Buyer Beware

Buyer Beware..

Well no, not exactly. In a recent case the Washington Supreme Court issued a decision that redefines the responsibilities between buyer and seller. ((Alejandre v. Bull Wn2d 674 2007) Up until the early 1980's "caveat emptor" or buyer beware was the law of the land but through the 1980's and 1990's these responsibilities were redefined requiring full seller disclosure and the implementation of the Real Property Transfer Disclosure Statement.

The new decision still requires full disclosure from the seller but places significant responsibility on the buyer. A little background. A few months prior to putting her home on the market Mrs. Bull had a problem with her septic system. She had the problem repaired. Mrs. Bull subsequently put her home on the market and sold it to the Alejandres. Mrs. Bull had the septic tank pumped in conjunction with the sale and the pumping receipt said that they were unable to inspect the back baffle but there was no obvious malfunction of the system at that time. The Alejandres conducted no further inspection and closed the sale. A few weeks after closing the septic system failed.

The Alajandres hired a septic repair company to do the repairs and coincidently hired the same company that did the original repairs. They told the Alajandres that Mrs. Bull was aware of the problem and had been advised that the home would need to be connected to sewer. The disclosure from Mrs. Bull did not include this information. The Alajandres sued Mrs. Bull claiming that she knew of the problem and failed to disclose.

The Supreme Court ruled that a buyer, under a real estate purchase and sale agreement, may not sue a seller for misrepresentation. As of this ruling, claims for misrepresentation by a real estate buyer against a seller are barred. Buyers may only sue sellers for fraud or for breach of the real estate contract. The Association of Realtors summarizes this as follows. "Alejandre v. Bull requires a change in practice for Realtors and home buyers. Buyers must now be far more diligent in the inspections they conduct than most buyers have been for the last two decades or more. The court explained that a seller still has a duty to identify defects when: 1. the residential dwelling had a concealed defect. 2. The seller had knowledge of the defect. 3. The defect presents a danger to the property, health, or life of the purchaser. 4. The defect is unknown to the purchaser and 5. The defect would not be disclosed by a careful, reasonable inspection by the purchaser. However the court elevated the definition of "careful, reasonable inspection" by the purchaser to a level almost no buyer would have satisfied prior to the decision."

In short, we are not back to buyer beware. The seller still must fully and honestly disclose known material defects to the buyer but much more of the burden of fully evaluating and investing the property prior to closing has been shifted back to the buyer.

By

Brian Leavitt , Broker

Northstone Real Estate Inc.