Plaintiffs agreed to buy defendants' home for $310,000. The contract required $5,000 down, $26,000 within five days afterwards, and the rest at closing a month later. The contract also provided that the buyer had a right to obtain a written report from a roofer before closing to ensure that it was waterproof and that the seller would pay for any necessary repairs. It also said that if a legal dispute arose, the "prevailing party" would be awarded all costs and reasonable fees.
Before plaintiffs made the additional deposit, plaintiff Mrs. Davis noticed some buckling and peeling in the plaster by a windows and that there were stains on some of the ceilings. Defendant Mr. Johnson told her that they were because of a problem with the window and because of a ceiling beam being moved but that neither were a problem any longer. The parties disagreed whether he also said that there had never been a problem with the roof or ceilings.
The plaintiffs then paid the remainder of their deposit and defendants vacated the house. Several days later, Mrs. Davis discovered water "gushing" in from around the window frame, ceiling, light fixtures, glass doors, and stove. Two roofers hired by defendants' broker said they could fix the problem and make the roof waterproof for $1000. Three roofers hired by plaintiffs said the roof was inherently defective, that any repairs would be temporary and the roof was slipping, and that only a new roof for $15,000 could be watertight.
Plaintiffs sued for breach of contract, fraud, and misrepresentation and sought rescission and return of their deposit. Defendants counterclaimed seeking the deposit as liquidated damages.
Trial court made no findings of fact, but awarded plaintiffs $26,000 plus interest and defendants $5,000 plus interest, with each to bear their own attorney's fees.
The Third District affirmed the trial court's return of the $26,000 to plaintiffs, but reversed the award of $5,000 to defendant and awarded plaintiffs costs and fees.
Did defendant have a duty to disclose the roof's condition?
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In the state of Florida, relief for a fraudulent misrepresentation may be granted only when the following elements are present:
- a false statement concerning a material fact;
- the representor's knowledge that the representation is false;
- an intention that the representation induce another to act on it; and,
- consequent injury by the party acting in reliance on the representation.
Evidence cited at trial shows that before plaintiffs paid the $26,000 defendants affirmatively repeated to plaintiffs that there were no problems with the roof before. The doctrine of caveat emptor does not protect one who makes false statements to induce the buyer to act. To approve of defendants' actions just because they already signed a contract would be unjust. It does not matter that plaintiffs could have discovered that it was false as it was not obviously false.
It is now settled in California that where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him and also knows that such facts are not known to or within the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer.
While previous Florida cases have said that there is no duty to disclose in such cases, there should be, as justice requires it.
Defendants knew of and failed to disclose the problem before entering into the contract, thus also entitling plaintiffs to the $5,000 as well.
[W]here the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.
Affirmed with the addition of granting plaintiffs $5,000 more plus interest.
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