Atkeson v. T & K Lands, LLC

It is not inequitable to impute an attorney’s knowledge to the client where the attorney is hired to perform due diligence in a real estate transaction.

Atkeson appealed the trial court’s grant of summary judgment to T & K Lands. Atkeson made a land-sale contract to purchase a lot from T & K Lands in an as-is condition. Before making the purchase, Atkeson hired an attorney to investigate the property. After the sale, Atkeson learned that several of the improvements to the land were built without permits or in violation of zoning laws and that the land was within a wetlands area. Atkeson personally paid for some required changes to the property and then sued T & K Lands for rescission of the contract based on the theories of mutual mistake and misrepresentation. T & K Lands argued that Atkeson’s attorney knew of the problems with the property, and that knowledge is imputed to Atkeson. An attorney’s knowledge is generally imputed to the client because of the agency relationship. Since imputation is based in equity, it does not apply where the party seeking the imputation is not innocent. However, that exception is limited and does not apply here where all parties knew and were entitled to rely on the principal-agent relationship. Affirmed.