Duty to Disclose Implied Warranty of Quality

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Duty to DiscloseImplied Warranty of Quality
Property

• Prof. David Glazier
• Jan 18, 2007

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Todays Class

• Duty to disclose
• Poltergeists in New York!?
• -- Stambovsky v. Ackley
• - More generally in Florida
• -- Johnson v. Davis
• Status of the law
• Implied Warranty of Quality
• Reading for Tuesday

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Stambovsky v. Ackley (NY 1991)

• What is the common law requirement for disclosure
  in real property transactions?

Caveat emptor Non-disclosure ?
misrepresentation Only active concealment or
affirmative misrepresentation actionable
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Stambovsky v. Ackley (NY 1991)

• How did this house become legally haunted?

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Stambovsky v. Ackley (NY 1991)

• Why did the court reject strict application of
  caveat emptor here?

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Stambovsky v. Ackley Wrap-up

• Narrow holding (NY specific)
• How many ghostly puns can be worked into a single
  opinion?
• For more details on the story, check this out
• http//home.comcast.net/subwaymark/Ghost/ghost.ht
  m

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Johnson v. Davis (Florida 1985)

• What are the facts?

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Johnson v. Davis (Florida 1985)

• Why does court say there had been distinction
  between misfeasance and nonfeasance?

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Johnson v. Davis (Florida 1985)

• What does court decide about the distinction?
• If (1) facts materially affecting property
  value
• (2) are not readily observable, and
• (3) are unknown to buyer
• Then Seller has duty to disclose
• Is this a sound decision?

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Statutory Duties to Disclose

• Federal law
• - Residential lead paint
• - Hazardous waste sites
• - Settlement costs
• State law varies
• - Majority mandate formal written disclosures
• -- e.g., all material defects known to seller
• -- some permit as is/non-reliance
  disclaimers
• - May be mix of statutory and common law rules
• Brokers required to disclose agency status

APPLIES TO RESIDENTIAL REAL ESTATE
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Nondisclosure Hierarchy

• Fraud deliberate misrepresentation of facts
• Fraudulent non-disclosure failure to disclose
  known facts where law creates duty to do so
• Negligent misrepresentation failure to disclose
  facts that party should have known
• - - - - - - - - - - - - - - - - - - - - - - - - -
  - - -
• Other failure to disclose ground for recission?
• - Some states still allow as is disclaimer

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Buyers Duty to Disclose?

• Seller Buyer

Any duty to disclose?
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Implied Warranty of Quality

• Imposed on home builders only
• - could extends to additions, remodeling(?)
• Liable for cost of repairing latent defects
• - not obvious to visual inspection
• - duty is to provide workmanlike construction
• Warranty extends to subsequent purchaser
• - no privity of contract required
• Duration set by standard of reasonableness

Some jurisdictions call it habitability
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Reading for Tuesday Jan 23

• The Deed
• Read warranties of title incl. nn. 1-5 pp. 513-17
• Read Brown v. Lober pp. 518-520
• Read Rosengrant v. Rosengrant pp. 536-40

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Questions?