Donnelly v. Taylor

2002-Ohio-7461, 122 Ohio Misc. 2d 24, 786 N.E.2d 119 (Ct. Com. Pl.)

 

RULE:

The law in Ohio regarding the effect of "as is" clauses in real estate contracts is to shift the risk of nondisclosure of defects in the real estate to the purchasers. In order to avoid this shifting of risk, purchasers have to show either that there was a positive misrepresentation by the seller or an active concealment of the defect and, in either case, that the defect was not discoverable by a reasonable inspection of the property or that an opportunity for such an inspection was not provided. If the defect is one that could not be discovered upon a reasonable inspection but the purchasers cannot establish a positive misrepresentation by the sellers or active concealment of the defect by the sellers, then the risk of the nondisclosure is still shifted to the purchasers. 

FACTS:

Approximately two weeks after their possession began, the purchasers started to hear noises in the walls of the house. A pest-control service informed them that the house had bats, living in the walls. The purchasers filed a complaint against the vendors for breach of contract, loss of enjoyment, and fraud and misrepresentation. The vendors filed a motion seeking summary judgment on all three causes of action.

ISSUE:

Should a summary judgment be granted in the vendors favor?

ANSWER:

Yes

CONCLUSION:

The court held that the purchasers did not show that there was a material issue of fact regarding whether the vendors actively misrepresented or actively concealed the presence of the bats in the house. The contract contained an "as is" clause, and thus, absent fraudulent misrepresentation or fraudulent concealment, the purchasers bore the risk of any latent defects in the property, whether they were discoverable or not discoverable by a reasonable inspection. There was no evidence of any misrepresentation by the vendors of the condition of the property, as the purchasers never talked to them about the house until after the discovery of the bats. The court founds for the vendors on the issues of fraud and breach of contract. Therefore, the court also found that even assuming that a loss of enjoyment of the premises was a separate cause of action, the vendors were entitled to a summary judgment on that issue also.

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