When you buy a property, you trust the seller's disclosures. But what happens when they conceal major defects? A recent court decision shows why a summary judgment was reversed, emphasizing that credibility is key. This case highlights the costly consequences of real estate misrepresentation.
Buying or selling property is one of the most significant transactions most people or businesses will undertake. Whether it involves a commercial building, office space, or a home, the integrity of the agreement depends on one thing: truthfulness. When sellers misrepresent or fail to disclose material defects, disputes inevitably follow.
Case Study: When a Seller's Disclosure Report is Questioned
A recent Court of Appeals decision highlights what can happen when disputes over property condition reports and seller knowledge reach the courtroom. Although the case involved a residential home sale, the lessons apply broadly to business owners, real estate investors, and entrepreneurs who rely on contracts and disclosures in property transactions.
The sellers in this case owned a home that had undergone a variety of renovations over the years. They eventually sold the property to new buyers. In the required real estate condition report, the sellers indicated that they were not aware of any ongoing water intrusion, moisture issues, or structural defects.
However, shortly after moving in, the buyers noticed troubling signs: the home was unusually humid, and renovations revealed significant structural damage caused by water infiltration. The damage was so severe that parts of the property had to be torn down and rebuilt.
The Legal Battle: Suing for Misrepresentation and Breach of Contract
The buyers sued for breach of contract and misrepresentation, arguing that the sellers had either known about the defects or should have known given their history of renovations. The sellers denied any knowledge and obtained summary judgment at the trial court level—meaning the case was dismissed without going to trial. The buyers appealed.
Why the Appellate Court Reversed the Summary Judgment
On appeal, the Court of Appeals reversed the trial court's decision and allowed the case to proceed to trial. The appellate court emphasized that there were reasonable inferences in favor of the Plaintiffs and the testimony obtained in discovery establishing genuine issues of material fact regarding the defendant's awareness of moisture intrusion and structural defects in the home, suggested the sellers had enough time to observe or become aware of the problem. Moreover, the testimony raised questions of witness credibility that couldn't be resolved at the summary judgment stage.
Because summary judgment requires no genuine issues of material fact, and because these disputed facts went directly to credibility, the appellate court determined the case should proceed to trial.
The Broader Implications for Illinois Property Transactions
Although this case arose from a residential property sale, its implications are much broader. Summary judgment is not a shortcut when facts are disputed. The trial court dismissed the case at the summary judgment stage, but the appellate court reversed because disputed facts required a trial. Credibility disputes—who knew what, and when—often cannot be resolved without testimony and evidence presented before a judge or jury.
Due Diligence: A Lesson for Both Buyers and Sellers
Careful disclosure and transparent communication at the outset are far less costly than defending a lawsuit later. Businesses or individuals selling property should invest in thorough inspections, legal review of disclosures, and clear documentation. Buyers, in turn, should insist on due diligence to uncover issues before closing.
This appellate decision illustrates how courts carefully scrutinize claims of non-disclosure and misrepresentation, particularly when credibility is at issue. The ruling serves as a reminder that property transactions and contractual representations are not just formalities, they are legally binding commitments with significant consequences.
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