Residential Real Estate Fraud Claims

Under Florida law, “where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.” Johnson v. Davis, 480 So. 2d 625, 629 (Fla. 1985). As to what is “readily observable,” the Florida Supreme Court provided no definition. However, certain Florida court provides some guidance.

In one case, the buyers purchased real property during the dry season, unaware of the existence of seasonal flooding. After learning of the property’s flood-prone nature, the buyers filed suit for rescission, arguing that under Johnson, the seller “had the duty to advise them of the seasonal flooding.” The trial court disagreed, finding that Johnson was inapplicable and denying the buyers’ claim. On appeal, the District court discussed the meaning behind “readily observable,” concluding that the phrase encompassed a broader meaning than mere visual observation. Instead, the court defined “readily observable” as “information [that] is within the diligent attention of any buyer.”

To exercise diligent attention, the court noted that “a buyer would be required to investigate any information furnished by the seller that a reasonable person in the buyer’s position would investigate” and to “take reasonable steps to ascertain the material facts relating to the property and to discover them — if, of course, they are reasonably ascertainable.” Employing this definition, the court agreed with the trial court’s entry of final judgment, holding that “the flood-prone nature of the area was within the diligent attention of the [buyers],” and stated that “[t]here [was] nothing concealed about South Florida’s rainy season(s), nothing concealed about the fact that low-lying areas of the county flood during the rainy seasons, and nothing concealed about the County’s regulations requiring that homes in such areas be built on elevations to avoid interior flooding.”

While note every defect related to the sale of a property is actionable, Seller can take active steps to conceal materials defects “affecting the value of the property which are not readily observable and are not known to the buyer.” While we cannot include an exhaustive list of common items Seller attempt to conceal from Buyer, below are some examples:

• Unpermitted building or development on the property
• Plumbing problems
• Septic tank issues
• Drain field issues
• Well issues
• Pool, hot tub or spa issues
• Pipe leaks or air conditioning leaks
• Mold issues
• Environmental issues
• Roofing issues
• Foundation issues
• Settlement issues
• Sinkhole issues
• Electrical issues
• Fire Damage
• Smoke damage
• Termite damage
• Chinese drywall
• Boundary dispute
• Homeowner’s association issues
• Water intrusion issues
• Flooding damage

If you believe you are the victim of a real estate fraud and fraudulent nondisclosure or concealment claim, please contact us for a free consultation.