480 So. 2d 625 (Fla. 1985)
In May of 1982, the Davises entered into a contract to buy for $310,000 the Johnsons' home, which at the time was three years old.1 The contract required a $5,000 deposit payment, an additional $26,000 deposit payment within five days and a closing by June 21, 1982.2 The crucial provision of the contract, for the purposes of the case at bar, is Paragraph F which provided that prior to closing at Buyer's expense, Buyer shall have the right to obtain a written report from a licensed roofer stating that the roof is in a watertight condition, and in the event repairs are required either to correct leaks or to replace damage to facia or soffit, seller shall pay for said repairs which shall be performed by a licensed roofing contractor.3
Before the Davises made the additional $26,000 deposit payment, Mrs. Davis noticed some buckling and peeling plaster around the corner of a window frame in the family room and stains on the ceilings in the family room and kitchen of the home.4 Upon inquiring, Mrs. Davis was told by Mr. Johnson that the window had had a minor problem that had long since been corrected. He also told her that the stains were wallpaper glue and the result of ceiling beams being moved. There is disagreement among the parties as to whether Mr. Johnson also told Mrs. Davis at this time that there had never been any problems with the roof or ceilings.5 The Davises thereafter paid the remainder of their deposit and the Johnsons vacated the home.6
Several days later, following a heavy rain, Mrs. Davis entered the home and discovered water gushing in from around the window frame, the ceiling of the family room, the light fixtures, the glass doors, and the stove in the kitchen.7 Two roofers hired by the Johnsons' broker concluded that for under $1,000 they could fix leaks in the roof and by doing so make the roof watertight.8 Three roofers hired by the Davises found that the roof was inherently defective, that any repairs would be temporary because the roof was slipping, and that only a new $15,000 roof could be watertight.9
The Davises filed a complaint alleging breach of contract, fraud and misrepresentation, and sought rescission of the contract and return of their deposit.10 The Johnsons counterclaimed seeking the deposit as liquidated damages.11 The trial court entered its final judgment on May 27, 1983.12 The court made no findings of fact, but awarded the Davises $26,000 plus interest and awarded the Johnsons $5,000 plus interest.13 Each party was to bear their own attorneys' fees.14 The Johnsons appealed and the Davises cross-appealed from the final judgment.15 The Third District found for the Davises affirming the trial court's return of the majority of the deposit to the Davises ($26,000), and reversing the award of $5,000 to the Johnsons as well as the court's failure to award the Davises costs and fees.16 The Supreme Court of Florida granted review because the decision expressly and directly conflicts with Banks v. Salina and Ramel v. Chasebrook Construction Co.17
Whether the sellers breached the roof inspection provision of the purchase contract?18
The contract's roof inspection provision contemplated the possibility that the roof may not be watertight at the time of inspection.19 It provided a remedy if it was not in such a condition.20 The remedy required the seller to pay for repairs performed by a licensed roofing contractor to correct leaks or replace damage to facia or soffit.21
No. The contract contemplated the possibility that the roof may not be watertight at the time of inspection.22 It provided a remedy if it was not in such a condition. The record is devoid of any evidence that the seller refused to make needed repairs to the roof.23 In fact, the record reflects that the Davises never even demanded that the areas of leakage be repaired either by way of repair or replacement.24 Yet the Davises insist that the Johnsons breached the contract justifying rescission.25
The trial court included no findings of fact in its order but the district court inferred from the record that the trial court refused to accept the Davises' characterization of the roof inspection provision of the contract.26
The sellers did not breach the roof inspection provision of the purchase contract.27
Whether the sellers' statements to the buyers about the condition of the roof constituted fraudulent misrepresentation?28
Relief for a fraudulent misrepresentation may be granted only when the following elements are present: (1) a false statement concerning a material fact; (2) the representor's knowledge that the representation is false; (3) an intention that the representation induce another to act on it; and (4) consequent injury by the party acting in reliance on the representation.29
Yes. The evidence adduced at trial shows that after the buyer and the seller signed the purchase and sales agreement, the Johnsons affirmatively repeated to the Davises that there were no problems with the roof.30 This occurred after receiving the $5,000 initial deposit payment.31 The Johnsons subsequently received the additional $26,000 deposit payment from the Davises.32 The record reflects that the statement made by the Johnsons was a false representation of material fact, made with knowledge of its falsity, upon which the Davises relied to their detriment as evidenced by the $26,000 paid to the Johnsons.33
The doctrine of caveat emptor does not exempt a seller from responsibility for the statements and representations which he makes to induce the buyer to act, when under the circumstances these amount to fraud in the legal sense.34 To be grounds for relief, the false representations need not have been made at the time of the signing of the purchase and sales agreement in order for the element of reliance to be present.35
The sellers' statements to the buyers about the condition of the roof constituted fraudulent misrepresentation.36
Related opinions on this issue
Chief Justice Boyd dissents and finds insufficient evidence from which the trier of fact could have found that at the time Johnson told Mrs. Davis about the previous leaks that had been repaired, he knew that there was a defect in the roof.37 He also finds insufficient evidence that there were in fact any defects in the roof at the time of the execution of the contract.38 Boyd concludes that the elements of actionable fraud were not established by sufficient evidence in this case.39
There was no competent substantial evidence to show that Mr. Johnson made a false statement knowing it to be false.40 There was no evidence that the statement was made with the intention of causing Mrs. Davis to do anything since she had already contracted to purchase the house.41
Whether a seller of a home has a duty to disclose to the buyer latent material defects of which the seller is aware?42
Yes. In the case at bar, the evidence shows that the Johnsons knew of and failed to disclose that there had been problems with the roof of the house.45 Mr. Johnson admitted during his testimony that the Johnsons were aware of roof problems prior to entering into the contract of sale and receiving the $5,000 deposit payment.46 Thus the Johnsons' fraudulent concealment also entitles the Davises to the return of the $5,000 deposit payment plus interest.47
The courts in some jurisdictions hold that where the parties are dealing at arms length and the facts lie equally open to both parties, with equal opportunity of examination, mere nondisclosure does not constitute a fraudulent concealment.48 However, these unappetizing cases are not in tune with the times and do not conform with current notions of justice, equity and fair dealing.49
A seller of a home has a duty to disclose to the buyer latent material defects of which the seller is aware.50
Related opinions on this issue
Chief Justice Boyd respectfully but strongly dissents to the Court's expansion of the duties of sellers of real property.51 He states that this ruling will give rise to a flood of litigation and will facilitate unjust outcomes in many cases.52 If as a matter of public policy the well settled law of this state on this question should be changed, the change should come from the legislature.53
Boyd adds that he does not find sufficient evidence in the record to justify rescission or a finding of fraud even under present law and would quash the decision of the district court of appeal.54