A nondisclosure claim under Johnson has four elements: (1) the seller of a home must have knowledge of a defect in the property; (2) the defect must materially affect the value of the property; (3) the defect must be not readily observable and must be unknown to the buyer; and (4) the buyer must establish that the seller failed to disclose the defect to the buyer. Notably, the only consideration pertinent to the seller's state of mind under is knowledge of a defect materially affecting the value of the property at the time the seller enters into the contract with the buyer. A state of mind element is not specified with regard to the act of nondisclosure for the cause of action it identifies. Significantly, the cause of action is cast in terms of "duty," a concept drawn from the law of negligence. If the facts of a case give rise to a duty to disclose, the seller's state of mind motivating the failure to disclose is immaterial; the forgetful or unsophisticated seller is just as liable as the knowing dissembler. Thus the critical issue under the first element of liability is the seller's knowledge, not his or her intent.
The parties entered into a contract of sale of a residence in St. Petersburg. Before the contract was signed, the sellers filled out a property disclosure statement for the buyer’s review. It included a question on whether the sellers were aware of any improvements that were constructed in violation of the building codes or were without permits, to which the sellers responded “No.” After the sale, the buyer filed for breach of contract, for non-disclosure of material defects and for unpermitted changes in the property. The circuit court ruled for the buyer based on a “should have known” standard. Hence, the appeal.
Are the sellers liable for the breach on the ground of constructive knowledge of the defects on the property?
The appellate court reversed the judgment. Because the circuit court found that the sellers had no knowledge of the defects, it improperly found them liable to the buyer under a "should have known" standard. Proof of the seller's actual knowledge of the defect was required to establish liability. The cross-appeal in which the buyer contended that the circuit court erred in finding that the sellers did not have actual knowledge of the asserted material defects in the residence was affirmed.