Faced With Uncertainty, Home Buyers Seek Coronavirus Clauses in Contracts
Real estate agents, racing to keep home sales from falling through, are writing special coronavirus clauses into offers and extending contracts as more than 100 million Americans
encompassing the three biggest cities in the U.S. and many of the country’s luxury housing hubs. The rules have seriously disrupted home sales, which often include face time among multiple parties and stakeholders, including buyers, sellers, agents and lawyers.
Many deals are in a state of limbo if appraisers can’t appraise or inspectors can’t inspect ahead of a scheduled closing, or worse, if one of the parties involved in the sale gets sick. To mitigate the overwhelming uncertainty, buyers are now adding clauses that allow them to postpone closings or even back out entirely from deals without penalty should Covid-19 derail the process.
But that presents a dilemma for someone who buys a home they cannot access. “You don’t want to be in a position where you have to pay the carrying costs on a new home, but you can’t move in until this is all sorted,”
Contract law in many states offers some sort of provision for so-called “acts of God” or other unforeseen and totally unpreventable circumstances.
Inspector Not Liable for Later Injuries
An individual (“Owner”) hired a home inspector (“Inspector”) to inspect a house prior to his purchase. The Inspector noted that the flooring on the second story deck (“Deck”) needed to be replaced and so the seller replaced the flooring prior to the sale. The Inspector did not identify any problems with the Deck’s railing. Following his purchase, the Owner had a social gathering at the house and the Deck’s railing collapsed, causing one of the guests (“Guest”) to fall off the Deck and suffer severe injuries. The Guest brought a lawsuit against the Owner, prior owner, contractor, and the Inspector. The trial court entered judgment in favor of the Inspector and the appellate court affirmed. The Guest appealed to the state’s highest court.
The Supreme Court of Tennessee affirmed the lower court, finding that the Inspector did not provide false information to the Owner nor did he assume a duty of care to property visitors. The court first considered the negligence allegations against the Inspector, which was an issue of first impression for the court. The Inspector testified that he had not seen any visual damage to the railing and the railing had seemed secure during his property inspection. However, later testing revealed that improper screws had been used to secure the railing and the screws had rusted, causing the railing’s collapse.
The court found that the Inspector had not assumed a duty of care for later visitors to the property and thus was not negligent. In order to allege negligence, a party must establish that the other party owed a duty of care to them and the other party breached that duty, causing injury. The court found that the Inspector had only agreed in the home inspection agreement to perform a visual inspection of the property and did not ascertain whether the property met building code requirements. He also had not assumed a duty to protect later visitors to the property. Since the Inspector had not assumed these duties, the court ruled that the Inspector was not liable for negligence.
Next, the court considered the negligent misrepresentation allegations. As part of a negligent misrepresentation claim, a party must show that the other party negligently provided false information. Here, the Guest failed to plead this, as the Inspector never represented that the Deck’s railing was safe; instead, the Inspector simply failed to visually notice any problems with the railing. Because the Guest had failed to allege a negligent misrepresentation by the Inspector, the court affirmed judgment in favor of the Inspector.
Lawsuit over Disclosure of Bats in Attic Proceeds
appellate court has considered whether a trial court had properly allowed to proceed to the jury a buyer’s lawsuit involving the presence of a seasonal bat colony in the attic.
During this visit, he inspected the attic of the house due to a stain he noticed on the outside of the house. While in the attic, he noticed the smell of animal excrement and urine. When he asked about these smells, he was allegedly told that the smell was from the Sellers’ pets. The next time he visited the house, he noticed animal droppings in the attic as well as evidence of “sweeping” around the droppings; he was allegedly told that these droppings were bird droppings. Photographs were taken of the droppings.
Following these visits to the property, the Buyer then submitted a list of 23 questions to the Sellers about the property. None of the Buyer’s questions addressed the condition of the attic. The Sellers answered the Buyer’s questions, and the Buyer made an offer to purchase the property, contingent upon an engineer’s inspection of the property. The Buyer and the inspector (“Inspector”) visited the property, and the Buyer once again noticed a mothball smell in the attic. The Buyer asked the Broker for an explanation of the earlier presence of animal feces in the attic, and the Broker allegedly told the Buyer that a bird was entering the attic through a broken pipe and that this would be repaired prior to the closing
The Buyer moved onto the property two months before the closing. He claims he was told not to store anything in the attic prior to the closing, but he claimed that the smell of urine returned to the attic prior to closing. The closing took place in January 1994. Following his purchase, the Buyer discovered that the attic was home to a seasonal bat colony
The Buyer eventually filed a lawsuit against the Sellers, the Broker, the Brokerage, and the Inspector, claiming that they had failed to disclose the presence of a seasonal bat colony on the premises and fraudulently tried to conceal the evidence of infestation by claiming that it was birds in the attic. All of the defendants filed a motion with the trial court seeking judgment in their favor and the trial court denied this motion, sending the case to a jury for resolution. The defendants appealed.
Salesperson Liable for Incomplete Well Testing
One of the contingencies in the purchase contract was a “satisfactory test of the well system to be performed by a competent well inspector”. An unsatisfactory report would allow the Buyers to cancel the purchase agreement. During a visit to the property, the Salesperson observed the dug well on the property but did not examine the well in any other way.
the Salesperson hired a home inspector who tested the potability of the well water but did not physically inspect the well. The potability test did not reveal any problems with the well water, and no other inspections of the well and its water were performed.
The transaction closed. Following the closing, the Buyers learned that animals were able to access the well and contaminate the water. As a result, the Buyers had to drill a new well on the property. The Buyers brought a lawsuit against the Salesperson and the Brokerage
alleging negligence, breach of the state’s consumer protection act, and breach of contract. A jury returned a verdict in favor of the Buyers on all allegations, and the Salesperson and Brokerage filed a motion with the court asking the judge to set aside the verdict.
rejected the challenge to the jury’s verdict. First, the court considered whether the Salesperson had a duty to contract for a physical inspection of the well, rather than a simple water test. A negligence claim requires a showing that one party owed the other a duty. The court found that the Buyers had relied upon the Salesperson to contract for a complete and competent inspection of the well.
How Home Inspectors Can Protect Themselves from Viruses
There is currently no vaccine to prevent the coronavirus (COVID-19). The best way to prevent illness is to avoid being exposed to this virus. For more information about the coronavirus
The virus is thought to spread mainly from person to person:
between people who are in close contact with one another (within about 6 feet); and
through respiratory droplets produced when an infected person coughs or sneezes.
These droplets can land in the mouths or noses of people who are nearby, or possibly inhaled into the lungs. Ideally, a home inspection would be performed at an unoccupied or vacant house. Usually, home inspectors are doing their work along with their clients, real estate agents, and occupants.
Wash your hands often.
Wash your hands frequently using soap and water for at least 20 seconds, especially after you have been in a public place, or after blowing your nose, coughing, or sneezing.
If soap and water are not readily available, use a hand sanitizer that contains at least 60% alcohol. Cover all surfaces of your hands and rub them together until they feel dry.
Avoid close contact with people who are sick. Put distance between yourself and other people if COVID-19 is spreading in your community. This is especially important for people who are at higher risk of getting sick, such as the elderly, and people with underlying health issues. Ask your clients if they’re willing to consider not showing up at the inspection.
There are many home inspectors who will video-record the inspection for absent clients. Their clients can then play the inspection video from the comfort and safety of their own homes.
Home inspectors can use live video chat or FaceTime with their absent clients during the inspection. Facebook Messenger, iPhone FaceTime, and Google Duo are options.