Negligent Misrepresentation In A Home Purchase

A company obtained a home through foreclosure and had it inspected.  The inspector noted moisture stains but did not note what the stains were.  The company contracted to sell the property to buyers who agreed in the contract that the property was being sold in “as is” condition.

The buyers were permitted to conduct a home inspection, which resulted in a number of issues being raised as to the condition of the house.  The purchasers sought a price reduction for those issues, which the seller denied.  In fact, the seller cancelled the contract and put the house back on the market.

The buyers responded by offering to reinstate the contract without a price reduction, to which the seller agreed.  The parties agreed that the defendant would perform any repairs necessary to obtain the certificate of occupancy required for closing.

After closing, the buyers sued the seller, claiming that the seller had negligently misrepresented the condition of the property and knowingly concealed defects that could not be remedied.  At the trial level, the case was dismissed on summary judgment, without a trial.

The Appellate Division affirmed, finding that there was not sufficient evidence that the seller had failed to disclose the existence of a road improvement project that would impact the property, or that the seller even had notice of the project.

A home buyer should expect that in general, all sales are final.  Surely in the event of fraud, a purchaser may maintain a lawsuit after closing against the seller.  However, in the case described above, the buyers decided to proceed to closing although they knew that the house had many significant defects.  By accepting the deed and paying the purchase price, they waived any right to make a claim based on those defects.

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