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Massachusetts Supreme Judicial Court - 311 Mass. 677
Tags: Contracts, Misrepresentation, Caveat emptor
In Massachusetts' 1942 case Swinton v. Whitinsville Savings Bank, the court addressed a key issue regarding mortgage lenders' responsibility for negligent property inspections. This case set a precedent for the extent of a lender's duty of care during property inspections in the lending process.
Swinton, the plaintiff, bought a house using a mortgage loan from Whitinsville Savings Bank, the defendant. The bank inspected the property before giving the loan but missed a termite infestation. Swinton sued, claiming financial harm due to the bank's negligent inspection.
The trial court sided with the bank, asserting it wasn't obligated to exercise care during the property inspection. Swinton appealed, seeking liability on the bank for the inspection negligence. The Massachusetts Supreme Judicial Court upheld the ruling, stating the bank didn't have a duty of care during the inspection. The court's rationale was that inspections are primarily for the bank's benefit to assess property value as collateral, not to guarantee property condition for buyers. Thus, the bank couldn't be held liable for post-purchase defects.
Swinton v. Whitinsville Savings Bank is significant because it defined mortgage lenders' duty of care in property inspections, establishing a precedent for negligence liability limits. The ruling clarified that lenders aren't responsible for guaranteeing property conditions for buyers, guiding both parties in understanding lender liability boundaries in property transactions.
The plaintiff purchased a house from the defendant, which was severely infested with termites. The plaintiff alleges that the defendant intentionally concealed the presence of termites, resulting in considerable expenses for repairs and termite treatment. However, there is no evidence of any false statement or misrepresentation made by the defendant. The law does not impose liability on a seller for mere nondisclosure of a nonapparent defect that materially reduces the value of the subject of the sale. Therefore, the plaintiff's case lacks merit, and the defendant cannot be held liable for mere nondisclosure of the presence of termites in the house.
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