INDIANAPOLIS | Home sellers who fail to honestly disclose any known problems with major home systems may have to pay the buyers' future repair bills, the Indiana Supreme Court ruled Tuesday.
In a 5-0 decision involving a Crown Point house, the state's high court set aside its 1881 "buyer beware" precedent that essentially allowed sellers to claim anything they wanted about a property so long as the buyer had an opportunity to personally inspect it.
Instead, the court said a 1993 state law requiring a home seller complete a disclosure form attesting to the condition of the home's foundation, mechanical systems, roof, structure and plumbing bars a seller from knowingly misrepresenting the condition of those items.
"The disclosure statutes create liability for sellers when they fail to fully or truthfully disclose the condition of those certain features of their property," wrote Justice Steven David for the court.
The Supreme Court decision follows four recent Indiana Court of Appeals rulings that refused to follow the "buyer beware" precedent.
Appeals Court Judge Nancy Vaidik, a Porter County native, first declared the law demands honest disclosure in 2009.
Vaidik said the Legislature intended to protect buyers, in limited circumstances, when they purchase a home – usually their largest and most important asset. Allowing sellers to knowingly lie on the disclosure form contradicts the Legislature's intent, she said.
Concerning the Crown Point house, the Supreme Court ordered a Lake County court determine whether the sellers had actual knowledge of $13,805.95 worth of home defects not disclosed to the buyers.