Seller Failed to Disclose True Condition of Walls

Karen S. Engelhart v. Crystal Kay Kramer, 1997 SD 124

February 1, 1998

PIERRE, S.D.--An understatement by a homeseller concerning the degree of cracking in a basement wall is a violation of the state's seller disclosure law, the state Supreme Court has ruled.

The court upheld a trial court that had awarded a $34,800 judgment to a woman who had purchased a home in Sioux Falls in October 1994. In the seller disclosure statement, which has been required in South Dakota since 1993, the seller wrote that “basement cement walls have some crumbling.” At the time of the sale, the basement walls were covered with paneling, so the walls weren’t visible, according to court papers.

After moving into the house, the buyer discovered that the cement was so badly cracked that the walls were in danger of collapsing. The foundation had to be replaced.

The buyer brought suit against the seller, claiming fraud and failure to comply with the state's disclosure statute. Trial testimony showed that the seller had removed old plasterboard and put up wood paneling over the basement walls four days before putting the house on the market in September 1993.

Although the seller had taken photographs of the walls before installing the paneling, the seller failed to show the pictures to the buyer. The court ruled that the seller's failure to show the photographs was unreasonable and negligent and therefore in violation of the seller disclosure law.

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