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Schneider v. Hartline

A-3751-04T2 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTS; MISREPRESENTATIONS—Where a building defect is obvious, the property was sold “AS IS,” and the seller relied on a municipality’s certificate of approval, though wrong, the seller is not liable to the buyer for a known building defect that got worse after closing.

A buyer of residential real estate alleged that its seller either fraudulently or negligently failed to disclose a deteriorating retaining wall. The buyer sought damages for the removal and replacement of an in-ground swimming pool, pool decks, and the retaining wall. The contract specified that the property was being sold “as is.” The buyer admitted noticing the deterioration prior to closing, and there was no problems with the retaining wall for 15 months following the home inspection. The buyer also admitted that he had not noticed any further damage after closing, and in a deposition stated that “the winter months had done some serious damage.” Nonetheless, he claimed the seller negligently or fraudulently failed to disclose a material defect on the Seller’s Disclosure Statement.

The lower court ruled in favor of the seller stating the defect in the retaining wall was obvious to the buyer during the home inspection; and it was not unreasonable for the seller to believe the retaining wall was not a problem based on the municipality’s issuance of a certificate of approval, even if that certificate was erroneously issued. The lower court also held that because the buyer could not prove: (1) that the seller made a material misrepresentation; nor (2) that the seller was aware of the falsity of the misrepresentation; nor (3) that it was made with the intention of inducing the buyer to rely thereon; nor (4) that the buyer did in fact rely to its detriment on the misrepresentation, buyer could not sustain the cause of action.

The Appellate Division affirmed the lower court’s ruling in favor of the seller holding: (1) the defect in the retaining wall was obvious; (2) the seller was entitled to rely on the municipality’s certificate of approval and thus the seller could not have made a material misrepresentation; and (3) the contract for sale specifically stated the property was being sold “as is.”

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