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Can a Seller rely on an as-is contract to escape liability?

| Nov 3, 2020 | Real Estate |

How can a Seller of real estate in Texas rely on the as-is clause in a real estate contract? It is possible for a defendant to incorrectly apply the Lutfak v. Gainsborough case in support of a motion for summary judgment. If anything, the Gainsborough case may support a plaintiff’s position. Just because defendants argue that since there is an as-is clause and since plaintiffs conducted an inspection and negotiated repairs, that plaintiffs are precluded from bringing their claims, but that would be incorrect. This is because as the Gainsbourough case states: “Texas courts consistently concluded that a buyer’s independent inspection precludes a showing of causation and reliance if the buyer continued to complete the purchase after the inspection revealed the same information that the seller allegedly failed to disclose.” (emphasis added).

Recently, The Weaver Law Firm argued in one case that the Defendants presented fraudulent mold remediation certificate and withheld the mold report showing toxic mold which was outside of the inspection report. The inspection report did not discuss the main maters that were the subject of the litigation. Therefore, a good case for examination is Marlonia Ivy v. Victor Garcia, et. al., No. 03-18-00545-CV (Tex. App. – Austin 2019). The Marlonia case also cites Gainsborough.

In Marlonia, Ivy filed suit against the Garcias asserting various claims related to the condition of the property. Ivy alleged that Garcia failed to disclose certain facts or made misleading facts about the condition of the property. The Defendant attempted to rely on the as-is provision of the sales contract. Ivy claimed that Garcia fraudulently induced her into the as-is contract. To raise an issue of fact as to the enforceability of the as-is clause in response to the Garcias’ motion for summary judgment, Ivy was required to adduce more than a scintilla of evidence to support her claim that she was fraudulently induced to purchase the Property “as is.” Marlonia at 6 citing Williams v. Dardenne, 345 S.W. 3d 118, (Tex. App. -Houston 91st Dist.] 2011, pet. denied).

In Marlonia, Ivy argued that she was fraudulently induced into signed the as-is contract for several reasons including because Garcia did not disclose previous fires. The court noted that many of the defects alleged by Ivy – namely, water penetration, deterioration and damage in the roof and attic were specifically identified in her inspection report. In such a case, the buyer would be precluded from showing causation and reliance if the buyer continued to complete the purchase after the inspection revealed the same information that the seller allegedly failed to disclose. (emphasis added). Id. But as the court found in Marlonia, not all of the defects alleged by Ivy, were revealed by her inspection report. (emphasis added)  Ivy’s inspection report did not determine whether the property previously sustained a fire.

In the recent case handled by The Weaver Law Firm, the Plaintiff’s inspection did not address: (1) how many times the property flooded; (2) the height of the water penetration during the Harvey Flood; (3) mold history and conditions; (4) that the mold remediation certificate was fraudulent; (5) and that the Defendants were licensed real estate agents.

Because Ivy presented evidence of a previous fire (that was not disclosed and not addressed in her inspection report), the court in Marlonia concluded that Ivy met her burden to adduce more than a scintilla of evidence to support her claim that she was fraudulently induced to purchase the Property “as-is.”

If you require the assistance of a board certified attorney, you can contact Richard Weaver, who is board certified in residential and commercial real estate law. The Weaver Law Firm’s phone number is 713-572-4900

 

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