Must buyers beware?

After closing the Buyers discovered significant rot, pest infestation and other problems
By Bill Wood
, Attorney at Law | Mar 28, 2013

Nigel and Kathleen Douglas were looking for a house to buy, maybe something they could put a little money and effort into to bring it up to decent condition, and then rent it out or use it themselves.

They found such a house in the Blaine area, and their offer of $189,000 was accepted by the Sellers, Terry and Diane Visser.

The Vissers had purchased the house two years earlier, and had renovated a bathroom, repaired portions of rot, and made further miscellaneous repairs, and had now put it up for sale.

Before closing, the Buyers obtained at least two independent inspections of the house and were informed that there were areas of rot and decay that were of undetermined extent, evidence of roof leaks, and other concerns that would have to be attended to.

The Sellers provided to the Douglas’s a Form 17 Disclosure Statement, a form used in Washington that over several pages requires a seller to answer “yes,” “no” or “don’t know” to questions about the condition of the property.

Terry and Diane either said “don’t know” or simply left many questions unanswered.

The Buyers asked for additional information from the Sellers, but never got it and the Buyers elected to complete the purchase anyway.

I suspect you know what happened next and indeed after closing the Buyers discovered significant rot, pest infestation and other problems never disclosed to them and so pervasive that it would be cheaper to tear the house down and start over rather than attempt repairs.

The Buyers sued the Sellers for fraudulent concealment for this expense to tear down and rebuild and testimony at trial indicated that some of the “repairs” actually appeared to be attempts to cover up defects and that may be why many defects were not readily apparent in the original inspection.

Testimony at trial also established that the Sellers knew the problems with the house were extensive; that they had themselves abandoned repair efforts and decided to get out.

One workman testified he had trouble finding wood that would hold a nail because it was all so rotted.

The trial court found for the Buyers, determined that the Sellers had knowledge of the significant defects, made superficial repairs and had concealed structural damage and awarded the Buyers a total of nearly $200,000.  But the story does not end there.

The Court of Appeals recently overturned this award from the trial court and the Buyers were left with nothing.

Buyers were ordered to pay the attorney’s fees of the Seller.   How can this be, you ask.

The answer is that the Court of Appeals applied the clear law in Washington that once a buyer discovers evidence of a defect, they are on notice and have a duty to make further inquiries.

Buyers, once informed of the general nature of the condition of a house, have a duty to conduct further investigation, or else accept the consequences of foregoing that additional investigation.

Buyers cannot succeed in a lawsuit against a seller simply because the extent of a defect is greater than anticipated, even when magnitudes greater.

Buyers do not have to perform exhaustive invasive inspection, or endlessly assail a seller with further questions, but they do have to make further inquiries or at trial show that further inquiry would have been fruitless.

There is some evidence, the Court said, that the Buyers made inquiries, but they did not pursue them after the inspections, and there was no evidence that such further inquiry would have been fruitless.

Only when a buyer could not have uncovered the true condition of property will such duty of the buyer be excused.

The Buyers here simply gave in, settled for the information that they had, and decided to complete the purchase.

The Seller’s conduct may have been reprehensible, and they may have had much information that the Buyers wish had been disclosed, but it was the Buyer that chose to go forward.

As an earlier court in a similar case said, “the law in Washington balances the harshness of the former rule of caveat emptor with the equally undesirable alternative of the courts standing in loco parentis to parties transacting business.”

That is to say, a balance between “catch me if you can” and “here, let me do this for you.”
 So, Buyer beware.

Get a good Realtor, get a good lawyer, and realize the limits on a court’s willingness and ability to protect you if you won’t protect yourself.

 

This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Publishing this article does not create an attorney-client relationship between the author and any party. The opinions expressed in this article are the opinions of the individual author and not of any other person or entity.

Comments (0)
If you wish to comment, please login.