Real Property Disclosures
- Sellers Not Liable for Failing to Disclose Deficiencies in Residence Converted Into Wine Tasting Room Where Sellers Lacked Actual Knowledge of Alleged Deficiencies.
In the case of RSB Vineyard, LLC vs. Bernard A. Orsi, the issue before the trial court was whether knowledge could be imputed of defects to the defendants based upon presumed knowledge of defendant’s construction professionals.
In this case, plaintiff purchased a vineyard from defendant. Plaintiff was forced to demolish a building, a renovated residence, that had been converted into a wine tasting room after discovering structural and material defects. Plaintiff sued defendant claiming misrepresentations and omissions in connection with the sale of the residence. Defendants moved for Summary Judgment offering evidence that they had no actual knowledge of the various deficiencies in the building. While plaintiff provided no evidence to suggest defendants had actual knowledge of the structurally unsound residence and its problems it did demonstrate that the deficiencies were so severe that defendant’s construction professionals should have been aware of them and argued that this knowledge was or should be imputed to defendants.
The trial court granted Summary Judgment reasoning that defendants could not be held liable for non-disclosure in the absence of evidence they had actual knowledge of the facts to be disclosed.
The Appellate Court affirmed the Superior Court’s Summary Judgment. In California, a real estate seller has a duty to disclose any facts materially effecting the value or desirability of the property, if such facts are not necessarily apparent to a diligent buyer. However, this duty only arises if the seller has actual or constructive knowledge of the deficiencies. While defendants, as principals, may be chargable with and may be bound by the knowledge of their construction professionals, i.e. agents, “not all relationships….satisfy the definition of agency” defined as “one who represents another…. in dealing with third persons” under Civil Code Section 2295. Here plainiff failed to show defendants had direct knowledge of the defects.
About the Author
Scott Souders is a real estate attorney who has practiced real estate law in excess of 42 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.