June 1, 2021
Undisclosed Defect Claims in a Fast-Paced Real Estate Market

Buyer (and Seller) Beware…

It goes without saying that the real estate market in Southwest Florida is on fire right now. We have heard story after story of houses selling before they are even listed on the market. In this extremely fast-paced market, we have seen many buyers and sellers enter into “sight unseen” or “cash for keys” deals. Although this may sometimes be necessary to seize the little inventory remaining on the market, these types of deals can present a potential pitfall for buyers…and especially sellers.

In the landmark case of Johnson v. Davis, 480 So. 2d 625 (Fla. 1985), the Florida Supreme Court created a new Florida tort of breach of duty to disclose material defects upon sale of a residence. This common law cause of action imposes upon any seller of residential real estate a duty to disclose certain defects within the residential property. Importantly, this does not apply to commercial transactions.

The duty to disclose applies in a residential sale if:

  1. the seller of the home knows of facts,
  2. these facts are not readily observable by and are not known to the buyer,
  3. these facts materially affect the value of the property, and
  4. the buyer has been damaged by the breach of the duty to disclose.

If you would like simple explanation of a Johnson v. Davis claim, please click here to watch a short video from Boatman Ricci.

So, how would this duty affect a potential “sight unseen” sale? From the seller’s perspective, it is important that the seller does not get caught up in the excitement of a cash offer and fail to disclose a known defect in the home. An “as is” clause will not necessarily extinguish a seller’s duty to disclose defects which qualify under the Johnson v. Davis test. A failure to disclose—even if it is unintentional—can lead a later claim by the buyer under Johnson v. Davis.

From the buyer’s perspective, a buyer should remember that sight unseen means that the buyer is waiving his right to observe any defects which are “readily observable.” In the event the property is not in as good as condition as expected and the defects were readily observable, the buyer will likely be precluded from bringing a claim against the seller for these issues after the purchase. This potential risk should be discussed and should be weighed as a factor in the price and terms of any cash deal.

Whether you recently purchased a home in Southwest Florida and are wondering whether you may have a claim against the seller or you are considering purchasing a home and need assistance reviewing the terms of sales contract, the experienced attorneys at Boatman Ricci are here to help. It is often said that an ounce of prevention is worth a pound of cure. This adage applies even in an extremely fast-paced real estate market. If you need assistance navigating the market as a buyer or a seller, do not hesitate to contact the attorneys at Boatman Ricci at 239-330-1494 to schedule an initial consultation.

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THIS BLOG IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE. THE READER SHOULD CONSULT WITH KNOWLEDGEABLE LEGAL COUNSEL TO DETERMINE HOW APPLICABLE LAWS APPLY TO SPECIFIC FACTS AND SITUATIONS. BLOG POSTS ARE BASED ON THE MOST CURRENT INFORMATION AT THE TIME THEY ARE WRITTEN. SINCE IT IS POSSIBLE THAT THE LAWS OR OTHER CIRCUMSTANCES MAY HAVE CHANGED SINCE PUBLICATION, PLEASE CALL US TO DISCUSS ANY ACTION YOU MAY BE CONSIDERING AS A RESULT OF READING THIS BLOG.

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Published: June 1, 2021
Author: Bo Boatman
Categories : Uncategorized