Having recently purchased a home built the same year the yo-yo was invented (1929), I was especially interested in a recent opinion of the Indiana Court of Appeals discussing the doctrine of caveat emptor. In Kent and Elizabeth Hizer v. James and Rebecca Holt, No. 71D06-0907-PL-176 (Oct. 27, 2010), the Court addressed liability where a seller fails to disclose certain items AND a buyer fails to independently inspect those same items.
In 2008, the plaintiffs entered into an agreement with the defendants to purchase a home and reserved the right to conduct an inspection. As you may expect, they did not conduct an independent inspection of the home itself. The sellers reported that a prior inspection by a prospective buyer had revealed virtually no problems. The sellers completed the Sales Disclosure Form, as required by I.C. 32-21-5-7, at closing. They disclosed only that the microwave oven and ice maker did not work.
Lo and behold, after the closing, the buyers discovered numerous problems, including faulty mechanical items, extensive mold, recalled pipe, and a leaking crack in the basement wall. They contacted an inspector, who, coincidentally, was the same inspector that had inspected the house for the prior potential buyers. He reported that he had previously discovered the mold, the recalled pipe, and indications of water flow into the basement. A lawsuit was born.
Basically, the dispute concerned whether fraudulent statements made on the Sales Disclosure Form are negated when an inspection would have revealed the alleged defects. The sellers cited a 2009 opinion, Dickerson v. Strand, wherein the court held that sellers could not be liable for fraud in misrepresenting the quality of the property when the buyers had the opportunity to inspect. The Court rejected this earlier case, holding that it failed to account for the statutory disclosure requirements under Indiana law, and that there would be no purpose for such forms if sellers cannot be liable for fraud. Thus, the Court rejected any interpretation of the common law that might allow sellers to make written misrepresentations with impunity regarding items that must be disclosed on the Sales Disclosure Form.
The Court did not address whether the microwave and ice maker were fixed in time for football season.
For the full text of the opinion, see here..
Ryan Bowers
