Daily Development for Friday, June 22, 2007
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

VENDOR/PURCHASER; DISCLOSURE; CAVEAT EMPTOR: Where, after original contract of sale has expired, seller solicits a renewal of the contract and fails to disclose that he has removed (or contracted to remove) timber on property that is valuable for buyers proposed use, seller has no liability because it is up to buyer to reinspect the property and be aware of any changed conditions on the property. 

Rockford Homes, inc. v. Handel, 2007 Westlaw 1544711 (Ohio App. 5/25/07)

Buyer, a home builder, contracted to purchase 75 acres of land from Seller.  Some of the land was wooded, and Buyer regarded this as a desirable feature, making possible premium priced lots.  Nevertheless, the contract contained no mention of trees on the property.  The contract contained contingencies relating to title, and Seller was unable to satisfy the title contingencies by the original time of closing or by the expiration of two subsequent extensions.  Thus, as of June 1, 2004, the contract was not in effect.

The parties, however, later extended the contract again (presumably this was effectively a new contract), with an expiration of October 16.  Seller still was unable to satisfy the title problem.

Sometime in mid-October (the record apparently is vague on the point), Seller entered into an oral agreement with a lumber harvester to harvest trees on the property.  On November 19, Seller again contacted Buyer to ask that the contract be renewed (effectively another thirty day contract.  Buyer executed the renewal on November 22, and Seller executed it on November 25.  Earnest money was paid on December 8 and the parties closed on December 10.

A few weeks later, Buyer learned for the first time that the trees that Buyer had thought valuable to his home development purposes had been removed from the property.  Seller testified that the trees probably were removed prior to the renewal agreement, but no specific date was provided.

Buyer brought suit for fraud, breach of contract, waste and conversion.  The trial court granted summary judgment on all counts and Buyer appealed.

Held: Affirmed. 

On the breach of contract claim, Buyer claimed that the trial court should have found that the trees were cut while the property was under contract.  According to the court, the issue was moot because even if the cutting of the trees did breach the purchase contract, Buyer lost any claim for breach of contract under the concept of merger by deed. 

The court acknowledged that there is an exception to the merger by deed doctrine in Ohio when the party affected by the merger can show fraud by the other side.  But the court held that there can be no fraud in a land contract as to matters that are readily observable by inspection as, of course, was the case here.  (There is some question as to whether there would be fraud if the trees were cut while the property was under the extension contract anyway, since by then the Buyer already had agreed to buy and any claim would have to be based on something other than fraud.)  No one claimed that Seller ever represented to Buyer that the trees were still on the property.

On the waste claim, the Ohio court ruled,, that waste is not a recognized doctrine in Ohio. [Oh?  Thats interesting.  In all contexts - including fiduciary relationships, life estates, mortgages, leases, etc. etc.]

As to the conversion claim, the court held that, even assuming that the logs were cut while the contract was in effect, the Seller was still in title, and therefore there was no conversion of Buyers property.

Comment 1: The lawyer who sent this case to the editor clearly felt it was an improper result.  A frequent critic of his own states judicial decisions, he commented:Only in Ohio.  The editor disagrees.  Many other states would have reached the same outcome, but likely on different grounds.

Comment 2: The contract never mentioned the trees.  So it certainly is quite arguable that the Seller did not know that the Buyer valued them.  If they were cut prior to the last extension agreement, then the editor would agree, absent more facts, that the Seller had no duty to disclose that they had already been cut.  Buyer should have reinspected the premises.  Do other readers disagree?

Comment 3: But what if they hadnt already been cut as of the time of the extension (new contract)?  The court said that there is no doctrine of waste in Ohio.  On what grounds would be Buyer have a claim?

Well, what about equitable conversion?  But court notes that an Ohio statute, plus common law conversion, would give a remedy against one who cuts trees on the land of another.  But it says that the Seller had title to the property, and thats the end of the argument.  Is it?  Under the doctrine of equitable conversion, recognized in many jurisdictions, the buyer becomes effectively the owner of the property once the contract becomes subject to specific performance. 

Did equitable conversion occur here?  Hard to say.  But clearly summary judgment was inappropriate if there were alleged facts that Buyer was denied the opportunity to prove that would have supported such a claim. 

Comment 4: But the court found that merger by deed cut off the Buyers right to complain.  The editor believes that, although some states might apply merger by deed to these facts, such application would be wrong.  The doctrine ought to apply only when the party accepting the deed has actual knowledge that buyer is not getting what he contracted to get.  Further, in many jurisdictions, the concept is limited to title defects.  Otherwise, of course, a court could find a knowing waiver, and this is essentially the same as calling the situation a merger, but here there is no evidence that the buyer knew that the trees were gone.

In any event, Buyer would have a conversion claim notwithstanding merger because the claim arose when the trees were cut. 

Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters.  The same is true of all
commentary provided by contributors to the DIRT
list.  Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor
and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality


DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 to 15 messages per work day.

Daily Developments are posted every work day.  To
subscribe, send the message

subscribe Dirt [your name]



To cancel your subscription, send the message
signoff DIRT to the address:


for information on other commands, send the message
Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters.  Because real estate brokers generally find
this service more valuable, it is named BrokerDIRT.  But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list.  If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]



To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:


DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law.  Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, DIRT, and its sponsors.

DIRT has a WebPage at:
https://e2k.exchange.umkc.edu/exchweb/bin/redir.asp?URL=3D http://cctr.umkc.edu/dept/dirt/



To be removed from this mailing list, please go to
<https://e2k.exchange.umkc.edu/exchweb/bin/redir.asp?URL=3D http://listserv.umkc.edu/listserv/wa.exe?SUBED1=3DDIRT%26A=3D1
or send an email message to the address listserv@listserv.umkc.edu,
with the text SIGNOFF DIRT in the body of the message. Problems
or questions should be directed to manager@listserv.umkc.edu.