Question

Austin recently sold a warehouse to Beverly, who paid Austin $250,000. The warehouse roof is made of a synthetic material called "Top-Tile." During negotiations, Beverly asked if the roof was in good condition, and Austin replied, "I've never had a problem with it." But, the fact is that the manufacturer of Top-Tile notified Austin a year ago that the warehouse roof would soon develop leaks. The valid written contract to sell the warehouse between Austin and Beverly specified that the property was being sold "as is, with no warranties as to the condition of the structure." After Beverly bought the warehouse, the roof immediately started leaking.

If Beverly asks your opinion on whether there is any ground(s) to cancel (rescind) the contract with Austin and demand a return of the $250,000 Beverly paid Austin, what will you tell her? Explain your response.

Answer 1

In my opinion I think that Beverly do has a definite grounds to cancel or rescind the contract with Austin and demand return of money because under contract and real estate law , there is a provision of Mispresention and non disclosure which allows the part to rescind the contract if any of two have taken place on the behalf of seller..

With respect to the case mentioned above, Austin can be made subject to Mispresention and non disclosure of true information as she has misleaded Beverly by telling her that she has had no problems with the roof of the warehouse on being asked about its condition even after being notified by the manufacturer of Top Tile a year ago about the possibility of roof soon developing leaks which constitutes Misspresentation.

Since Top Tile has notified Austin about the likely occurrence of leaks, she has thus intentionally not disclosed this information to Beverly and rather hid this important fact even after being asked about the condition of roof ,,, which thus constitutes non disclosure.

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Moreover the other ground to the ability of Beverly to rescind the contract is through counteracting Austin's clause of "as is, with no warranties as to the condition of the structure." through claiming that roof of the warehouse was automatically a material fact to the contract and the purchase decision because it is obviously integral part of any building under real estate law.

Therefore Beverly can rescind the contract and demand her money back on these grounds which are valid.