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Real Estate, Caveat Emptor and "As Is" Clauses

Kidd v. Benson, [Ms. 1190413, Sept. 04, 2020], ___ So. 3d ___ (Ala. 2020). In a plurality opinion, (Sellers, J.; Wise and Mitchell, JJ., concur; Parker, C.J., and Bolin, Shaw, Bryan, Mendheim, and Stewart, JJ., concur in the result) the Court affirms a summary judgment entered by the Baldwin Circuit Court in favor of the sellers of residential real estate located adjacent to the Fish River who were sued by the parcel’s purchasers when a retainer wall collapsed. The purchase agreement contained an “As Is” clause.

The Court first discusses Alabama’s version of the doctrine of caveat emptor (“let the buyer beware”) as it applies to the sale of used real estate. Ms. **6-7, citing Nesbitt v. Frederick, 941 So. 2d 950, 956 (Ala. 2006). The Court reiterates that ordinarily there are three exceptions to caveat emptor that require a seller to disclose to the buyer known defects in the property, i.e., 1) when the seller has a duty under § 6-5-102, Ala. Code 1975, to disclose known defects because a fiduciary relationship exists between the buyer and the seller; 2) when a seller has a duty to disclose material defects affecting health or safety not known to or readily observable by the buyer; and 3) when a buyer inquires directly about a material defect or condition of the property. Id.

However, in this case, because of the inclusion of the “As Is” language, Clay Kilgore Construction, Inc. v. Buchalter/Grant, L.L.C., 949 So. 2d 893, 897-98 (Ala. 2006) negates the element of reliance essential to any claim of fraud and/or fraudulent suppression. Ms. *8. The Court concludes “under Alabama law, when a buyer elects to purchase real property subject to an ‘as is’ clause in the purchase agreement and neglects to inspect the property, the buyer cannot take advantage of any exceptions to the doctrine of caveat emptor.” Ms. *9. Accordingly, the summary judgment in favor of the sellers is due to be affirmed.

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