Even in the midst of a global
pandemic, the sale of new and renovated homes has continued apace. According to the United States Department of
Commerce, more than 620,000 homes will be bought and sold in the United States
this year alone. But, what happens when
your client’s dream home is littered with defects and turns into a
nightmare? A good place to start is the
teachings of St. Thomas Aquinas.
In the 13th century, St. Thomas
Aquinas, an influential philosopher and religious leader, outlined the
following four principles in the context of product sales:
1. A
defect in kind, in quantity, or in quality, if known to the vendor and
unrevealed, is sin and fraud, and the sale is void.
2. If
the defect be unknown it is no sin. Yet the seller must make good to the buyer
his loss.
3. A
seller is bound to reveal secret flaws that may occasion loss through a
decrease in the value of the article or danger through the ware becoming
harmful in use.
4. If
the flaw is manifest, he is not bound to reveal it “by any duty of justice,”
though to do so would exhibit “the more exuberant virtue.”
Aquinas, Summa Theologica (2d ed.
1896)
These moral principles espoused
were widely accepted throughout Europe and enforced in various civil justice
systems – namely in England – for several hundred years.
With the emergence of the
Reformation in the 16th and 17th centuries, civil society began to shift away
from moral and religious governance to a more laissez faire attitude in
commerce and trade. From that attitudinal
shift arose the doctrine of caveat emptor: Let the Buyer Beware. Caveat emptor placed the onus in a
transaction upon the buyer, as opposed to the seller, absent an express
warranty or fraud. See Chandelor
v. Lopus, 79 Eng. Rep. 3 (1603).
However, caveat emptor fell out of
favor almost as quickly as it rose.
Tracking the industrial revolution and increased complexity in
commercial life, courts began to question the wisdom of caveat emptor and
created and imposed implied warranties of merchantability and habitability in
certain types of transactions.
Legislatures also followed suit by setting new statutory rules to
protect consumers including home buyers.
In Massachusetts, the Supreme
Judicial Court established an implied warranty of habitability in the
landlord-tenant context in Boston
Housing Authority v. Hemingway, 363 Mass. 184 (1973) and extended the principle to residential real estate
sales in Albrecht
v. Clifford, 436 Mass. 706 (2002).
Similarly, the Massachusetts legislature enacted Mass. Gen.
Laws ch. 93A (“Chapter 93A”) to level the playing field in
consumer sales and to place affirmative duties of disclosure upon sellers in
transactions involving “trade or commerce.”
See 940 C.M.R. § 3.16.
As a result of these and other
legal developments, the following currently constitutes the most critical
aspects of Massachusetts law in the home sales context:
1. Fraud
remains impermissible, see Kannavos
v. Annino, 356 Mass. 42 (1969);
2. Implied
warranties, where applicable, trigger liability for latent defects, see Albrecht,
436 Mass. 706;
3. Chapter
93A requires disclosure of defects in “trade or commerce”, see Rousseau
v. Gelinas, 24 Mass. App. Ct. 154 (1987); and
4. Exculpatory
provisions, like “as is” provisions, generally protect sellers from liability
for obvious defects, see generally McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass. 704, 712 (1990).
Therefore, the principles laid down
by St. Thomas Aquinas nearly 800 years ago – while on a hiatus during the
caveat emptor period – have gained widespread acceptance once again and more or
less represent the current state of Massachusetts law. So, if your client’s dream home turns into a
nightmare, considering St. Thomas Aquinas’ teachings is a great place to start
your analysis.
This blog was adapted from a
webinar titled “When your Client’s Dream Home Turns into a Nightmare” available
here: https://rebama.blogspot.com/2020/07/if-your-clients-home-turns-into_1.html
Robert Stetson is a construction
and real estate litigation partner at Bernkopf
Goodman LLP. He can be
contacted via email at: rstetson@bg-llp.com
