DIRT Daily Development for Friday, September 21, 2001

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

VENDOR/PURCHASER; DISCLOSURE; CAVEAT EMPTOR; "REASONABLE INSPECTION:"

Buyer's "duty of reasonable inspection" does not include hiring a professional pool service to inspect a residential swimming pool for hidden leaks.

Mitchell v. Christensen, 2001 Utah 80, 2001 WL 995237 (Utah 8/31/2001)

Buyer carefully inspected the property herself, and hired a professional home inspection service. After buyer closed the property, leaks were found in the piping system for the swimming pool that were hidden from view. The court assumed that an inspection by a professional pool service would have detected the leaks, probably through a pressure check.

The court noted the usual common law rule that sellers are liable to disclose any known defects that are "latent," - undiscoverable by reasonable inspection.

Although sellers claimed that they had no knowledge of the leaks, the court assumed for purposes of their summary judgment motion that they did have such knowledge, and failed to disclose the information to buyer. The problem then devolved into whether the defects were "latent."

The court held that buyer's claim for failure to disclose will survive the summary judgment motion. The defect, the court held, was "latent," since a residential home purchaser should not be expected to retain a professional swimming pool inspector to identify problems when there are no problems apparent from an inspection of the visible elements of the pool.

Comment 1: This is a close call. The home inspection service supplied a report in which it specifically warned the buyer that it hadn't inspected non-visible elements of the home. It made no suggestion that it had tested the pool equipment. Call me crazy, but if I were to acquire a home with a pool, I'd have that pool inspected by someone who knew about pools. I'd even view that as a minimum "reasonable" precaution. Of course, I don't live in Utah.

Comment 2: A number of jurisdictions require greater disclosure, especially in residential transactions, and would not permit the buyer to withhold information of a known defect, even if it was reasonably discoverable.

Comment 3: Some states, by statute, require that seller provide a written statement of condition. This statement purports to include all defects known to the seller. As the usual rule is that sellers are liable for any affirmative misrepresentations, the statement constitutes a warranty that seller knows of no defects other than those listed. In many jurisdictions, brokers are requiring these disclosure statements as a matter of custom, telling their clients that the statements are required by law, whether this is true or not.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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