Property Condition Disclosure Highlights: 3Q 2018

One case this quarter pertained to Property Condition Disclosure. In that case, a North Carolina court determined a real estate company was not liable for failing to disclose a faulty septic system because the buyers failed to demonstrate that they justifiably or actually relied upon the misinformation.

A. Cases

1. Apperson v. Intracoastal Realty Corp., 818 S.E.2d 202 (Ct. App. N.C. September 18, 2018)

Buyers sued real estate company for negligent misrepresentation, fraud, and unfair trade practices, alleging that the property’s disclosure statement contained misleading information. The disclosure statement stated there were no issues with the drainage, grading, or soil stability of the property and that a new septic system was installed in 2014. The buyers later discovered that the septic system did not work and would need to be replaced; that the new septic system would have to be drained into a nearby creek; that this drainage would require permission from the State of North Carolina; and that without the permission and drainage, the septic system would be inoperable.

The trial court held that absent evidence that real estate company’s statements were false, summary judgment was appropriate. The court on appeal held that the buyers failed to demonstrate that defendants breached a professional duty to plaintiffs and that the buyers failed to demonstrate that they justifiably or actually relied upon any alleged misinformation from defendants to their detriment. Summary judgment for the real estate company affirmed on appeal.

B. Statutes and Regulations

North Carolina

North Carolina modified its Residential Property and Owners' Association Disclosure Statement to eliminate questions regarding radon mitigation systems.4

Oregon

An Oregon statute revised the required Seller’s Property Condition Disclosure form to include information regarding whether a residence built before 1974 is bolted to its foundation.5

C. Volume of Materials Retrieved

Property Condition Disclosure issues were identified once in case (see Tables 1, 2). One regulation and one statute regarding Property Condition Disclosure issues were retrieved this quarter (see Table 1).

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State Law Based Changes

NAR's State Law Based Changes is a compilation of new types of laws collected over the past few years. This resource is helpful to guide states that may want to adopt similar laws in their state.

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Read a summary of this quarter's additions to the State Law Based Changes.