INDIANAPOLIS | For the fourth time in three years, the Indiana Court of Appeals has ignored a state Supreme Court precedent and ruled a home seller must honestly disclose any known major problems with the property to a buyer.
Indiana has traditionally followed a "buyer beware" rule that says so long as a buyer has a chance to examine a property prior to purchase, the seller is free to make any claims he or she wants about its quality — even fraudulent claims. The rule stems from an 1881 Indiana Supreme Court decision known as Cagney v. Cuson.
Despite the controlling high court precedent, the appeals court on Monday again ruled a 1993 state law requiring a home seller complete a disclosure form attesting to the condition of a home's foundation, mechanical systems, roof, structure and plumbing bars a seller from knowingly misrepresenting the condition of those features.
"A seller may be liable for any misrepresentation on the sales disclosure form if the seller had actual knowledge of that misrepresentation at the time the form was completed," wrote Senior Judge Betty Barteau in a case involving the sale of a Crown Point home.
Judge Nancy Vaidik, a Porter County native, first declared the law demands honest disclosure in her dissent to the 2009 appeals court ruling in Dickerson v. Strand/German, which followed the Cagney precedent.
Since then the appeals court has adopted the principles of Vaidik's dissent as its majority ruling four times.
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.
The Supreme Court usually reviews Court of Appeals decisions that contradict its prior rulings.