Plaintiffs, Robert Rogers and Joyce Rogers, entered into a real estate contract to purchase a home “as is” in an age-restricted community from defendants Nora and Christopher Conti. Ms. Conti had moved out of the property at least a year earlier due to health issues. The transaction was handled by her son as attorney-in-fact. The issue in Rogers v. Conti, 2023 N.J. Super. Unpub. LEXIS 679 (App. Div. May 5, 2023) was whether the defendant buyers were entitled to rescind the sale after discovering mold behind the walls just three days after closing.
One year before the property was listed for sale, a leak had arisen in the hallway bathroom. The seller’s son discovered the leak within 24 hours and made a total repair of the water intrusion, including replacing sheetrock and treating the area with an anti-microbial agent.
When the property was listed for sale a year later, the seller’s son did not disclose the prior leak on the seller’s disclosure form. The plaintiffs had a professional inspection conducted which did not disclose any issues with the property. However, three days after the closing, the buyers did discover mold behind some of the walls and asked to rescind the sale. The sellers did everything to rescind the sale, including stopping the deed from being recorded, returning all proceeds from escrow, and offering to make buyers whole, even offering to cover the broker’s commission. However, plaintiffs then insisted on consummating the transaction.
Plaintiffs refused to allow defendants to inspect the alleged mold condition and completely renovated the alleged condition, which eliminated any evidence of the alleged mold. Plaintiffs thereafter filed this lawsuit, alleging breach of contract, civil conspiracy, intentional common law and consumer fraud, and breach of the implied covenant of good faith and fair dealing.
After discovery was completed, the defendant homeowners moved for a summary judgment, barring plaintiffs’ expert report as a net opinion and barring plaintiffs’ expert from testifying. The trial court did grant a summary judgment to the defendants. The trial court judge found that defendants did not make any misrepresentation and also found that plaintiffs’ expert report was a net opinion.
Plaintiffs argued upon appeal that there were material facts at issue, precluding summary judgment and claimed that the trial court made a mistake by assuming the role of the jury in determining defendants did not make a material misrepresentation of fact relevant to the real estate transaction. Further, the plaintiffs claimed that if defendants had given proper disclosure of the water leak at the time of the contract, plaintiffs would have proceeded in a different manner by either cancelling the contract or conducting a more extensive inspection of non-visible portions of the property. Plaintiffs claim that the defendants had an independent duty to disclose the prior year’s leak. Further, they argued that the judge should have allowed their evidence of a mold-like condition to be presented to the finder of fact as lay testimony under the common knowledge doctrine.
The Appellate Division found that the two critical documents were the sales contract and the disclosure statement. In the disclosure statement, defendants expressed that they were unaware of any leaks, backups or other problems relating to any of the plumbing systems and fixtures. The buyers (plaintiffs) expressly affirmed their decision to buy the property “as is” in the sales contract and not based on any representations made by the seller. The Court noted that when the term “as is” is used in connection with the sale of realty, it acknowledges that the purchaser is “acquiring real property in its present state or condition.” However, this principle assumes that the seller has satisfied its duty to disclose all latent defects that are not readily observable.
The Appellate Division pointed out that the disclosure statement asks questions about the present condition of a property, not any prior occurrences on the property. The previous leak had been fully remediated and was not inquired about and did not require disclosure. Hence, defendants answered the statement accurately. The Court found that plaintiffs cannot establish any duty on the part of defendants to disclose an unknown, latent condition, particularly in light of their own professional inspection and that the property was being sold in an “as is” condition.
Upon appeal, plaintiffs did not argue that the trial court made a mistake in determining that the plaintiffs’ expert rendered a net opinion, instead argued that lay testimony should be sufficient on the cause of mold. The Appellate Division agreed with the trial court decision that plaintiffs cannot prove causation without admissible expert testimony.
Here, plaintiffs could not establish defendants had a duty to disclose an unknown mold condition, much less breach of that duty. Further, the Appellate Division found that in the absence of an expert report, plaintiffs would not be able to prove that the alleged mold condition was caused by the water leak remediated a year prior to the closing. Thus, the Appellate Division agreed with the trial court decision in granting summary judgment to defendants and affirmed the trial court decision.
