A recent Eleventh District Ohio Court of Appeals decision (Bockelman v. Griffin) reminds us that: 1) fraudulent concealment/non-disclosure is an exception to the general real estate principle of “Caveat Emptor” (Let the Buyer Beware); and 2) the Ohio Residential Disclosure Form (Disclosure Form) can be the source of the fraud.
The General Rule of “Caveat Emptor” is still alive and well in Ohio, generally precluding recovery in an action by a purchaser against a seller pertaining to a property’s defective condition if:
- the condition complained of is open to observation or discoverable upon reasonable inspection;
- the purchaser had the unimpeded opportunity to examine the premises; and
- there is no fraud on the part of the seller.
The Exception for Fraud
In the context of real estate transactions, there are basically two types of fraud (that serve as exceptions to Caveat Emptor): fraudulent misrepresentation and fraudulent concealment/nondisclosure. The elements of fraudulent misrepresentation are: (a) a false representation concerning a material fact; (b) knowledge of the falsity; (c) intent to induce reliance on the misrepresentation; (d) reliance and (e) injury resulting from the reliance.
Even without an affirmative misrepresentation or “actual” concealment, an action for fraud, commonly referred to as “fraudulent nondisclosure” is also maintainable in Ohio for failure to fully disclose material facts where there exists a duty to speak. In such regard, the Supreme Court of Ohio has held that a “vendor has a duty to disclose material facts which are latent, not readily observable or discoverable through a purchaser’s reasonable inspection.” As with fraudulent misrepresentation, the aggrieved party in an action for fraudulent non-disclosure must also prove that the non-disclosing party intended to mislead the other party, reliance on the part of the aggrieved party and injury/damages to the aggrieved party resulting from such reliance.
Background of Bockelman v. Griffin, 2025-Ohio-807
Bockelman v. Griffin involved a real estate purchase dispute regarding a house in Trumbull County, Ohio owned by defendant-seller (Seller) Delores Griffin. Prior to the sale, notices from the Trumbull County Engineer’s office were sent, one of which notified Seller regarding the need for a tie-in to a new sewer at the street and the other notified Seller of an upcoming sewer assessment of $27,260. The plaintiff-buyer (Buyer) Mark and Sheri Bockelman sued Seller for failing to disclose the pending $27,260 sewer assessment in the Purchase Agreement (Agreement) and on the Disclosure Form.
The Bockelman/Griffin Agreement contains a provision that states: “Seller has not received notice of future assessable improvements unless noted _______________.” Seller did not fill in the blank.
On the Disclosure Form, Seller did state that, “Buyer has to tie in to new sewer line at road,” but checked the “no” box in response to the question: “Do you know of any recent or proposed assessments, fees or abatements, which could affect the property.”
At the trial court proceeding, Seller argued that she never received an assessment notice, but her testimony was suspect as she was the only one who lived at the property, the notice was not returned as refused or unclaimed, and she acknowledged receipt of the tie-in notice which mentioned that there would be assessments in the future. The Seller further argued that the principal of “Caveat Emptor” precluded Buyer’s recovery and that there was no duty to disclose because assessment information is not latent, but discoverable by examining the public record. The Buyer argued that Caveat Emptor did not apply here because there was fraudulent-non-disclosure, and the assessments were not yet public records prior to the sale, so the Buyer would have had no way to discover the assessment information.
Court Rules in Favor of Buyer
The trial court in Bockelman v. Griffin (the Court) held that the Seller’s non-disclosure of the assessment information constituted fraudulent non-disclosure. The Court first concluded that Ohio’s Residential Disclosure Act specifically gives sellers the duty to disclose defects and other information about their properties being sold. While the Court acknowledged that a failure to disclose information does not always mean a seller has committed fraud, in this case, the Court found Seller’s behavior fraudulent due to Seller’s disclosing only the minor issue (the $1,800 sewer tie-in responsibility) and purposely leaving out the major issue (the upcoming $27,000 assessment). The Court further explained that the assessment information was “latent” and not-discoverable by Buyer (since it had not yet been recorded), and that the principal of Caveat Emptor only applies to real estate sales relative to conditions open to observation.
Lessons to be Learned
What is the moral of this story? It is easy not to be guilty of fraudulent misrepresentation and fraudulent non-disclosure. Simply, do not lie, and you cannot be guilty of fraudulent misrepresentation. To be safe from valid claims of fraudulent non-disclosure, disclose, disclose, disclose.
Had the Disclosure Form in Bockelman v. Griffin mentioned the upcoming assessments, you would not be reading about a case called “Bockelman v. Griffin.” Perhaps the sale would not have occurred, or, the price would have needed to be negotiated lower because of the assessment. Still, that result would likely have been better for the Seller than paying $27,000 plus costs and attorneys’ fees.
Also, do not let anyone try and convince you that Ohio’s Residential Disclosure Form is just a broker form or standard closing document that does not need to be reviewed by a lawyer. It is required to be filled out by sellers in most Ohio residential real estate transactions, and what you say (or do not say) on the form can turn out to very costly for you.
If you have questions about real estate purchase agreements, Ohio’s Residential Disclosure Form or other real estate transactional matters, please reach out to KJK Real Estate attorney Stephen D. Richman (SDR@kjk.com).