ISSUE: Whether the district court erred in finding Defendants statutorily liable for failure to disclose a leaking roof and damaged windows when they listed their home for sale.
HOLDING: Yes, the Defendants are statutorily liable for failure to make the mandatory disclosure regarding the leaking roof, but they are NOT statutorily liable for the defective windows as it was not mandatory for them to make such a disclosure.
SUMMARY OF FACTS: Defendants Joseph Emans and Lisa Swesey owned a home in West Des Moines. There was a roof leak in the sunroom that Joseph repaired and there were no further leaks. Defendants listed their house for sale in 2009. They used a seller disclosure form on which they stated that the roof was new in 2006, but did not disclose that there was a leak in the sunroom or that they repaired it. They also stated that the windows were “working.” Plaintiffs Jill Stuecker and Kwasi Yeboah made an offer to purchase the house. An inspection report did not disclose a leak in the sunroom and stated that the windows were not opened due to weather. About two months after purchasing, the Plaintiffs noticed wetness in the sunroom and discovered damage to the drywall that cost $17,280.92 to repair. In addition, four of the windows would not open, costing $4365 to replace. Plaintiffs then sued Defendants claiming fraud by concealment, fraud by false disclosure statement, misrepresentation, negligence, and statutory liability under Iowa Code chapter 558A. The district court dismissed all claims except the statutory liability claim, finding Defendants failed to disclose the leak, of which they had actual knowledge, in their disclosure statement. Defendants were found liable for damages in the amount of $21,645.92. This appeal followed.
The Court of Appeals affirmed the finding that the Defendants were statutorily liable for the nondisclosure of the sunroom leak and repair. Iowa Code section 558.4(1) does not limit the required disclosures to “active” problems when selling a home, and requires a seller to disclose any known problems. The Court also affirmed the awarding of damages in the amount spent to repair the leak, as the Defendants’ initial violation of the Iowa Code disclosure requirement entitled Plaintiffs to “actual damages.”
The Court reversed the district court’s finding of liability for the non-working window replacement cost. The Court held that disclosure of the windows’ condition was non-mandatory and the Iowa Code only authorizes damage awards for failing to reveal “required” disclosures. Therefore, the Defendants are not statutorily liable for the defective windows and are not required to pay the associated replacement costs. The case was remanded for consideration of which party should pay the attorneys’ fees.
Attorney Lombardi's Commentary and Opinion: Where does the duty to disclose begin and end? Must I disclose a toilet that overflowed five years previous to the sale?