Let the Buyer Beware: “As Is” Really Means “As Is” Under Caveat Emptor
When a purchase contract for property says the buyer is to take the property “as is,” the seller truly means “as is.” Under the doctrine of caveat emptor, property buyers are held responsible for inspecting the quality and condition of the land or building before the execution of the purchase contract. If the buyer does not exercise due diligence and fails to examine the property, then the seller is shielded from liability for any defects. Additionally, the burden of proof is on the buyer to show that the seller actively concealed a material defect of the property.
Is Florida a caveat emptor state?
Florida courts continue to adhere to caveat emptor, which was reaffirmed in the Florida Fourth District Court of Appeals decision for Florida Holding 4800, LLC v. Lauderhill Mall Investment. In this case, the buyer purchased commercial property from Lauderhill Mall. After discovering issues with the property, which included roof leaks, HVAC failures, and mold, the buyer sued the seller for allegedly misrepresenting and actively concealing the property’s conditions. When the trial court ruled in favor of the seller due to the language of the sale agreement, the buyer appealed to the Fourth DCA. The appellate court found that the contract was classified as an “as is” sale, meaning the seller made no warranties, covenants, or representations of the property’s quality. The Fourth DCA reaffirmed the trial court’s contention, finding that the contract permitted the buyer to inspect the property and cancel the contract if any defect or unsatisfactory condition was discovered.
Are there exceptions to caveat emptor?
Yes, there are three exceptions to the caveat emptor doctrine. In Green Acres, Inc. v. First Union National Bank of Florida, the court acknowledged exceptions to caveat emptor in Florida, including (1) where the purchaser has been prevented from making an independent inspection of the property due to a trick or artifice, (2) where the purchaser does not have an equal opportunity to become apprised of the fact, and (3) where one of the parties attempts to disclose facts and fails to reveal the whole truth. Nonetheless, these exceptions are difficult to claim in court because the buyer has the burden of proving that the seller actively hid the material fact to sidestep any “as-is” language of a contract.
Additionally, oral representations by the seller regarding the property’s condition are explicitly contradicted by any “as is” language in the written agreement. This notion rests on the buyer’s inherent ability to inspect the property and withdraw from the property agreement if the quality of the land or building does not meet their expectations.
What is an example of caveat emptor?
Carl wants to buy a house from Nick. Upon touring the house, Carl asks Nick if there is anything wrong with the property. Nick discloses that there was a termite problem but that a fumigator had resolved the problem about a month ago. Relying on this representation, Carl does not inspect for any remaining termites himself and goes through with the home purchase. In the purchase contract, there is “as is” language.
After moving into the house, Carl finds termite wings in the bathroom. He then decides to hire a fumigator, who reveals the walls and ceilings are infested with insects. Carl decides to sue Nick for damages.
At court, the judge reiterates that a property buyer assumes the risk that a property will not meet their expectations if they do not exercise their due diligence and inspect the property for any defects themselves before the purchase. Accordingly, the judge finds Carl is precluded from suing Nick due to caveat emptor. Carl cannot win any damages since he did not exercise due diligence in inspecting the home for any defects or faulty conditions.
