Many home sellers mistakenly consider an “AS IS” sales contract as a release from liability for all faulty or defective conditions on the sale of a home. However, under the landmark case of Johnson v Davis, 480 So. 2d 625 (Fla. 1985) the Florida Supreme Court took a different view.
Florida Supreme Court’s View on “AS IS”
In Johnson, the Florida Supreme Court effectively changed the law in Florida holding that where a seller of a home knows of facts materially affecting the value of the home which are not readily observable and are not known to the buyer, the seller is under a duty to disclose those facts to the buyer.
The effect of Johnson does not make a seller of a home a warrantor of the good condition of the home. Slitor v Elia, 544 So. 2d 255 (Fla. 2d DCA 1989). However, recognizing that in the sale of a home, full disclosure of material facts must be made wherever elementary fair conduct demands it, caveat emptor (or let the buyer beware) is not the rule in Florida residential transactions. Therefore, in the sale of a home, if a seller knows something that materially affects the value of the home which is not readily observable, it must be disclosed. Otherwise, the seller may be subject to various fraud claims or breach of contract claims by the buyer.
But my contract expressly states “AS IS”
Subsequent case law makes it clear that the rule also applies to “AS IS” contracts. Syvrud v Today Real Estate, Inc., 858 So. 2d 1125 (Fla.2d DCA 2003); and Solorzano v First Union Mortgage Corporation, 896 So. 2d 847 (Fla. 4th DCA 2005). In fact, most “AS IS” contract forms contain a provision in the agreement whereby a seller represents that the seller knows no facts materially affecting the value of the property which are not readily observable and which have not been disclosed to the buyer.
What should a seller do? It appears that honesty is the best policy. If you know something that fits the Johnson disclosure requirement, disclose it (preferably in writing). Most local realtors will provide you with a prepared disclosure form to aid in ensuring proper disclosures are made. If you are unsure regarding entering a disclosure, it is recommended that you talk to an attorney to fully educate yourself. Indeed, differing circumstances may affect the necessity of disclosure including, without limitation, whether or not a defective or faulty condition has been properly repaired. If you have any questions or concerns regarding this issue, please feel free to contact me at firstname.lastname@example.org or by phone at 239-344-1369.