The doctrine of caveat emptor was the rule of law governing disputes from the sale of residential real property. Seller’s disclosures were not required. The seller of real property was not liable or responsible to the buyer for a defective condition in the real property that existed at the time the seller transferred possession to the buyer. A purchaser bought real property at his or her own risk. A seller had no duty to communicate the existence of latent defects unless the seller represented that such a defect did not exist.
The principle behind caveat emptor was that the transaction was “arm’s length”. An arm’s length transaction meant both the buyer and seller had equal knowledge concerning the property. Over time, the courts realized that real estate transactions were not always arm’s length. Sellers were often in a better position than buyers with regard to defects.
The purchase of residential property is a large economic investment. The courts recognized the purchase of a home is not an everyday transaction for the average family and that a residential purchase may be the most important transaction in a person’s lifetime. Applying caveat emptor in favor of a seller would not always be fair. Today, caveat emptor no longer protects a seller in a residential real estate transaction. Seller’s disclosures are provided in many residential transactions. However, the doctrine still applies to commercial real estate transactions.
While seller’s disclosures have become a part of residential real estate transactions, many issues still arise over the course of a real estate transaction. Involving an experienced lawyer early in the transaction will help prevent entering into an agreement without the necessary disclosures. The South Florida luxury residential real estate attorneys at Schecter Law have represented the buyers, sellers, brokers, and developers in connection with the acquisition, development, and sales of luxury residential real estate since 1976.