Prior to 1985, when it came to real estate sales, Florida, like many states, applied the legal principle known as “caveat emptor” or “buyer beware.” In essence, that meant that when a buyer bought a property, they did so at their own risk as far as the condition of the property. That trend changed in 1985 with the Florida Supreme Court’s ruling in Johnson v. Davis, 480 So. 2d 625 (Fla. 1985).
In Johnson v. Davis, a buyer sued a seller in connection with sale of a house. The buyer alleged that the house had a defective roof which the seller failed to disclose. Under the “caveat emptor” rule, the buyer would have been out of luck. However, the Florida Supreme Court reversed prior trends by ruling in favor of the buyer. In doing so, the Court set forth the new standard as follows:
Where a seller knows of facts materially affecting value of property which are not readily observable and are not known to purchaser, seller is under a duty to disclose them to purchaser, and duty is equally applicable to all forms of real property, new and used.
In so ruling, the court recognized that the doctrine of caveat emptor does not exempt a seller from responsibility for the statements and representations which he makes to induce the buyer to act, when under the circumstances these amount to fraud in the legal sense.
Since the ruling in Johnson v. Davis many courts have interpreted and refined the application of this new rule of law. From these cases, one can conclude that in a home buyer’s nondisclosure claim against the seller, there are four elements: (1) the seller must have knowledge of a defect in the property; (2) the defect must materially affect the value of the property; (3) the defect must be not readily observable and must be unknown to the buyer; and (4) the buyer must establish that the seller failed to disclose the defect to the buyer.
The key to this legal trend has been to establish that a seller has a duty to disclose known defects. The standard makes this an affirmative obligation to disclose–not just if asked but in any instance where known defects exist. Failure to disclose could result in legal action against the seller. In essence, this turns the tide and makes the duty one of “seller beware!”
If you are a buyer who feels that a seller has failed to disclose material defects in a home you purchased, you should consult an experienced litigation attorney who can advise you on your claim.