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A SELLER OF REAL PROPERTY CAN REMAIN SILENT ABOUT DEFECTS IN THE PROPERTY BUT CANNOT TAKE STEPS TO THWART A BUYER’S DISCOVERY OF DEFECTS; HERE IT WAS ALLEGED THE SELLERS COVERED WATER DAMAGED WOOD WITH NEW PLYWOOD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the complaint alleging the defendant sellers concealed water damage to the property should not have been dismissed. A seller of real property can remain silent about property defects (caveat emptor, buyer beware) but cannot act to thwart discovery of the defects. Here plaintiffs alleged the sellers put new plywood over wood damaged by water:

“New York adheres to the doctrine of caveat emptor and imposes no liability on a seller for failing to disclose information regarding the premises when the parties deal at arm’s length, unless there is some conduct on the part of the seller which constitutes active concealment” … . “If, however, some conduct (i.e., more than mere silence) on the part of the seller rises to the level of active concealment, a seller may have a duty to disclose information concerning the property” … . “To maintain a cause of action to recover damages for active concealment, the plaintiff must show, in effect, that the seller or the seller’s agents thwarted the plaintiff’s efforts to fulfill his [or her] responsibilities fixed by the doctrine of caveat emptor” … .

Here, accepting the facts alleged in the amended complaint as true, and according the plaintiffs the benefit of every possible favorable inference … , the amended complaint sufficiently states a cause of action to recover damages for fraud on the theory that the … defendants actively concealed extensive water damage to the property. The amended complaint, as amplified by an affidavit of one of the plaintiffs … , alleges, among other things, that the … defendants took measures to actively conceal the existence of leaks and water damage to the property, including placing new wood on top of rotten wood to hide the extent of the damage. The plaintiffs’ allegations, if true, might have thwarted the plaintiffs’ efforts to fulfill their responsibilities imposed by the doctrine of caveat emptor with respect to the property … . Striplin v AC&E Home Inspection Corp., 2023 NY Slip Op 03720, Second Dept 7-5-23

Practice Point: Although a seller of real estate can remain silent about defects in the property, a seller can not take steps to thwart a buyer’s discovery of defects.

 

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