Opinion
No. SC–000128–14–/C.
05-29-2014
Julie KIER and Thomas Everetts, Plaintiffs, v. Robert WILCOX and Ashley Wilcox, Defendants.
Julie Kier, pro se. Thomas Everetts, pro se. Blake T. Webber, Esq., for Defendants.
Julie Kier, pro se.
Thomas Everetts, pro se.
Blake T. Webber, Esq., for Defendants.
Opinion
STEPHEN D. ARONSON, J.
This case holds that sellers in a residential real estate transaction may be liable for damages for failure to disclose that their septic system leach field encroached upon their neighbor's property, where the sellers' real estate agent was notified of the encroachment before closing and where the sellers did not revise their property condition disclosure statement.
In this small claims case, the plaintiffs (buyers) seek $5,000 from the defendants (sellers) for failure to disclose before closing that part of the septic system leach field pipes were located on a neighboring property. A hearing was held on May 8, 2014.
The buyers contend, in words or substance, that they purchased from the sellers a house at 9127 Ashley Road in the Town of Richmond. After the closing, they discovered that their leach field encroached underneath property belonging to their adjoining neighbor. The sellers knew about the encroachment before the closing but said nothing. The buyers were required to hire people to move the leach field, thereby incurring out-of-pocket expenses in excess of $5,000. As a result, the sellers should be responsible to pay the buyers the maximum allowed by the jurisdictional limit of this court-$5,000.
The sellers contend, in words or substance, that this property had been subdivided before they purchased it in 2006 and that the prior owner had installed the leach field; the sellers were unaware of its location. Before the closing, a potential problem was brought to their attention. They contacted the contractor who had installed the septic system and declined his suggestion to do some digging to determine the location of the leach field. They exercised due diligence. No encroachment was discovered, and, as a result, they owe nothing to the buyers.
In every small claims case, the court is bound to perform substantial justice to the parties in accordance with principles of substantive law (Uniform City Court Act § 1804 ). Real property laws and related case law contain substantive law principles applicable to this case. Every seller of residential real property is required to complete a property condition disclosure statement in a form prescribed by statute (Real Property Law § 462[1] ). The language used in the property condition disclosure statement is the same in every residential real estate transaction (Real Property Law § 462[2] ). The law instructs the seller to complete the form based upon the seller's actual knowledge (Real Property Law § 462[2] ). Knowledge is defined as “only actual knowledge of a defect or condition on the part of the seller of residential real property” (Real Property Law § 461[3] ). However, if a seller acquires knowledge before the closing that renders materially inaccurate a condition previously provided, the seller is obligated to deliver a revised property condition disclosure statement to the buyer as soon as practicable (Real Property Law § 464 ). A seller's nondisclosure of information within his or her exclusive knowledge may constitute an affirmative misrepresentation based on the property condition disclosure statement, exposing the seller to liability for damages (Anderson v. Meador, 56 AD3d 1030 [3d Dept 2008] ). Moreover, principals are bound by knowledge of matters brought to the attention of their agents, notwithstanding the fact that the information is never communicated to the principals (White Plains Cleaning Servs., Inc. v. 901 Props., LLC, 94 AD3d 1108 [2d Dept 2012] ).
In this case, the sellers represented that there was no material defect with the sewage system (see sellers' property condition disclosure statement, No.28). However, a septic system located partially on a neighbor's property is considered a material defect (Ayres v. Pressman, 14 Misc.3d 145(A) [App Term, 2d Dept, 9th & 10th Jud Dists 2007] ). The credible evidence shows that the sellers did not know about this material defect when they signed their property condition disclosure statement. However, the credible evidence also shows that about two weeks before the closing, the sellers' real estate broker was notified that the leach field encroached onto their neighbor's property. Under the law, this knowledge is imputed to the sellers even though the broker never told the sellers (White Plains Cleaning Servs., Inc. v. 901 Props., LLC, 94 AD3d at 1109). Once the broker learned about the encroachment, the sellers were obligated to file a revised property condition disclosure statement (Real Property Law § 464 ). Their failure to do so constitutes a material misrepresentation. It is a concealment giving rise to liability for damages notwithstanding the “as is” clause contained in paragraph 17 of the contract (Ayres v. Pressman, id.; Anderson v. Meador, 56 AD3d at 1036).
Judgment for the plaintiffs for $5,000 plus the $20 filing fee.