Most jurisdictions have abandoned caveat emptor in the sale of real estate noting that the doctrine is a vestige of the past when the buyer and seller were in equal bargaining positions and each could readily protect their interests. Today, however, the seller, broker or builder of real estate and the buyer of real estate are not in equal bargaining positions. The seller, broker and builder of real estate have superior access to information about the real property compared to the buyer’s access. Courts, therefore, have imposed an affirmative duty on sellers of real estate, real estate brokers and builders to disclose certain information including defects about real property to potential buyers. In light of this duty, caveat venditor, that is let the seller beware, seems to have replaced caveat emptor in real estate transactions.
A seller and a buyer of a house should be aware that now caveat venditor governs the transaction. As a seller, you are required to disclose visible defects or hidden defects of which you are aware. For example, if you know that the basement of your house habitually floods, you need to so advise potential buyers. As a buyer, through your broker or attorney, you need to ask questions about the condition of the house and obtain in writing a statement from the seller or broker about the conditions and defects in the house. Even though caveat emptor has been replaced by caveat venditor, a buyer who does not inquire about the condition of a house may have difficulty recovering damages if a defect is discovered after the closing. Comparatively, even without receiving inquiry from a buyer, a seller needs to disclose defects in the house. Taking these steps is the best way to avoid a problem in the future regarding the condition of the house that you either bought or sold.
If you have an issue regarding whether you improperly failed to disclose a defect and a buyer is making a claim against you or whether you were not advised of a defect and you want to make a claim against a seller, builder or broker, you may reach out to Bathgate, Wegener & Wolf at 732-363-0666.