Luckily, when it comes to purchasing a used home in Florida, the same gotcha "as is" concept does not necessarily apply as evidenced by a recent court case decided by our Second District Court of Appeals (2nd DCA) on Oct. 31, 2003.
In the case of Syvrud v. Today Real Estate Inc., the buyers (the Syvruds) and the sellers (the Cummings) entered into a sales contract on a preprinted real estates sales form approved by the Florida Bar called a "FAR/BAR contract." They also executed a typewritten addendum which included among other language that "Buyer(s) hereby acknowledge that the property being sold is not new and that the seller(s) and broker(s) make no verbal representations, warranties, or guarantees as to the condition of the property and its appurtenances and/or fitness for specific purpose." This is a typical "as is" provision.
The addendum did not however, delete or otherwise reference paragraph "W" of the FAR/BAR contract relating to "WARRANTY" which provides that "Seller warrants that there are no facts known to Seller materially affecting the value of the Property which are not readily observable by Buyer or which have not been disclosed to Buyer."
This paragraph "W" sets forth a Seller's duty to disclose defects in connection with residential real estate transactions declared in 1985 by the Florida Supreme Court in the case of Johnson v Davis.
Paragraph (D) of the addendum made the contract "contingent on buyer's review and approval of a seller's property disclosure statement within 7 days of receipt of said statement." The standard disclosure statement delivered by the seller contained no disclosure of any of the hidden defects and conditions affecting the property that the buyers alleged they discovered after the closing.
The hidden defects, claimed as not being disclosed, were not merely cosmetic but much more serious including mildew damage, water leak damage, structural cracks, and other structural defects to the unit itself as well as structural defects in the buildings in the project costing special assessments in excess of $20,000 per unit.
In the action brought for the sellers' failure to disclose the hidden defects affecting the value of the property for which the sellers had knowledge, evidence consisted of six letters from the governing homeowner and condominium associations to the unit owners wherein the serious structural defects were discussed.
The trial court entered judgment on the pleadings against the buyers on the grounds that the provisions of the addendum to the parties' contract (the "as is" language) relieved the sellers and its agents from any duty to disclose the defects (Johnson v Davis duty) to the buyers. So the buyers appealed.
The 2nd DCA said that the "as is" language did not waive the buyers' right to have the hidden defects known to the seller, and/or its agents, disclosed to the buyers. The court said that although the "as is" clause purported to disclaim any representations, warranties, or guarantees concerning the condition of the property, "at no point does this provision or any other part of the addendum specifically state that the Buyers waive the Sellers' duty to disclose hidden defects materially affecting the value of the property as required by Johnson v. Davis."
Therefore, the 2nd DCA Court held "an 'as is' clause in a contract for the sale of residential real property does not waive the duty imposed by Johnson v. Davis to disclose hidden defects in the property."
The question still remains. If the "as is" clause in the addendum did contained language waiving the sellers' duty to disclose the hidden defects in paragraph "W," would such a waiver be enforceable? Although the 2nd DCA decided not to answer this question and further said that no Florida case has squarely decided the issue, it did refer in a footnote to a case wherein Justice Altenbernd of the Florida Supreme Court, in a dissenting opinion, doubted "whether Florida law allows a buyer's waiver of contractual warranties to operate as a bar to a claim of fraud under Johnson v. Davis."
This case illustrates why it is so important to use competent real estate and legal professionals when buying and selling a home to ensure smooth closings and unwanted surprises do not arise after the sale for either party.
Rob Samouce, a principal in the Naples law firm of Samouce, Murrell, & Gal, P.A. concentrates his legal practice in the areas of community associations (including condominium, cooperative and homeowners' associations), real estate transactions, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.