Question: My husband and I are about to place our home on the market. My husband says that we have no obligation to disclose several major defects and code violations that we know resulted from his "do it yourself" electrical and plumbing projects. These are not really visible the way a leaky roof or cracked foundation might be. He maintains that the buyers will never know, and as long as we sell the house "as is" we are covered. Is he right?
Answer: Many people still believe that "Let the buyer beware" is a terrific motto and "as is" is a terrific protection in selling real estate. Unfortunately, these are not truths of real estate law. A seller is bound by the results of a Florida Supreme Court case which said, "We hold that where the seller of a home knows facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. This duty is equally applicable to all forms of real property, new and used." (Johnson vs. Davis)
This principle was retested in court when a suit was filed by a home buyer named Solorzano, who purchased a home directly from Wachovia Mortgage Company in 2001. Solorzano alleged that the mortgage company knew that the city of Lake Worth had determined that there were material housing code violations on the property. The suit also claimed that the seller knew of these violations that materially affected the value of the property before the sale and that the value had decreased significantly because of these. In fact, the city had levied code fines of more than $50,000 before the sale.
Wachovia argued that the property was sold "as is" and that the buyer had time to conduct research to determine that the code violations had been publicly levied and were readily observable. The trial court agreed and dismissed the case with prejudice.
Solorzano appealed the ruling and the District Court of Appeals reversed the trial court's dismissal citing the Johnson vs. Davis case and stating "whether Solorzano readily observed the alleged housing code violations or whether she had adequate time to research the alleged violations is not properly resolvable on Wachovia's motion to dismiss." The seller should have disclosed the violations.
There is sometimes confusion about what should be considered "readily observable" and what should be apparent to the buyer. Determining this in a court of law after a sale can be an expensive proposition. You and your husband could consider remedying the problems before placing the house on the market. If defects, visible or not, still remain, the safest course is for you and your husband to disclose all facts materially affecting the value of the property. If in doubt, seek the advice of a real estate attorney.
Attorney Sylvia Heldreth is a certified specialist in real estate law. Her office is located at 1215 Miramar St., in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.