In New York State, the doctrine of Caveat Emptor governs arms-length transactions in the sale and purchase of real property. This doctrine, often referred to as “buyer-beware,” means that absent a fiduciary or “special” relationship between the buyer and seller of real property, the burden is on the buyer to make sure there are no problems with the home or property on which it sits. It also means that sellers of real property are not required to affirmatively volunteer information about such problems. Rather, the only thing a seller must avoid is intentional misrepresentations of material fact.
The mechanism for disclosure from a seller to the buyer of real property is the Property Condition Disclosure Statement based on the seller’s “actual knowledge” of a defect or condition affecting the property. In fraud cases of this sort, the buyer must show, among other things, that the seller’s active concealment of a defect or condition hampered the buyer’s efforts to fulfill their duties under caveat emptor, or, their ability to discover the problems themselves.
Written by Attorney Joshua B. Levitt