Legal Update 2020
Instructor: John Henderson
"As Is" Clause Doesn't Defeat Seller's Statutory Disclosure Duty
Phelps v. Caperoon, 2018 Pa. Super. 171, 190 A.3d 1230 (2018)
Superior Court of Pennsylvania
Facts: The buyer and seller entered into an Agreement for Sale under which the buyer certified that he had personally inspected the property and agreed that it was in satisfactory condition, acknowledged that the buyer purchased the property “as is”, and disclaimed any express or implied warranties. According to the buyer, during one of his three inspections of the property he asked the seller if there was anything he needed to know and the seller responded that “everything was fine. There was nothing to be concerned with.” The buyer was aware that that a seller should complete and provide a statutorily required Pennsylvania’s Real Estate Seller Disclosure Law (RESDL) disclosure form, but “did not find it unusual” that the seller did not do so. Six months after the purchase, the buyer discovered numerous alleged defects and sued the seller on various grounds, including violation of the RESDL. The trial court found that the RESDL cannot be waived, granted partial summary judgment to the buyer for its violation, and awarded damages in the amount of $39,065.02. The seller appealed.
Issue: Did the “As Is” clause abrogate the RESDL disclosure requirement?
Held: No. Judgment affirmed. The RESDL provides that any seller who intends to transfer any interest in real property “shall” disclose to the buyer any known material defects by completing all applicable items on a specified disclosure form. The word “shall” makes the disclosure requirement mandatory and the seller failed to point to any statutory provision absolving him from that responsibility, regardless of the “as is” clause in the agreement. The case precedent relied upon by the seller, to the effect that an “as is” clause puts a buyer on notice “that there may be liabilities attendant to the purchase,” does not apply because it predates and thus does not address the RESDL disclosure requirement. Also, even if the seller relied on the advice of counsel when he sold the property “as is” without providing the required disclosure, the RESDL does not provide for an “advice of counsel” or “good faith” defense.