Shapiro v Hu - 1987     view  

1. This involved commercial real estate, not residential. 

   1. In general that seems of little consequence to the relevant parts of the As Is and Disclosure precedent

   2. HOWEVER, This case was initiated in 1983 and settled in 1987 and in 1985, California 1102 regulated written statutory disclosures  for residential real estate. 

   3. Had that process applied for the transaction,  it does not seem anything would have changed, because none of the disclosure statements made were ultimately disputed, but it would have forced the seller to write "absolutely no" and some people believe that saying something false is bad, but putting it in writing is far worse. Some liars will avoid situations in which they must put lies in writing for "belief" based reasons. Thus forcing writing does have relevance, although minimal to none that can be ascertained in this situation. 

2. The dispute initially revolve around the idea that the Seller Explicitly stated the the property was sold  "As Is", and his position was that that simple statement relived the seller of any damages for defects for any reasons. After an initial finding against him by a jury, he was exonerated, but he was NOT exonerated due to his position on As Is Sales, and in fact, quite the contrary. 

3. The initial finding  by a jury was against the seller. They allowed for  a recision of sale and/or damages for a foundation defect that was "first seen" by the buyer after the purchase.  The defect was not easy to see prior to making an offer or during escrow because there was no electricity in basement and it was behind a stack of plywood.  This verdict was easily questionable for several reasons.

   1. the Buyer was in fact a real estate agent.  

   2. The Buyer and the Seller's Agent both agreed that As Is sales still required the disclosure of defects and that process was followed verbally, if not in writing. The Buyer was in fact notified of defects related to the rear roof that he could partially ascertain. 

   3. The Seller's Agent did not investigate the basement at all prior to listing.She said it was dark without electricicty. 

   4. The  buyer did NOT do any inspections of the basement himself for the same reasons.  in fact he stated the basement was dark and wet and he didn't want to go in. Not only was he grossly negligent in that regard, he was just plain dumb.  

   5. The buyer did NOT  hire a professional inspector who may have/should have helped identify the defect. 

4. On appeal the decision was reversed but it was NOT reversed simply because it was an 'As Is' sale.  The reason for this was that the Buyers provided NO EVIDENCE AT ALL that the defect was known to the seller.  

   1. It seems logical that the initial jury sensed deceit, especially in context of the approach the Seller used to sell the home.

   2. However, there were simply no facts to show in anyway, that he had been aware of this defect. 

   3. The Judge made it clear that had they been able to prove that the Seller had knowledge of the defect the seller would have been liable for Fraudulent Misrepresentation,  even though the defect could have been considered "visible" and "not concealed", which adds an additional twist.  

   4. The judge even indicated that had a Termite Inspection  (or other professional inspection) been done prior to Negotiating the purchase or even during escrow, the defect likely would have been found and the depth of the conflict could have been resolved one way or another. 

   5. Although impossible to know, even if an inspection had been done and a professional inspector had NOT noted the defect, the judge probably still may have found for the seller, absent any proof he was aware of the defect.  In such a scenario the buyer should have had a claim against a Termite Inspector , given part of their Charter with the Structural Pest Control Act is foundation inspection and sketches. 

While all this is important what's more important is the level to the seller attempted to use the  "As Is Sale" defense and the level to which that did NOT contribute to his ultimate success with his defense.