Sellers Beware: Even in “As Is” Real Estate Transactions, Sellers Must Disclose Latent Defects

In Battaglia v. Aversa, No. A-3240-21 (App. Div. Sept. 22, 2023) (per curiam), the Appellate Division revisited the duty to disclose set forth in Strawn v. Canuso, 140 N.J. 43 (1995), which holds that the seller of real estate has a duty to disclose “on-site defective conditions if those conditions are known to [to the seller] and unknown and not readily observable by the buyer.” Id. at 59. In this recent unpublished opinion, the Appellate Division rejected a seller’s attempt to avoid this duty by relying on the “as is” language in the contract of sale; the argument that “a seller’s disclosure form is not a warranty .. [and so] it does not create liability”; and testimony that while he knew that prior owners had flooding in the basement, he himself “never had a problem with water in [the] basement as long as [he] owned the property.”

The Appellate Division debunked each of those arguments. While the trial court found that the seller was “truthful and candid” in his testimony, he nevertheless was liable for several inaccurate statements about flooding in his seller’s disclosure statement. The court held that the seller’s disclosure statement is “part and parcel” of the sale of the property, and that buyers can rely it.

The Court also explained that even without a seller’s disclosure statement, and even in an “as is” transaction, “a seller may not deliberately conceal or fail to disclose a known latent condition material to the transaction. At *11. (citing Weintraub v. Krobatsch, 64 N.J. 445, 454, 317 A.2d 68 (1974).) On the contrary,” the ‘as is’ principle assumes the seller has satisfied its duty to disclose all known latent defects that are not readily observable by the purchaser.” Id (citing Weintraub at 453.)

This case makes it clear that sellers are obligated to disclose material latent issues with their property. Need help? Davis Environmental Law is an experienced environmental law firm. We can help counsel regarding environmental issues in real estate transactions. Contact us to get started.