This case involves legal issues arising from residential home sale transaction. The parties signed a purchase agreement requiring the seller to pay “reasonable attorney fees” if the seller failed to disclose material defects in the property of which they had actual knowledge or should have found out about upon an inspection and the buyer prevailed at trial as to any resulting damages from the non-disclosure. Indeed, the seller failed to disclose a significant water problem in the basement, and the buyers filed sued for damages and attorney’s fees.
At trial court jury awarded the buyers $12,000 on their damage, finding the nondisclosure to be a material defect that should have been disclosed under Iowa Code Ch. 558A. The court further awarded the buyers $20,000 in attorney fees. On appeal, the appellate court concluded that the seller’s duty to effectively disclose defects to the real estate was incorporated into the purchase agreement. Even though the purchase agreement did not specifically state that the seller had a legal duty under §558A to disclose material defects, it did state that “Sellers and Buyers acknowledge that Sellers of real property have a legal duty to disclose Material Defects.” This reference to the disclosure requirement was good enough for the court.
The buyers were able to prove through substantial evidence that the seller knew or should have known that the basement had a water problem. The buyers and seller did not agree to waive this requirement, thus, the seller should have complete the required form. The court also upheld the award of attorney fees. Johnson v. Baum, No. 0-389/09-1340, 2010 Iowa App. LEXIS 757 (Iowa Ct. App., Jul. 14, 2010).