The Real Estate Cupboard #105 Archives by Steve Hubbard, Certified Buyer’s Representative
Caveat venditor”, let the seller beware, has become as important as “Caveat emptor”
“Caveat emptor” is an important term in the Real Estate business. It means “let the buyer beware” and has over the years until recent times strongly connoted that virtually all of the responsibility for making an informed decision concerning the purchase of real estate resides with the buyer. The buyer’s knowledge of the condition of a property was not considered the seller’s responsibility. This was true even to the point of the seller not being required by law or even morally obliged to disclose any known material property defects such as problems with the roof, problems with the electric, plumbing or heating or structural problems and the like to the buyer.
Although it is still highly recommended that the buyer make every effort to learn as much about a property to be purchased as possible, it is no longer true of course that responsibility for knowledge of a property rests with the buyer alone. The owner of the property being conveyed is now required to disclose any known material defects and information that might materially effect the value of the property to the buyer at the earliest opportunity. We might even say that the term “Caveat venditor”, let the seller beware, has become as important as Caveat emptor.
But the inscription at the Delphic Oracle “Know thyself ” may be, if not more important than either Caveat emptor or venditor, it is certainly equally as important. What I mean to say is that not very thoughtfully considering what you are about and not being as certain as you can be before entering into the Real Estate buying process can be very expensive. Two recent court cases illustrate the expense that can result from thoughtless or uncertain forays into Real Estate buying. In the first case a court ruled that the seller could keep the deposit of a buyer who backed out of a purchase even though the seller was not damaged by the buyer’s decision not to buy. In May 1994 the buyer and seller agreed to a sale price of $355,000. The buyer backed out in August and the seller went on to sell the property to another buyer at $360,000 within just a few week of the collapse of the first deal. Wow! Good for them. The buyer, arguing that the seller had not only not been damaged by the buyer’s withdrawal from the deal but had actually gained, sued for the return of their $17,000 deposit. Guess what. The court, citing the purchase agreement which said ” If the buyer shall fail to fulfill the buyer’s agreements herein, all deposits made hereunder by the buyer shall be retained by the seller”, ruled in favor of the seller ordering that the seller keep the buyer’s deposit. The buyer appealed but the seller ultimately prevailed.
In another case with which I am familiar, the buyer many weeks, I guess even several months, into the deal and well past the time of her home inspection, announced to all parties that instead of attending the closing scheduled for the next day she wanted and was in fact demanding another home inspection on that day. It was her eleventh hour and I think pretty transparent claim that she had never really been satisfied that the professional home inspector whom she had hired and paid had given her the “real truth” about the house she was about to buy. And so on the day on which the closing was supposed to have taken place she had another home inspection with predictable results. A home inspector from well out of the area not surprisingly found the house to be hardly habitable without a vast expenditure of funds. It was clear to the buyer that this guy really really knew the truth. The buyer not surprisingly backed out of the deal citing as her reason her second home inspection which described the house as other than what she had thought it to be. Again the court ruled in favor of the seller and ordered the escrow agent to send the seller the buyer’s deposit, 10% of the purchase price. Although I am not familiar with the reason for the court’s ruling in this case I am confident that it was the reasoning of the court that the buyer had, after a full professional home inspection, accepted the property as it was. And as it was essentially the same property on the day on which the closing was to have taken place as it was on the day it had been inspected and accepted the first time, the buyer did not have good cause for withdrawing from the deal. In addition, the seller had been substantially damaged by loss of valuable marketing time. The buyer had tied up the property from late spring through a good portion of the summer. So if you think you may for some reason back out of a Real Estate transaction, you can save yourself lots of money by not entering into it in the first place.
Steve Hubbard owns and operates Steve Hubbard Real Estate Services.
All Rights Reserved©