If You Hire a Home Inspector, Listen to the Inspector, Not the Sellers

A recent case out of Texas, Naquin v. Cellio, No. 14-04054-431, deals with “as-is” clauses and fraudulent inducement in the context of a real estate transaction. 

Naquin bought a home in 2012. The home purchase contract stated that she was buying the home “in its present condition.” Naquin hired an inspector to look the home over, received a report, and decided to buy the house. Naquin then claims to have discovered, inter alia, plumbing issues caused by a toilet that had been added to a pool house on the grounds, and claims that she had been fraudulently induced to buy the house by the Cellios’ misrepresentations. 

The court upheld the enforceability of the “as-is” clause. There was no disparity of bargaining power between the parties, and both parties were represented by real estate agents in the transaction. The parties specifically negotiated over the “as-is” clause and agreed to give Naquin the right to complete an inspection of the property before closing the transaction (which Naquin did). 

However, the “as-is” clause would not be enforceable of the Cellios made a fraudulent misrepresentation. It was true that the Cellios executed statements saying they were unaware of any issues with the plumbing and that they had not done anything to the home without the necessary permitting (although it also appeared to be true that the Cellios thought this statement was true when they made it). But, at any rate, it was also true that Naquin knew that there were plumbing issues and structural defects because those had come up in the inspection. The inspection report, the court held, should have trumped the Cellios’ representations, and Naquin should have relied on that. In fact, when Naquin hired the inspector, it was an indication that she was not relying on the Cellios’ word. Therefore, she couldn’t prove that she had been fraudulently induced.