Hill v. Jones

Brief Fact Summary. Plaintiffs Warren G. Hill and Gloria R. Hill entered into an agreement with Defendants Ora G. Jones and Barbara R. Jones to purchase Defendants’ home. Plaintiff sought to rescind the agreement after they learned that the home had termites.

Synopsis of Rule of Law. Where sellers to a home are aware of facts materially affecting the value of the property, the sellers are under a duty to disclose such facts.

Facts. Plaintiffs purchased Defendants home for $72,000. Plaintiffs had, on several occasions, inspected the home and twice noticed potential termite damage to the home. Although Plaintiffs, who were both familiar with termite damage, noticed holes in the wood on the patio and a ripple in the floor in the living room they never followed up to determine the cause of such damages. On one such occasion, Plaintiffs asked Defendants about a ripple on the floor in the living, Defendants responded that the ripple was caused by water damage. The house eventually passed termite inspection, and Plaintiffs closed relying on the inspection. Defendant sellers never disclosed to Plaintiff, or to the termite inspector, the fact that in the past the house had been infested by termites and that the house received treatment for such infestations. Upon moving into the house, the wood in the living room began to crumble, it was determined that such damage was caused by termites.

Issue. Does a seller have a duty to disclose to the buyer the existence of termite damage, where such damage is known by the seller, and not the buyer, and materially affects the value of the property?

Held. The Court held that where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. The Court held that the existence of termite damage is sufficiently material to warrant disclosure. The Court held that the standard integration clause of the contract does not provide protection against non-disclosure.

Discussion. A seller has an affirmative duty to disclose material facts which adversely affect the value of the property.