Imagine there were a law requiring a seller to disclose to a buyer anything he knows that would materially affect the value of a home. In other words, a law requiring the seller to tell anything he knows that a buyer would need to know to make an informed decision about buying a house. Well, such law does exist.
I know most people don’t ascribe much practicality to courts, and probably especially the state Supreme Court. And I might just agree. However, here the court did the right thing. The Court reasoned that someone who has lived in a house best knows the house’s characteristics, and that those characteristics cannot be easily discovered. Thus, the Court placed a duty on the seller to tell what he knows. That case is called Johnson v. Davis, and it established Florida as the trailblazer in enforcing this new standard. Because the standard originated from caselaw and not statute, the full meaning of the case continues to be defined.
Later case decisions have demonstrated that if a seller knows his roof is leaking resulting in water intrusion and mold, he must disclose this information. The same is true for bad plumbing, faulty wiring, and terminate infestation. A seller can no longer rely on the previous caveat emptor (or buyer beware) standard and sit back, cross his fingers, and hope the prospective buyer fails to uncover these defects.
Now, suppose the “house” the seller owns is not just a house, but a condominium unit.
Cases after Johnson v. Davis determined that the seller of a condo unit has the same duty to disclose as the seller of a single-family home. Similar to houses, condo units have interior improvements such as a water heaters, stoves, and refrigerators. Conversely, condominium law defines plumbing, wiring, walls and roofing as “common areas.” Condo law also dictates that common areas are not the unit owner’s responsibility to maintain or repair. But, the unit owner must still disclose knowledge of common area defects in the same manner as if the same defects were present in a house.
Realtor forms are not yet adequate for disclosure of known defects in condominium common areas. Yet by law, those defects must be disclosed. Like the Champlain Towers Condo Association in the City of Surfside, every association has a duty to maintain common areas. Ordinarily, the board will get information before it goes to the members. It must determine how and when its information is disclosed to its members. Then the members must decide how and when to give information to a prospective purchaser
Without question, a $100,000 assessment, such as the association at Champlain Towers would have required of its members, is a material amount that a buyer would be entitled to know.
None of us yet know the extent of an association’s duty to disclose to its members the contents of reports received by the board. The timing of those disclosures is important. In addition, members wishing to sell their units will be severely affected by the unsettled nature of their disclosure responsibilities to buyers and should also seek advice. Lastly, more than anyone, condo unit buyers will need to exercise diligence by inspecting the association budget, minutes, and all reports incorporated into board meeting minutes for the years prior to their purchase.
I sincerely wish there were clearer or better lessons from the Champlain Towers collapse. But for now, a purchaser should involve a lawyer who is knowledgeable about condominium law and work closely with him or her prior to purchasing a condo unit. In light of the Johnson v. Davis disclosure standard, the sound of the fall of Champlain Towers will echo for a long time.