Material Defects Flashcards
What is the rule for disclosure of material defects?
Under modern law, a seller is required to disclose any latent material defects. Under common law, a seller does not have to disclose anything unless asked.
What is a material fact?
1) affects a buyers decision to buy
2) affect the price paid
3) Affect the terms and conditions
What is Caveat Emptor?
Rule under common law: “Let the buyer beware”
Seller has no affirmative duty to disclose patent defects or latent defects unless asked.
What is a “Patent Defect?”
A defect at those that are open and obvious that could be discovered by a reasonably prudent purchaser.
What is a “Latent Defect?”
Defects that cannot be discovered by a diligent inspection or on your own. Can only be told by the buyer.
If a seller is asked a question about the property, must they answer honestly?
Under both modern and common law, a seller must answer any question honestly.
Modern law on Material defects?
Sellers must disclose latent defects because they are not discoverable even by a prudent inspection. This info is only discoverable if the seller informs the buyer. What is a latent defect is held to the reasonable person standard.
What are the different rules followed by different states?
1) some states: anything that can possibly be material must be disclosed.
2) Anything that objectively would be important under the reasonable person standard must be disclosed.
3) Some: Do not have disclose anything unless asked. (Caveat Emptor)
What must a buyer discover on their own?
Buyer is responsible for discovering anything that is knowable rather than the seller informing them of it. (Sex offender registry, anything on title)
