Where plaintiffs claimed intentional misrepresentation based on a warranty deed stating that property being conveyed was free from encumbrances, but a bank held a lien on the property and had recorded a deed of trust eight years before the transaction, plaintiffs’ reliance on the warranty deed was not reasonable.
In Erwin v. Great River Road Supercross, LLC, No. W2019-01005-COA-R3-CV (Tenn. Ct. App. Dec. 1, 2020), plaintiffs purchased real property from defendants in 2008. The warranty deed conveying the property “contained a covenant that the real estate was unencumbered.” The parties eventually got into a dispute regarding personal property that was supposed to be included in the sale, which resulted in plaintiffs paying less than the agreed price and defendants declaring a default and instituting foreclosure proceedings. During the foreclosure, plaintiffs learned that a bank had a pre-existing lien on the property, meaning that the representation in the warranty deed that the property was unencumbered was false.