The market is unusual, with buyers skipping inspections to secure homes, altering the dynamics of buyer-seller disputes.

THE BETTER OFFER

          Imagine a survey with this question:  Which is a stronger offer on a Home: a) full price, cash, no inspections, or b) full price, cash, all inspections?  Your response will be the same as 99.9% of the Sellers, Buyers and real estate licensees.  You will pick a).

          You are mistaken. Here’s why: A buyer purchases your home with no inspections.  Later, they discover a small roof leak causing mold in the wall. Further inspection reveals the roof needs new decking, joists, and major repairs. With an estimate of $30,000, they turn to lawyers.  The lawsuit against you (which we will dissect later in this article) claims: 1) breach of the Sellers Property Disclosure Act, 2) fraudulent misrepresentation, 3) negligent misrepresentation, 3) innocent misrepresentation, 4) breach of contract, and 5) violation of the PA Unfair Trade Practices and Consumer Protection Act.

          Let’s skip the mediation and go straight to the trial, where you’ll regret the buyer didn’t have inspections. Without inspections, you’ll testify that you didn’t know about the roof leak or mold. The jury will think you must have noticed something, as the buyers did so immediately. You’ll be held responsible and end up paying for mold remediation and a new roof, even though the roof was 18 years old.

          BUT, let’s imagine your buyer had an inspection.  That buyer will be faced with this line of questions on cross-examination from your lawyer (if she or he has any experience):

• You would agree with me that you knew you wanted an inspection?
• You would agree with me that there are things that a non-expert will never notice when inspecting a home?
• You would agree that not everyone can be a home inspector?
• You would agree with me that you asked for recommendations for a professional home inspector?
• You would agree with me that you picked the top inspector in the field, as recommended by your real estate agent and others?
• We can agree that you were there for over 4 hours with the inspector?
• We can agree you thought the inspector was very thorough?
• In fact, didn’t you tell your real estate agent that the inspector was a bit of a “piss ant”?
• We can agree that you got a written inspection report from the inspector?
• I direct your attention to Defense Exhibit 7, the inspection report.  You would agree it mentions on page 6, that there is a small water stain on the ceiling of the southeast bedroom?
• You would agree that you did not look into the source of that stain?
• You would agree that on page 11 it mentions a slight dip in the roof?
• We can agree that you never noticed that dip?
• We can also agree that you never looked into the cause of that dip?
• We can agree that if the professional home inspector did not point out the dip in the roof, or the small water mark, you would never have seen them.
• We can agree the inspector did not report evidence of mold?
• So, let me see if I get this right, you want this jury to believe that my clients, had Superman Eyes and they were able to see things that only a very accomplished professional home inspector was able to see in a four-hour inspection, and in fact see mold that even the inspector did not see?  Is that what you are trying to tell this jury?
•  Then after a long pause and no answer from the witness, your lawyer (bowing to that classic example of trial practice, “My Cousin Vinny.”) points to the jury and says “ you can tell them, they know…”

Dissecting the  Plaintiffs’ Case

1) Breach of the Sellers Property Disclosure Act.  This type of claim gets the Buyer (Plaintiff) around one of the technical defenses often raised.  Sellers will often point to a clause in the PAR® Agreement of Sale found in paragraph 25(A), which in the law is called an integration clause and claim the Sellers Property Disclosure cannot come into evidence because of something called the parole evidence rule.  That argument fails as to this claim.  However, a seller is only required to disclose what they actually know.  There is no need to inspect or study things.

2) Fraudulent Misrepresentation.   This claim requires a “smoking gun.”  Examples: a proposal from a roofer 2 months before you listed the house which provides a price to repair the “defective leaking roof.”  There are three reasons this type of claim generally fails where there is no smoking gun: 1) the burden of proof for fraud is “clear and convincing evidence,” 2) the Court will probably rule that the case is really a breach of contract case and that the “Gist of the Action Rule precludes a tort claim (non-contract claim), 3) the Court may also rule that the “Economic Loss Rule” precludes recovery in tort for a contract claim.

3) Negligent Misrepresentation.   Here, we are back to everything above except the heightened burden of proof.  However, the contributory negligence rule provides that if the Plaintiff is even 1% responsible, there is no recovery.  

3) Innocent Misrepresentation.   This again is subject to the Gist of the Action Rule and the Economic Loss Rule, but on the surface, it seems easier to prove.  Here is the problem, our appellate courts have held that if you win, the only remedy is recession and restitution.  The seller gets back the house and you get what you paid.

4) Breach of Contract.  This a problem for most Plaintiffs, but the best defenses are often missed.  What is the best defense.  If the Buyer did an inspection (remember we already figured out that we want the buyers to inspect) and found an issue that needed to be addressed, paragraph 13 of the PAR® Agreement of Sale comes into play.  If the buyers submit a written proposal and you as the seller accept it, the buyer is bound to buy the house as is and give you the release set forth in paragraph 28 of the contract.

5) Violation of the PA Unfair Trade Practices and Consumer Protection Act.  Here is where things get sticky for a Seller.  Section 201-2 of the UTPCPA lists things that the legislature considers to by unfair trade practices.  It is subsection xxi that creates the problem.  It used to require fraud.  It was changed to read “Engaging in any other fraudulent of deceptive conduct which creates a likelihood of confusion or of misunderstanding.”   Let’ forget the fraudulent conduct for a moment and focus on the word “deceptive.”  This takes ups back to the misrepresentation claims discussed above.  There are three elements of misrepresentation or deception: a) an untrue statement, b) reliance on that statement, and c) damages which flow from that reliance.  If the Buyer had an inspection and even if the “tip of the iceberg” is showing, the element of reliance is defeated.  One cannot be confused by a representation or have a misunderstanding based on a misrepresentation if there was no reliance upon the representation.  If successful, the Court has the power under this statute to award treble damages and attorneys’ fees.