Actual Knowledge by Home Sellers Must Be Proven in Nondisclosure Claims


Are you preparing to sell your Florida home? If so, you should be aware of both your obligations and your legal protections when it comes to property disclosures. As a home seller, you have a legal duty under Florida law to make certain disclosures about your property to prospective buyers. As established by the case of Johnson v. Davis, 480 So.2d 625 (Fla. 1985), a home seller must disclose information about the property's condition or history that could substantially affect the value of the property, such as unobservable property defects. If these facts are not properly disclosed, the purchaser of the home could later sue the seller for damages.

But what if the home seller is genuinely unaware of the defect that is later discovered by the buyer? Should that seller still be held liable to the buyer for nondisclosure of the defect? These questions have been answered by Florida's Second District Court of Appeal. In the case of Jensen v. Bailey, 76 So.3d 980 (Fla. 2d DCA 2012), the appellate court concluded that a homeowner must have "actual knowledge" of the defective condition in order to be held liable for its nondisclosure. In this specific decision, the court rejected the plaintiff's claim that the homeowner "should have known" about the defect and was therefore liable to the buyer for damages.

About Jensen v. Bailey

In Jensen v. Bailey, a home buyer sued the individuals she bought the home claiming they failed to disclose the fact that improvements had been made to the home without the required permits and in violation of the applicable building code. Because of these unpermitted improvements, the new homeowner was required to pay for reconstruction work to correct the defective construction work performed by the seller's contractors without the required permits. . The previous homeowners' defense was that they did not know that the appropriate permits had not been obtained, as they had trusted that the contractors they hired had done the work in a legal manner.

A circuit court ruled in favor of the new homeowner, entering a final judgment that required the previous owners to pay $33,370 in damages in addition to $13,787 in prejudgment interest. However, the judgment was reversed on the seller's appeal, because the buyer failed to prove the sellers' actual knowledge of the nondisclosed condition and that the trial court improperly applied a "should have known" standard to establish the sellers' liability to the buyer contrary to Johnson v. Davis.

Why This Ruling Matters to Homeowners

The appellate court noted that homeowners have a responsibility to obtain proper permits and generally can find no protection from their failure to do so because they merely relied on someone else to do so. However, the legal duty of disclosure imposed by the Florida Supreme Court in Johnson v. Davis does not turn the seller into a "guarantor" of the property's condition. To prove a cause of action under Johnson, a buyer of a house must prove the seller's knowledge of a defect which materially affected the value of the house. While knowledge in this regard can be proven by circumstantial evidence, it must nevertheless be proven by competent, sufficient evidence.

As a seller or buyer in a home sale, you should be aware of the seller's duty of disclosure imposed by Florida law as the breach of that duty can lead to a costly fraudulent nondisclosure claim. To prove that a former property owner failed to properly disclose information about a home, the home buyer must prove the following facts:

  • the seller of a home must have knowledge of a defect in the property,
  • the defect must materially affect the value of the property,
  • the defect must be not readily observable and must be unknown to the buyer, and
  • the buyer must establish that the seller failed to disclose the defect to the buyer.

If you believe that a seller failed to disclose material facts about the home you purchased or you are threatened by a buyer claiming that material facts about the home you sold were not disclosed or otherwise need legal assistance concerning a claim of fraudulent nondisclosure, you can secure the counsel of my law firm, Gregg H. Glickstein, P.A. I can aggressively represent you, whether you are the seller or the buyer in this type of dispute and in any real estate litigation that may develop from such dispute. I am a Palm Beach County real estate litigation attorney who has nearly three decades of experience in the practice of law. Contact my firm so I can assist you with your case!

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