Generally, a vendor is not liable for personal injury to a purchaser or a third person caused by any dangerous condition of premises in the following circumstances[i]:
- where the dangerous condition existed at the time when a purchaser takes possession of premises;
- where the injury is caused after a vendor has divested himself/herself of land control; and
- where the dangerous condition did not arise until a purchaser took possession of premises.
Therefore, the doctrine of caveat emptor applies as between a vendor and a purchaser to any proposed liability after a purchaser has purchased real estate from a vendor[ii].
However, there are exceptions to this general rule. For instance, where a vendor creates a situation which interferes with the rights of the public or with the use or enjoyment of adjoining lands, a vendor can be made liable for the dangerous condition created in the premises[iii]. Likewise, in cases where land is transferred in such a condition that it involves an unreasonable risk of harm to those outside the premises, a vendor is made liable at least for a reasonable length of time after s/he has parted with possession. In such cases the liability of a vendor is based upon the theory of a public or a private nuisance[iv]. Another exception is a vendor’s failure to disclose a dangerous condition known to him/her, where s/he should have realized that a purchaser did not know and probably would not discover the condition or its potentiality for harm[v].
In order to make a vendor, who conceals or fails to disclose to his/her purchaser any condition that involves an unreasonable risk to persons on the land, liable to a purchaser and others upon the land, after a purchaser has taken possession, the following conditions must be satisfied[vi]:
- a purchaser must not have knowledge or reason to know about the dangerous condition or the risk involved;
- a vendor must have knowledge or reason to know of the dangerous condition or the risk involved; and
- a vendor must have believed or reason to believe that a purchaser will not discover the condition or realize the risk.
Generally, where a vendor transfers a land with dangerous condition, s/he is made liable only until a purchaser had reasonable opportunity to discover the condition and to take necessary precautions. But, where a vendor actively conceals the dangerous condition, the liability continues until a purchaser discovers it and has reasonable opportunity to take effective precautions against it[vii].
With regard to the liability of a purchaser, it has been held that a purchaser of a land who had knowledge of a dangerous condition at the time of the conveyance and who did not have a sufficient opportunity to remedy the defect at the time of the accident will not be held liable for the dangerous condition on the premises. In such circumstances, it is the vendor who is made liable. In order to make a purchaser liable, s/he must obtain some reasonable time to cure the defect[viii].
Usually, a purchaser becomes liable for injuries caused by defects on premises from the moment that s/he acquires title or possession of the land[ix]. However, the liability of a purchaser will not arise if a vendor transfers the property with an assurance that defective or dangerous premises are safe with the knowledge that they are not and with an intention to prevent a purchaser from learning about it before taking possession.
Similarly, the liability of a purchaser, who takes possession of a land upon which there exists a structure or other artificial condition that is unreasonably dangerous to persons or property outside the land, depends upon the following factors[x]:
- whether a purchaser knows or should know about the condition;
- whether a purchaser knows or should know that such condition exists without the consent of those affected by it; and
- whether a purchaser has failed after a reasonable opportunity to make it safe or otherwise to protect such persons against such condition.
[i] Kilmer v. White, 254 N.Y. 64 (N.Y. 1930).
[ii] Belote v. Memphis Development Co., 208 Tenn. 434 (Tenn. 1961).
[iii] Sarnicandro v. Lake Developers, Inc., 55 N.J. Super. 475 (App.Div. 1959).
[iv] Cavanaugh v. Pappas, 91 N.J. Super. 597 (Cty. Ct. 1966).
[v] Royal Indem. Co. v. Caleco, Inc., 2004 U.S. Dist. LEXIS 23300 (E.D. Pa. Nov. 9, 2004).
[vi] Kimberlin v. Lear, 88 Nev. 492 (Nev. 1972).
[vii] Century Display Mfg. Corp. v. D. R. Wager Constr. Co., 71 Ill. 2d 428 (Ill. 1978).
[viii] Young v. Hanson, 179 A.D.2d 978 (N.Y. App. Div. 3d Dep’t 1992).
[ix] Andrews v. Casagrande, 167 Ariz. 71 (Ariz. Ct. App. 1990).
[x] Restat 2d of Torts, § 366.