History of Condo Flooding is ‘Adverse Fact’

Buyers of a Charlottesville townhouse can sue the part-owner/real estate agent for failure to disclosure adverse material facts, based on allegations the agent knew of and failed to disclose a history of flooding at the residence; even though the flooding allegedly was caused by a clogged drain on adjacent property, the flooding still was a condition of the subject property, says a Charlottesville Circuit Court on this first-impression question.

Under count I, plaintiffs allege the residence frequently flooded due to the clogged drain on the adjacent property but that defendant, as owner and agent, failed to disclose this materially adverse fact in writing, in violation of Va. Code § 54.1-2131(B). Plaintiffs allege the adjacent drain, the history of flooding and the possibility of flooding in the future are material adverse facts about the property. Defendant argues that because the flooding was caused by a drain not located on the subject property, the drain is a condition explicitly excluded from the disclosure requirements of § 54.1-2131(B).

Defendant is correct that the faulty drain is a condition of an adjacent property and excluded from the disclosure requirements of the statute. However, whether flooding of a property directly resulting from a problem on an adjacent property is a physical condition of the subject property has never been addressed in Virginia.

Construing the language liberally, recurrent flooding of a property, from whatever cause, is a condition of the subject property. Plaintiffs seek rescission not because the nearby drain clogs, but because their property is the subject of periodic flooding. It is reasonable that a buyer would want to know that a property has a history of and potential for flooding, and the statute is designed to ensure that licensees disclose this type of condition. The history of periodic flooding and the possibility of future flooding are physical conditions of the subject property. Whether this condition of the property was a material adverse fact is an issue for the jury.

Plaintiffs aver the residence had flooded at least three times prior to their purchase of the property, that defendant had prior knowledge of the history of flooding, that defendant failed to disclose this history in writing and that plaintiffs suffered damages as a result of this same flooding. Plaintiffs have sufficiently pleaded a breach of the statutory duty to disclose adverse material facts as required by Va. Code § 54.1-2131(B).

Plaintiffs have not, however, stated claims for actual or constructive fraud.

Plaintiffs do not allege that defendant took steps to divert their attention away from the history of flooding problems, nor did plaintiffs ask defendant if there was a problem or history of flooding.

Plaintiffs were given ample opportunity to inspect the property, which they did through the use of a professional inspector. Because defendant did not divert plaintiffs’ attention away from the history of flooding, caveat emptor applies and defendant’s demurrer is sustained on these two counts of common law fraud.

Walton v. Aguilar (Hogshire, J.) No. 2010-106, Oct. 28, 2010; Charlottesville Cir.Ct.; John D. Griffin for plaintiffs, John Zunka for defendant. VLW 011-8-012, 5 pp.