A home is invariably the most expensive purchase a person will ever make. Unfortunately, many purchasers, after they move into their new home, discover defects, apparent or real, that make them unhappy and even regret their new purchase. They then want to sue the sellers for their damages, which usually include their anticipated costs to remedy the defects, as well as other collateral costs. The general rule with respect to transactions involving real property firmly remains that of “caveat emptor,” which translated means “let the buyer beware.” In other words, before one purchases a home he had better make sure he is getting what he bargained for. In many cases, that means carefully looking at the home on several occasions and making any purchase subject to a home inspection by a reputable home inspector. The old adage of an ounce of prevention is perhaps no more applicable than when purchasing a home.
Nonetheless, here is a distillation of the law regarding the obligations of a seller and the rights of purchasers arising from the sale of real property; but first the definition of two important terms, “latent defect” and “patent defect”.A latent ‘defect’ is in effect some fault in the structure that is not readily apparent to an ordinary purchaser during a routine inspection. And ordinarily, if a vendor actively conceals a latent defect, the rule of caveat emptor no longer applies and the purchaser is entitled, at her option, to ask for a rescission of the contract or compensation for damages.
- A vendor is not bound to call attention to patent defects; the rule is caveat emptor;
- Where there is active concealment of an otherwise patent defect, the general rule of caveat emptor will not apply;
- If a vendor actively conceals a latent defect, the rule of caveat emptor no longer applies and the purchaser is entitled, at his option, to ask for a rescission of the contract or compensation for damages;
- A vendor may be liable to a purchaser with respect to premises that are not new if he knows of a latent defect that renders the premises unfit for habitation. However, in such a case it is incumbent upon the purchaser to establish that the latent defect was known to the vendor, or that the circumstances were such that it could be said that the vendor was guilty of concealment or a reckless disregard of the truth or falsity of any representations made by her; and
- Where there are no “clues” and no reasonable means of testing for defects, liability for actively concealing defects, whether patent or latent, actively not disclosing latent defects, or fraudulently misrepresenting facts relating to latent defects, remains with the seller, subject to the requirement with respect to active concealment or active non-disclosure that the same constitute a fraud on the purchaser the same as a fraudulent misrepresentation would.
Such evidential findings almost always turn on the credibility of the seller, the purchaser and their respective witnesses, and even experts, at trial.