Almost everyone has heard the phrase buyer beware, otherwise known as caveat emptor. But where and when does it apply? A recent Florida case involving a real estate transaction examined the scope of the doctrine of caveat emptor.
The case arose from a transaction where the buyer purchased 123 condominium units from the seller. After the closing, the buyer began renovating the units but ran out of money. The buyer and other parties (the “Plaintiffs”) sued the seller and other parties (the “Defendants”) for fraud. The Plaintiffs alleged that they were misled about the properties’ value and the existence of an appraisal valuing the property at over $90,000 per unit, when, according to the Plaintiffs, the units were worth substantially less. After trial, the Defendants made a directed verdict motion as to the fraud claim.
August 7, 2017
BUYER BEWARE: IN REAL ESTATE DEALS, ITS NOT JUST A CATCHPHRASE
The Defendants argued, inter alia, that any representations about the property value are not actionable under the doctrine of caveat emptor, absent evidence that the Defendants prevented the Plaintiffs from examining the property themselves. The Defendants further argued that no special relationship existed which would make caveat emptor inapplicable. The trial court denied the Defendants’ motion and the Defendants appealed.
In considering the appeal, Florida’s Fourth District Court of Appeal found that the doctrine of caveat emptor was applicable to the commercial transaction. The Fourth District Court of Appeal stated that “[t]his doctrine places the duty to examine and judge the value and condition of the property solely on the buyer and protects the seller from liability for any defects.” The Fourth District Court of Appeal then found that none of the exceptions to the caveat emptor doctrine applied because (1) the buyer admitted it had an opportunity to consult with professionals before the purchase; (2) the buyer had a full and fair opportunity to investigate all aspects of the property, including its value; (3) the buyer could have obtained its own appraisal; and (4) the buyer closed on the transaction knowing that it had not received a copy of any appraisal, and had not viewed a copy of the appraisal which was allegedly referred to during negotiations. The Fourth District Court of Appeal found that the Defendants were entitled to judgment as a matter of law on the fraud claim because, inter alia, “[e]ven if any of the defendants had misrepresented the property's appraised value, such a misrepresentation would not be actionable under the doctrine of caveat emptor in the absence of evidence that the defendants resorted ‘to some fraudulent means in preventing a prospective purchaser from making an examination of the property under consideration.’”
For more information about the topic of this blog post, please contact Weber Law, P.A.’s Steven D. Weber at 305-377-8788 or firstname.lastname@example.org.