Buyer Beware is STILL the law in Washington
Once again, Washington Courts have confirmed that “buyer beware” is STILL the law in Washington, as seen in the Court of Appeals, Division I’s, ruling in Apgood v. Plautz. The decision is “unpublished”, which means that it can be cited but is not binding. In this case, Robert Apgood purchased a Stanwood home from Robert and Linda Plautz. Prior to listing the property, the Plautzes had a Seller’s prelisting inspection which noted that the roof “appears to be a 40-year single ply type material” that “appears to be more than 20 years old”. The inspection report was otherwise silent regarding the roof’s condition, making no reference to any water damage. The Plautzes also disclosed “no” in response to the Form 17 question about leaks in the roof. In purchasing the property, Mr. Apgood waived the right to condition his purchase on an inspection. The Purchase and Sale Agreement also contained the following clause:
This Agreement constitutes the entire understanding between the parties and supersedes all prior or contemporaneous understandings and representation.
After purchasing the home, Apgood noticed signs of water damage in the living room. He contacted a roofer, who informed him that the entire roof needed replacement. Apgood then sued the Plautzes for fraud in the inducement and negligence, and the Plautzes’ inspector for negligence. In March of 2023, the Snohomish County Superior Court granted summary judgment to the Plautzes because Apgood knowingly and voluntarily waived his right to inspect the property. The Court also granted summary judgment in favor of the Plautz’s inspector because he did not have contractual “privity” with Apgood. Apgood appealed this decision to the Court of Appeals, who sided with the Plautzes. He then asked the Washington Supreme Court to review the decision, but they refused, meaning that the Court of Appeals decision stands. The Court of Appeals was clearly influenced by the fact that Apgood elected to waive his right to condition the closing of the sale on the results of his own independent inspection and, instead chose to purchase the property in its present condition.
This holding is yet another commitment by Washington Courts to the doctrine of “buyer beware” in real estate transactions. This commitment began in 2007 in the case of Alejandre v. Bull, in which the Washington Supreme Court held for the first time that a buyer has a heightened duty to investigate when the contract allocates the risk of an economic loss to the buyer. Alejandre was followed in 2010 by Eastwood v. Horse Harbor, in which the Washington Supreme Court held that a plaintiff can sue both for breach of contract and for non-contractual tort claims, if there is an ‘independent duty’ in tort. Eastwood was followed in 2013 by Douglas v. Visser, in which a Seller, who happened to be a real estate broker, intentionally failed to disclose material defects, but was exonerated because the buyer, who were on notice of said defects after their prelisting inspection, failed to inquire further.
So, what does this mean?
- Sellers Must Still Disclose: Nothing in this case, or in Alejandre, Eastwood or Douglas relieves a Seller of their statutory obligation to disclose material defects they have actual knowledge of under RCW 64.06, unless an exception applies.
- Buyers Must Investigate: At the same time, however, the courts have once again declared that a Buyer has a heightened duty to investigate for material defects, especially if they are notified of the potential for a defect before closing, even if that defect is not disclosed on a Form 17.
- Buyers Must Conduct Additional Inspections: If a Buyer’s inspection recommends additional inspections and the Buyer fails to do so, they will not be able to recover against a Seller, even if the Seller failed to disclose the initial or a related defect.
Please contact Helsell Fetterman’s Real Estate and Land Use Practice Group at 206 292-1144 if you have any questions.
