In Georgia, the long-standing rule in real estate purchases is caveat emptor (“let the buyer beware”). There is one exception: a negligence action against a builder/seller. A builder/seller may be held liable in negligence where a dwelling is sold containing latent defects that the builder in the exercise of ordinary care knew or should have known and that the buyer could not have discovered in the exercise of ordinary care. Georgia courts have not previously addressed whether this exception applies to an ordinary seller of real estate who performs its own repairs on the dwelling (i.e., whether an ordinary seller who performs repairs is a builder/seller under the exception to caveat emptor).
That was the question (among others) before the Georgia Court of Appeals in Reininger v. O’Neill. In this case, the purchasers of a home brought an action against the sellers of that home alleging that the sellers negligently repaired a previous basement water leak. The purchasers contracted with the sellers to purchase the 16-year-old home, which had no previous owners other than the sellers. Prior to this time, the sellers, in an effort to abate water entry into the basement, performed various repairs. The purchase and sales agreement contained an “As-Is Clause,” a Merger Clause, and a Property Disclosure Statement on which the sellers had checked “yes” to a question regarding water leakage in the basement, but provided no further written explanation though the sellers had verbally disclosed a water pipe leak in the basement. After closing, the buyers notified the sellers that the home was damaged and then filed suit against the sellers. The trial court determined that the buyers’ negligent repair claim failed as a matter of law because the sellers were not considered builder/sellers and thus, the rule of caveat emptor applied without exception.
On appeal, the buyers argued that the rule of caveat emptor did not apply, because the sellers had performed their own repairs rather than hiring a company to perform the repairs. The court affirmed the trial court’s ruling, holding that despite performing their own repairs, the sellers still were not considered builder/sellers.
This case helps resolve any question of whether a homeowner should be wary of performing its own repairs, thereby possibly waiving the general rule of caveat emptor in future sales of the home. Homeowners can continue to perform their own repairs without worry. The builder/seller exception only applies to true builders who then sell their own constructed homes.
Reininger v. O’Neill, 729 S.E.2d 587 (Ga. Ct. App. 2012).