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REAL ESTATE 5: Should you be concerned if seller’s disclosure statement states Seller has never lived at property?

This case arises out of the sale of residential property. Within a few months of purchase, plaintiffs experienced severe flooding of the house and surrounding property. At one point, there was nearly one foot of standing water in the living room. Plaintiffs filed a complaint and alleged fraudulent misrepresentation, negligent misrepresentation, silent fraud, and breach of contract.

Defendant (owner) originally purchased the house for her granddaughter and her granddaughter’s husband. Defendants toured the house once before the purchase. According to the owner, it was the only time she had ever visited the property. When the owner toured the house, she did not notice anything consistent with water damage.  Owner’s granddaughter lived in the house for approximately four to five years while making monthly payments to owner. During that time, they made a number of renovations, but they testified that they did not see anything that resembled mold.

In late 2014, they decided to sell the property. Before the house was placed on the market, the granddaughter and her husband painted the garage door, painted trim, raised the floor in the living room, and installed linoleum floors in the kitchen, entrance way, and laundry room.  They also removed the wood paneling in the living room and replaced it with drywall.  They denied that any of the renovations revealed any signs of mold or water damage.

A plaintiff cannot merely prove that the defendant failed to disclose something; instead, a plaintiff must show some type of representation by words or actions that was false or misleading and was intended to deceive.

The owner indicated that she did not have knowledge as to the property’s condition. While the disclosure statement constituted a representation by words, plaintiffs failed to provide any evidence to dispute its authenticity.  The owner visited the property once before she purchased it. She never lived on the property, and she never came to visit her granddaughter thereafter. Plaintiffs provided no evidence that disputed these facts. Furthermore, while plaintiffs rely on affidavits from a neighbor and former owner to argue that the granddaughter struggled with flooding, those witnesses do not claim that the owner knew about the flooding. Thus, plaintiffs provided no evidence that the owner knew about the property’s conditions.

Even if the owner knew about the flooding, there is also no evidence that she made a false or misleading representation with the intent to defraud plaintiffs. On the contrary, the disclosure statement plainly stated, Seller never lived at property, which reflected her lack of knowledge as to the condition of the property. Further, she notified plaintiffs the property was being sold “as is” without making any warranties or representations.  As a final point, the granddaughter and her husband were not parties to the contract, and they could not have been in breach of the purchase agreement between plaintiffs and the owner.  The trial court did not err when it granted summary disposition on this claim.

For most people, the purchase or sale of a home is one of the biggest financial transactions of their lives. Having an experienced and knowledgeable attorney on your side to carefully draft or review your contract is critical. We provide guidance throughout the course of your purchase or sale, including the representation associated with home closings.  Aldrich Legal Services is an established and respected firm with a strong knowledge of real estate law. Our attorneys have structured hundreds of real estate transactions and litigated literally thousands of cases.