved in a transaction cannot assume they are insulated from liability simply because they are not the buyer or seller. If they knowingly pass along false information—or help structure a transaction to conceal material facts—they may be exposed to significant legal risk.
Why it matters:
This decision has significant implications for real estate transactions—particularly in South Florida, where investment purchases and redevelopment strategies are common.
Sellers are often asked to make decisions based on representations about:
- Who the buyer is
- Whether the property will be occupied or redeveloped
- The overall nature of the transaction
This case makes clear that those representations matter. A seller is not required to independently verify every statement made during negotiations.
Even if there are warning signs—such as contract assignments or involvement of business entities—those facts alone do not automatically defeat a fraud claim.
The ruling also serves as an important reminder to brokers and other professionals that their role in a transaction carries potential exposure if they participate in or fail to correct material misrepresentations.
Finally, the decision reinforces a broader principle: fraud claims are highly fact-specific and rarely appropriate for resolution at the summary judgment stage.
Takeaway:
- A plaintiff does not need to prove “justifiable reliance” to bring a fraud claim in Florida.
- A party may rely on representations unless their falsity is obvious.
- Misrepresentations about a buyer’s identity or intent—such as using a straw buyer—can support a claim for fraudulent inducement.
- Brokers and other transaction participants may be liable if they knowingly participate in or facilitate the misrepresentation.
- Civil conspiracy claims can extend liability to all parties involved in the scheme.
- The presence of red flags or the ability to investigate does not automatically bar recovery.
- Fraud and related conspiracy claims are often not suitable for summary judgment and should be decided by a jury.
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