Based off of the 4 part reading (Images attached) Please answer the following questions.

1. Distinguish latent from patent defects. Which type is discussed in the case? Explain.

2. Was the response by the seller to the buyer about the reason for the bars on basement windows made before the contract to buy the house was entered into or was it made afterward? Should that make a difference? Did it?

3. Whose real estate agents were being sued? The seller's or buyer's? Does it make any difference?

4. How did the court resolve the issue of whether caveat emptor applied?

5. Would you analyze this case differently if you were applying ethical rules rather than legal rules?

6. When was the Ohio disclosure statute enacted relative to this case? Is that important? Why?

Van Camp v. Bradford 63 Ohio Misc. 2d 245, 623 N.E.2d 731 (Ohio, 1993) Buyer filed her complaint alleging that the defen- residence rendered defense of caveat emptor inap- dant's seller and real estate agent and broker plicable (2) material issue of fact as to whether knew of the unsafe character of the residence purchaser in fact inquired regarding safety of and neighborhood, failed to disclose, and premises precluded summary judgment; and concealed these material facts, which would (3) real estate agents had no affirmative duty have influenced her decision to buy the prop- to speak up and disclose knowledge of crimes erty. Plaintiff sought damages from all defen- simply because they were in room at time dants for mental stress and anguish, for the inquiry regarding safety of residence was decreased value of the property, for fraud and made. negligence, and for equitable relief. Ordered accordingly. The defendants filed for summary judgment, arguing Michael J. Sage, Judge that the doctrine of caveat emptor is a complete defense in a suit seeking recovery for the "stigma" attached to or the "psychological impairment" of a piece of property. Defen- dants also claimed that a cause of action for property de- This case arises from the sale of a residence located at fects that are neither a physical nor legal impairment does 6027 Arcade Drive, Fairfield, Ohio. On or about October not exist in Ohio. 30, 1991, a renter's daughter was raped at knifepoint in The trial court held that (1) latent nature of alleged the residence owned by defendant Bradford. On or about stigmatizing defect in property which resulted from rape in | December 20, 1991, another rape occurred in a418 UNIT 2 Application of Law to the Individual neighboring home. That same day, defendant Bradford close sources of peril of which he is aware, if such a source listed the house for sale with defendant Realty World. is not discoverable by the vendee. Thus, the Supreme Plaintiff Kitty Van Camp submitted a written offer to Court of Ohio held that the plaintiffs could sue for ter- purchase the home on February 4, 1992. Before closing mites discovered after the real estate agent made the re- and during a walk-through inspection of the premises presentation that the house was a "good solid home," with defendant Bradford and defendant Patton (listing especially since the seller was personally aware of the agent) and defendant Hoff (cooperating agent) present, problem prior to the sale. The nature of the defect and plaintiff noticed bars on the basement windows. In re- the ability of the parties to determine through a reason- sponse to plaintiff's inquiry regarding the purpose and able inspection that a defect exists are key to determining necessity of the bars on the windows, defendant Bradford whether or not the defect is latent. stated that a break-in had occurred sixteen years earlier, In contrast to the national trend, Ohio has recently but that there was currently no problem with the resi- upheld the doctrine of caveat emptor with regard to real dence. Plaintiff stated that she would like to remove the estate sales. Conditions traditionally limiting the applica- bars for cosmetic purposes, but Bradford advised her not tion of the doctrine, however, were also vigorously upheld to do so, as it was in plaintiff's best interests to leave the in the court's opinion: the property defect must be open bars in place. to observation or discoverable upon a reasonable inspec- The closing on the property took place on February tion, the purchaser must have an unimpeded opportunity 21, 1992. At this time, the perpetrator of the crimes was to examine the property, and the vendor may not engage still at large. While moving into the home, a neighbor in fraud. The court held that, unlike a latent defect, the informed plaintiff that the daughter of the last occupant structural defect of the basement wall at issue was "highly had been raped in October, and that another brutal rape visible," and the corrective I-beams supporting the wall had occurred shortly before Christmas, in 1991. Two were open to observation by the plaintiffs. more rapes occurred in June and August 1992 at a nearby With the recent enactment of R.C. 5302.30, the Ohio home. Plaintiff's house was burglarized on April 8, 1992, legislature has taken a bold step toward ameliorating the and threatening phone calls were received by plaintiff in harsh application of caveat emptor in even patent defect July 1992. Police reports submitted by plaintiff confirm real estate transactions. For sales conducted on or after that all of these crimes did in fact take place. July 1, 1993, the statute requires a seller of residential Plaintiff, after being informed of the rapes in her property to provide each prospective buyer, or his/her home and the surrounding neighborhood, confronted de- agent, with a prescribed disclosure form regarding various fendant Campbell (owner of Realty World) who acknowl aspects of the property. Even though the official disclosure edged that he, defendant Patton, and defendant Hoff were form has not yet been formally established, preliminary all aware of the rapes, including the rape at the subject drafts indicate that its purpose is to disclose material mat- property. ters regarding not only the physical condition of the prop- erty, but also title, survey and other matters. If the seller fails to provide the disclosure form, the statute grants the buyer the powerful remedy of rescission. With this initia- The rule that a seller is generally under no duty to disclose tive, the Ohio legislature has seriously undermined the material facts about the subject matter of a sale unless a doctrine of caveat empfor as previously applied. specific exception exists originates from the doctrine of Virtually all of the case law regarding the buyer's du- caveat emptor. At least since 1956, the principle of caveat ties under caveat emptor focuses on physical property de- emptor has been consistently applied in Ohio to sales of fects. Thus, the case at bar is unique in that it presents real estate relative to conditions discoverable by the buyer, issues regarding duty and liability for a so-called psycho- or open to observation upon an investigation of the prop- logical defect in the property, namely, that the property erty. [In 1979], however, the Supreme Court of Ohio held was rendered unsafe for habitation by the plaintiff due that latent defects do give rise to a duty on the part of the to the serious crimes that had occurred in and near the seller, and constitute an exception to the application of residence. caveat emptor. When latent defects are coupled with mis- The stigma associated with the residence at 6027 representations or concealment, the doctrine of caveat Arcade Drive is analogous to the latent property defects emptor does not preclude recovery for fraud. Fraudulent that have become an exception to the strict application of concealment exists in cases in which a vendor fails to dis- caveat emptor. Due to the intangible nature of the defectat issue here, a prospective buyer would have been unable the buyer has met the burden of proof required to with- to determine from a walk-through of the house in 1992 stand a summary judgment motion. that it was the site of a serious, unsolved violent crime. When a seller receives an affirmative inquiry regard- Clearly, any psychological stigma that may be attached ing the condition of a piece of property, the buyer is enti- to a residence is even more undiscoverable than the exis- tled to a truthful answer. One who responds to an inquiry tence of termites in a home, or a defect in the title to the is guilty of fraud if he gives equivocal, evasive or mislead- property, both of which have been deemed latent defects ing answers calculated to convey a false impression, even despite the fact that they could have been discovered though the answer may be literally true. Responding hon- through a professional inspection or title search. estly to an affirmative inquiry regarding the condition of a Defendants' argument that the defect at issue here residence is a lighter burden than the voluntary disclosure was readily discoverable lacks merit. Checking police re- of a defect mandated by caveat emptor, particularly when cords in order to ascertain the relative safety of a neigh- knowledge of a stigmatizing defect is within the ready borhood or a particular residence would not be an action personal or actual knowledge of the seller at the time of undertaken by even the most prudent of purchasers. the inquiry. When viewed in conjunction with a potential misrepre A seller who is under a duty to disclose facts and fails sentation or concealment on the part of defendant Brad- to do so will be held liable for damages directly and prox- ford regarding the relative safety of the home, the latent imately resulting from his silence. A person injured by nature of the defect at issue here renders the defense of fraud is entitled to such damages as will fairly compensate caveat emptor inapplicable. him for the wrong suffered. As an additional safeguard, objective tangible harm must be demonstrated to still the concern that permitting cases of this nature to go for- The case subjudice raises the question whether Ohio ward will open the floodgates to rescission on subjective should recognize a cause of action for residential property and idiosyncratic grounds. tainted by stigmatizing events that have occurred on and near the premises. The only reported case involving a psy- V chological property defect was heard in California and The defendants in this case have argued that the prevail- involved a house that had been the site of multiple mur- ing trend across the nation regarding property disclosure ders ten years prior to its sale to the plaintiff. The Third is evidenced by the nondisclosure statutes that have been District held that the plaintiff buyer did have a cause of enacted in twenty states and the District of Columbia. action capable of surviving the seller's motion to dismiss. Defendants also contend that these statutes imply that a The determinative issue in that case was whether the fail- cause of action for tainted property in Ohio is necessarily ure to disclose the murders was material. barred. The California court "saw no principled basis for These statutes generally state that sellers of real estate making the duty to disclose turn upon the character of are not liable for failing to disclose stigmatizing events, the information," and held that the failure to disclose such as the fact that a homicide, suicide, felony or death the murders was a material fact that could conceivably by AIDS occurred in the residence, Ohio has not adopted depress the value of the property. a nondisclosure statute of this nature. It is the opinion of this court that the nondisclosure IV statutes as enacted in other states still require a good faith Clearly defining the cause of action for stigmatized prop- response to an inquiry regarding a potential psychological erty is necessary in order to protect the stability of con- impairment: these statutes were enacted solely to insulate tracts and prevent limitless recovery for insubstantial sellers from liability for any failure to voluntarily and au- harms and irrational fears: misrepresentation, conceal- tomatically disclose information regarding potential stig ment or nondisclosure of a material fact by a seller of mas associated with property. As aptly stated by residential property in response to an affirmative inquiry Representative Prague during the public hearings discuss- is evidence of a breach of duty on the part of the seller. ing Connecticut's newly adopted nondisclosure statute, "It After inquiry, if the buyer justifiably relied on the misrep- seems to me that anybody selling a house would have to resentation or nondisclosure, or was induced or misled answer truthfully when a buyer asks a question. I mean, into effecting the sale to his/her detriment and damage, why should we tell you what the realtor should say or420 UNIT 2 Application of Law to the Individual shouldn't say, or should reveal and shouldn't reveal. He ing of summary judgment. | Defendant Bradford's motion should reveal anything that is asked of him." for summary judgment is hereby DENIED.| By contrast, however, the court finds as a matter of VI law that the inquiry of plaintiff was directed solely to the A cause of action for stigmatized property, as previously homeowner, defendant Bradford: she alone responded to defined and limited, is warranted in the case at bar. At plaintiff's question regarding the safety of the residence. this point, it is necessary to analyze the elements of the The real estate defendants had no duty to affirmatively cause of action for stigmatized property in the context of speak up and disclose their knowledge of the crimes sim- the defendants' summary judgment motions. ply because they were in the room at the time the inquiry A motion for summary judgment shall be granted was made. Had the real estate agents similarly misrepre when there is no genuine issue of any material fact and sented or failed to disclose a material fact upon an inquiry the moving party is entitled to judgment as a matter of directed to them, summary judgment in their favor would law. It must be awarded with caution, resolving doubts not be warranted. Even construing the facts in the light and construing evidence against the moving party, and most favorable to the plaintiff, however, the court must granted only when it appears from the evidentiary mate- nevertheless find that this factually distinguishable situa- rial that reasonable minds can reach only an adverse con- tion simply did not transpire in this case. Thus, since rea- clusion as to the party opposing the motion. sonable minds could come to but one conclusion Construing the evidence in the light most favorable regarding the evidence, and that conclusion is adverse to to the plaintiff, the court finds that the plaintiff has met the plaintiff, the summary judgment motions of defen- her initial burden of proof. The court must accept plain- dants Realty World, Campbell, Patton, and defendants tiffs evidence that a rape occurred in the residence at 6027 West Shell and Hoff are hereby GRANTED. Arcade Drive, and that several other crimes occurred in So ordered. close proximity to the property. Further, the court must accept plaintiffs allegation that all of the defendants in- For Critical Analysis volved knew that these crimes had occurred, yet failed to 1. Distinguish latent from patent defects. Which type is disclose this knowledge to the plaintiff. discussed in the case! Explain. Reasonable minds could construe the plaintiff's ques- 2. Was the response by the seller to the buyer about the tion regarding the bars on the basement windows as an reason for the bars on basement windows made affirmative inquiry directed at ascertaining the safety of before the contract to buy the house was entered the premises, and defendant Bradford's statements regard- into or was it made afterward? Should that make a ing the reason for the bars to be a misrepresentation or a difference? Did it? nondisclosure of their current purpose. Upon the plain- 3. Whose real estate agents were being sued? The tiff's inquiry, defendant Bradford was simply required to seller's or buyer's? Does it make any difference? tell the truth. A more difficult case would arise had there 4. How did the court resolve the issue of whether caveat been no evidence to indicate that the plaintiff had solicited emptor applied? information regarding the safety of the residence. 5. Would you analyze this case differently if you were Numerous questions of material fact remain regard- applying ethical rules rather than legal rules? ing the conversation that took place between plaintiff and 6. When was the Ohio disclosure statute enacted defendant Bradford, and these questions preclude a grant- relative to this case? Is that important? Why