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Hill v. Jones - 151 Ariz. 81, 725 P.2d 1115 (Ct. App. 1986)

Rule:

A seller has a duty to disclose to the buyer the existence of termite damage in a residential dwelling known to the seller, but not to the buyer, which materially affects the value of the property.

Facts:

Plaintiff buyer filed a suit to rescind a residence purchase agreement for misrepresentation and failure of defendant seller to disclose physical damage due to prior termite infestation. The court granted summary judgment in favor of defendant. On appeal, the court reversed judgment.

 

Issue:

Did the trial court err in precluding plaintiff from presenting evidence to jury showing sellers were under a duty to disclose their knowledge of termite infestation in the residence?

Answer:

Yes.

Conclusion:

The existence of termite damage and past termite infestation has been considered by other courts to be sufficiently material to warrant disclosure. There is also a judicial policy promoting honesty and fair dealing in business relationships. This policy is expressed in the law of fraudulent and negligent misrepresentations. Where a misrepresentation is fraudulent or where a negligent misrepresentation is one of material fact, the policy of finality rightly gives way to the policy of promoting honest dealings between the parties.

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