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14 Prob. & Prop. 1 (1985-1986)

handle is hein.journals/prbtprty14 and id is 1 raw text is: Section of.IFal Property, Probate and Trust Law American Bar Association Vol. 14, No. 1, Summer 1985 Highlights of Real Estate Law and Practice EDITOR'S NOTE: The following article is drawn from the quarterly report of Real Property Division Committee A-4 on New Developments in Real Estate Law and Prac- tice, Robert A. Mallow, Chair. 1. Real Estate Broker's Duty to Inspect and Disclose. Real estate (including a home, swimming pool, and guest house) was purchased for $170,000 and later damaged by massive earth movement and slides. Estimates of repair to avoid recurrence were as high as $213,000. The real estate broker had conducted a limited investigation, revealing erosion and set- tlement problems, but no request for soil reports or other tests were made. Under current Califor- nia law, if a broker fails to disclose facts materially affecting the value or desirability of property, the broker is liable for the intentional tort of fraudu- lent concealment. Because a jury concluded that a reasonably competent inspection would have re- vealed the problems, the broker was liable for breach of the affirmative duty to conduct a reasonably com- petent and diligent inspection and disclose those material facts that the inspection would have rev- ealed. Easton v. Strassburger, 152 Cal. App. 3d 90, 199 Cal. Rptr. 383 (1984). 2. Extent of Implied Warran of Workmanlike Quality in Residential Construction. In Aronsohn v. Mandara, 98 N.J. 92, 484 A.2d 675 (1984), the New Jersey Supreme Court adjudicated a suit against a con- tractor who constructed a patio that subsequently cracked. Plaintiffs had bought the property from sellers who contracted for construction of the patio. One aspect of the defective construction was lack of proper weepholes in the foundation, which was a readily discoverable defect (although Plaintiffs had arranged for an engineering inspection at the time of purchase). The court held that (1) contract rights of implied warranty are implicitly assigned to a pur- chaser of property from the seller who contracted for their work but (2) an implied assigriment the- ory cannot operate if defects are known or readily Copyright © 1985 American Bar Association, discoverable, because it is assumed that the sales price reflected such defects (leaving a cause of action with the seller), and (3) an implied warranty of habitability (as opposed to a warranty of workman- like quality) was not available to plaintiffs because the patio defect did not rise to the level of a habita- bility defect. The court also suggested that a tort theory of recovery might be available to the plain- tiffs, for loss of the benefit of their bargain, but did not specifically so hold because it viewed the implied warranty remedy sufficient for plaintiffs' needs. 3. Seller Under No Duty to Disclose Change in Mate- rial Fact. In Lenzi v. Morkin, 103 Ill. 2d 290, 469 N.E.2d 178 (1984), plaintiffs contracted to purchase defendant's home. The contract provided for a pro- ration of real estate taxes as of the date plaintiffs were given possession, based on most recent ascertain- able taxes. Prior to signing the contract, defend- ant allegedly received notice from the county asses- sor that valuation of the property would increase from $18,712 to $27,201. Plaintiffs contended that defendant knew the increased assessment indicated that taxes would be substantially greater than those previously reflected, and that defendant breached a duty of disclosure and thus committed fraud by intentionally failing to disclose this material fact. (continued on page 2) Issue Highlights Public Notice and Governmental Liens for Hazardous Waste Site Cleanups ........... 7 Title Insurance Seminarat Fall Meeting ....... 8 Software Review .......................... 8 New Limitations on Mixed Use Property ....... 10 The ERISA Plan Assets Debate and Real Estate Limited Partnerships ............... 14 Produced by the ABA Press

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