Property Flashcards
A buyer purchased a newly constructed house from a builder for use as a residence. The buyer did not perform an inspection of the house prior to the purchase. Neither the contract nor the deed contained any warranties as to the condition of the house. Six months later, during a heavy downpour, the basement flooded. Since that time, whenever there has been a substantial rain, there has been water in the basement. The source of the problem has been identified as several cracks in the foundation wall that surrounds the basement. An expert hired by the buyer has opined that the cracks formed due to settling after the home was built and could have been prevented by adherence to proper construction methods. The builder has repeatedly refused to address the problem. Just before the first anniversary of the purchase, the buyer filed suit against the builder for the defective foundation wall and the resulting damages. There are no applicable state statutes that address the issue. Who will prevail?
The buyer, because the builder breached the warranty of fitness or suitability.
A builder or other commercial seller of a newly constructed residence gives a warranty of fitness or suitability to the buyer. When this warranty is not mandated by statute, the courts have implied such a warranty. The warranty covers material defects that could not have been uncovered by the buyer through a reasonable inspection prior to purchase. Here, the cracks are material in that they are the cause of the buyer’s wet basement and, since they formed after the house was constructed, could not have been uncovered by the buyer prior to the purchase.
Requirements of equitable servitude
The requirements for an equitable servitude are: the deed contains a clear intent that the promise be enforceable against a successor-in-interest, the promise touches and concerns the land (i.e., refrain from building a fence on it), and the party against whom it is enforced has notice of it.
What is equitable conversion?
Under the doctrine of equitable conversion, the couple became equitable owners of the property upon the execution of the contract of sale. As such, they bear the risk of loss.
Does the SOF apply to assumption of a mortgage?
NO!
