Speak Now or Forever Hold Your Peace

A familiar phrase at weddings that equally applies in the home buying context.

In Douglas v. Visser, 295 P.3d 800 (Feb. 25, 2013), the Washington Court of Appeals held that “[w]hen prospective homebuyers discover evidence of a defect, the buyers must beware. They are on notice of the defect and have a duty to make further inquiries.”

The facts as stated by the court cry out – Buyer Beware.

The Douglases made an offer on a home owned by the Vissers. In response, the Vissers filled out a seller disclosure statement, answering the questions with a “don’t know” or failing to respond at all to many questions. Perplexed, the Douglases sent a list of follow-up questions and requested a copy of the inspection report prepared before the Vissers purchased the property. Diane Visser handwrote responses to the questions, but never provided a copy of the inspection report. While unsatisfied with the responses, the Douglases did not ask for any further clarification.

The Douglases then had the home inspected pre-purchase and their inspector discovered various areas of rot and decay, and evidence of recent improvements. The Douglases did not discuss their inspector’s report with the inspector or with Flaherty or the Vissers. They purchased the house without discussing the issue of rot with the Vissers.

After purchasing the home, the Douglases noticed a wet smell and constant presence of potato bugs. The inspector was summoned back to the house and when he lifted a ceiling tile, insulation and water came down. The Douglases requested a bid from a mold abatement contractor, but because the contractor could not issue a guarantee due to the house’s condition, the Douglases apparently took no action for several months.

In September, approximately four months after closing, the inspector came back for the third time and determined that house suffered from extensive rot and opinioned that “installation of the siding was within the last two years and the extent of damage to the sill and rim joist could not have occurred since the installation of the skirt boards siding. Therefore, whoever installed the skirt board siding would have known that structurally damaged portions of the framing would have been concealed.” . . . “It is my professional opinion that the installation of the pink fiberglass insulation in the crawl space stud bays between the floor joists and firmly packed against the rim joists may have been installed to reduce the probability that damaged rim joists and sill would be discovered during a standard home inspection.”

A later bid estimated that it would cost more to repair the home then to tear it down and rebuild it.

The Douglases sued the Vissers claiming fraudulent concealment, negligent misrepresentation, violation of the Consumer Protection Act, breach of contract, and violation of Terry Visser’s statutory duties as a real estate agent

The trial court ruled in favor of the Douglases, finding that “[d]uring the course of renovating the house, the Vissers discovered significant wood rot to the sill plate and rim joist that connects the concrete foundation to the frame.” And that “[r]ather than correct these defects, the Vissers or their hired help made superficial repairs to the visible damage and covered up the rest.”

On appeal, the Court of Appeals noted that “[t]he Vissers efforts in concealing the defects of the house they were selling are reprehensible, even more so because Visser is a licensed real estate agent.” However, the court could not overlook that the Douglases were on notice of problems with the house and notwithstanding this notice, closed on the purchase.

Citing to the case of Puget Sound Serv. Corp. v. Dalarna Mgmt. Corp., the court held that “[o]nce a buyer discovers evidence of a defect, they are on notice and have a duty to make further inquiries. They cannot succeed when the extent of the defect is greater than anticipated, even when it is magnitudes greater.”

 

This blog post is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Although I intend to keep this information current, I do not promise or guarantee that the information is correct, complete, or up-to date. You should not act or reply upon the information in this post without seeking the advice of an attorney.

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