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Supreme Court of New Jersey - 64 N.J. 445
Tags: Contracts, Misrepresentation, Non-disclosure
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Case Summary
In Weintraub v. Krobatsch (1974), the New Jersey Supreme Court addressed a home seller's responsibility for hiding defects in a property sale. This case is significant because it defined the seller's obligation to reveal known major issues to the buyer and set a precedent for real estate fraud cases.
Plaintiff Weintraub sold a house to Defendant Krobatschs. Before the purchase and sale agreement was drawn up, an inspection was conducted, which Defendants found satisfactory. Later, Defendants requested fumigation, and after a fire, Defendants indicated their ongoing willingness to make a deal by saying that they would make an adjustment at closing. However, prior to closing, Defendants took a tour of Plaintiff's property and found it infested with cockroaches. Defendants then said that they wanted to rescind the agreement to purchase the house.
Plaintiff responded by rejecting the rescission and enjoining Defendants and her broker in a suit. The law division denied the Defendants' summary judgment motion and granted Plaintiff’s cross-motion for summary judgment. The Krobatschs appealed.
On appeal, the decision was reversed and remanded. The court stated that the Defendant’s concerns were of such a material nature that they should overcome summary judgment. Instead a jury should determine whether Plaintiff knowingly concealed the truth about the roaches.
The Weintraub v. Krobatsch case matters because it clarified the seller's duty to disclose known material defects in real estate transactions and established a legal precedent for claims involving fraudulent concealment.
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The Appellate Division ruled in favor of the purchasers who rescinded a contract to purchase a home due to roach infestation. The lower court's summary judgment was based on insufficient pleadings and affidavits. The Law Division granted the seller's motion for summary judgment, but the Appellate Division sustained the summary judgment in the seller's favor and held that the purchasers were responsible for the broker's commission. The court held that a seller can be guilty of fraud by remaining silent on material matters within their knowledge, and the buyer is not required to make specific inquiries. The purchasers are entitled to proceed with their efforts to establish that they are equitably entitled to rescind the sale of the house due to the seller's deliberate concealment or failure to disclose the extensive infestation. The trial judge must determine whether the concealment or nondisclosure was significant enough to justify rescission, based on the full presentation of evidence.
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