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Casenotes

Indiana

Misrepresentation; Vendor and Purchaser

Dickerson v Strand, 904 NE2d 711 (Ind Ct App 2009).

Facts:Donna Strand and Gloria German (collectively, the sellers) sold a house to Drew and Donna Dickerson (collectively, the Dickersons) in 2000. Prior to the sale, the sellers had the home inspected by Central Indiana Home Inspections (the inspector). The inspector reported major structural defects in the form of termite damage to several floor joists and to the box sill on one side of the home. The Dickersons agreed to purchase the property after having visited the home several times, reserving the right to have the house inspected, and to terminate the purchase contract should any defects be found that the sellers could/would not repair. The purchase was also conditional on the sellers repairing the damage reported by the inspector.

As a result, the sellers hired someone to repair the damage, but only to prop up the floor on the damaged side of the home. The Dickersons did not exercise their right to have the house inspected and proceeded with the purchase. During the closing, the sellers represented on their Real Estate Sales Disclosure form that there were no structural problems with the building.

In 2003, the Dickersons hired a contractor to replace the house's siding. This contractor discovered extensive, unrepaired termite damage to the sill around the building. At this time, it was determined that the sellers did not have the damage repaired, and had only propped up the floors and walls. The Dickersons sued the sellers for misrepresentation. The trial court granted summary judgment for the sellers under the theory that the Dickersons did not have a right to rely on the seller's representations. The Dickersons appealed.

Holding:Affirmed. Though the record leaves questions of fact as to whether the sellers knew that the structural damage was still present and whether they intended to misrepresent the repairs that were made, the court found that the Dickersons did not have the right to rely upon a vendor's representations.

The court reiterated a rule dating back to the 19th century that states that buyers do not have the right to rely on a vendor's representations when they have the reasonable opportunity to examine the property. However, the dissent proposed an alternative view of the issue. Judge Vaidik argued that while caveot emptor is the governing common law doctrine, it is superseded here by provisions of the Indiana Code. In this case, he argued, Indiana Code Sections 32-21-5-1 to -13 require the sellers of residential real estate to disclose certain known conditions, which would have included the termite damage.

The dissent further argued that the legislation had fully intended to allow for lawsuits in cases where the sellers knowingly lied or made misrepresentations regarding the basic habitability of a property. As a result, the dissent argued, the Dickersons could sue under the theory that the sellers violated the statute. Whether or not the sellers knowingly lied, therefore, would be an issue of material fact and, according to Judge Vaidik, summary judgment was inappropriate.

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[Last update: 10-21-09]