Bought a House With Water Damage. What Can I Do?
It’s spring. Time for water entry into your house. Maybe it was the roof. Likely it was through the siding or the basement. You have it inspected and discover that this has been an issue for a long time. A really long time. The house seller had to have known and just didn’t tell you, or worse, tried to cover it up. What are your options?
If you signed a purchase agreement that’s like most purchase agreements, you agreed to take the property “as is”. This put the burden on you to do your own inspection and to discover any potential defects in the house.
What does that mean? It means that you can’t recover against the homeowner for simple negligence. You have to prove that they intentionally defrauded you in order to recover any money against them.
This can be a fairly high burden to meet. You can usually recover under one of two theories; Fraudulent Nondisclosure, or Fraudulent Concealment. The elements overlap slightly, but you will need to prove one or the other in order to recover against your home seller.
To prevail on a claim of fraudulent concealment, an injured party must establish: (1) actual concealment of a material fact; (2) with knowledge of the fact concealed; (3) and intent to mislead another into relying upon such conduct; (4) followed by actual reliance thereon by such other person having the right to so rely; (5) and with injury resulting to such person because of such reliance. Goddard v. Stabile, 185 Ohio App.3d 485, 2009-Ohio-6375, 924 N.E.2d 868, ¶ 32 (11th Dist.).
The elements which constitute the basis for a claim of Fraudulent Misrepresentation or nondisclosure are: (1) a representation, or where there is a duty to disclose, concealment of a fact, (2) which is material to the transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (4) with the intent of misleading another into relying on it, (5) justifiable reliance upon the representation or concealment, and (6) a resulting injury proximately caused by the reliance. Kimball v. Duy, 11th Dist. Lake No. 2002-L-046, 2002-Ohio-7279, ¶ 23; Cardi v. Gump, 121 Ohio App.3d 16, 22, 698 N.E.2d 1018 (8th Dist.1997).
If there is an “as is” clause in the agreement, you cannot recover for fraudulent nondisclosure: Massa v. Genco, 11th Dist. Lake No. 89-L-14-162, 1991 Ohio App. LEXIS 867, 5 (Mar. 1, 1991); Arndt v. P & M Ltd., 11th Dist. Portage Nos. 2007-P-0038 and 2007-P-0039, 2008-Ohio-2316, ¶ 81, citing Brewer v. Brothers, 82 Ohio App.3d 148, 151, 611 N.E.2d 492 (12th Dist.1992). An "as is" clause, however, does not preclude causes of action for Fraudulent Misrepresentation or Fraudulent Concealment. Waleszewski v. Angstadt, 11th Dist. Lake No. 2002-L-113, 2004-Ohio-335, ¶ 23; Brewer at 151 ("an 'as is' clause does not bar a claim for 'positive' fraud, a fraud of
commission rather than omission").
As a result, you will likely need to prove affirmative fraud. Otherwise, the doctrine of caveat emptor, or “buyer beware”, will bar any recovery. The doctrine of caveat emptor precludes recovery in an action by the purchaser for a structural defect in real estate where (1) the condition complained of is open to observation or discoverable upon reasonable inspection, (2) the purchaser had the unimpeded opportunity to examine the premises, and (3) there is no fraud on the part of the vendor. Goddard, 2009-Ohio-6375, at ¶ 25, citing Layman v. Binns, 35 Ohio St.3d 176, 519 N.E.2d 642 (1988), syllabus.
For concealment, this means that you must put forward actual evidence of concealment. Kaye v. Buehrle (1983), 8 Ohio App.3d 381. However, it is well-stated that in the sale of real estate, there will be a finding of fraudulent concealment when a vendor does not reveal to a buyer sources of peril of which he knows and which are not discoverable by the buyer. Klott v. Associates Real Estate (1974), 41 Ohio App.2d 118, 121. Nondisclosure will become the equivalent of fraudulent concealment when the duty to speak arises in order to place the other party on equal footing. Mancini v. Gorick (1987), 41 Ohio App.3d 373, 374, citing 50 0hio Jurisprudence 3d (1984) 431, fraud and Deceit, Section 78.
In short, unless you had a very unusual contract which had no “as is” clause and had no inspection contingency, you are going to have to prove that your house seller actively concealed a defect, and that you were never on notice of the defect.
Nicholas P. Weiss is the principal of NP Weiss Law. He can be reached at nick@npweisslaw.com, or via phone at 216-417-5111. npweisslaw.com.
This article is meant to provide general advice and does not create an attorney-client relationship with Nicholas Weiss. Your situation may be different, requiring a different analysis. Do not rely on this advice without first discussing your situation with independent counsel.
