Background
Destini and Tyler Hansen agreed in August 2023 to buy Regina Kramer’s house for $650,000, waiving inspection and testing contingencies. Kramer’s real estate condition report stated that she was unaware of defects affecting the property. The Hansens first noticed a strong cat-urine odor during their October 1 pre-closing walk-through. At a meeting the next day, Kramer attributed the odor to a cat marking near a bathroom by the garage. The Hansens proceeded with the October 2, 2023 closing after allegedly relying on that explanation.
After closing, the Hansens discovered urine odors and stains throughout the property and removed carpeting and padding, cleaned ductwork, and treated walls. Evidence at summary judgment included Kramer’s acknowledgment that pets had urinated inside, testimony from a carpet cleaner describing pervasive urine stains and exceptionally severe odors, and evidence that carpets had been professionally cleaned shortly before showings and closing. The circuit court nevertheless granted Kramer summary judgment on all claims.
The Court’s Holding
The Court of Appeals held that the Hansens did not waive their claims merely by waiving an inspection contingency and proceeding with the closing. Unlike buyers in cases where disclosed problems triggered contractual inspection rights, the Hansens presented evidence that the full extent of the urine condition was not disclosed or readily discernible and that their contract did not give them an identified right to rescind after discovering the odor. A jury could also find that they reasonably relied on Kramer’s pre-closing explanation that the problem was confined to the bathroom area.
The court affirmed summary judgment on all theories premised on Kramer’s failure to disclose a statutory “defect.” The Hansens had not submitted sufficient evidence that the particular urine conditions significantly impaired occupants’ health or safety or significantly reduced the property’s value, as required by Wisconsin’s statutory definition. But the court reinstated the intentional-misrepresentation and theft-by-fraud claims based on failure to disclose a material fact, as well as those claims and the false-advertising claim based on alleged concealment. Evidence concerning Kramer’s knowledge, repeated professional cleaning, open windows and doors, and the extent of the odor created factual disputes for a jury.
Key Takeaways
- Waiving a home inspection did not, as a matter of law, waive claims involving a condition whose true nature allegedly was neither disclosed nor readily discernible.
- A condition may be material under common-law disclosure principles even when the evidence does not establish that it meets Wisconsin’s statutory definition of a property “defect.”
- Evidence of repeated carpet cleaning, ventilation during showings, pet accidents, and pervasive odor was sufficient to require a trial on the alleged nondisclosure and concealment theories.
Why It Matters
The decision distinguishes statutory defect-disclosure claims from broader claims involving material facts and active concealment. Residential sellers may face liability for failing to disclose a condition important to a reasonable buyer even when the buyer cannot prove that the condition significantly affected health, safety, property value, or the premises’ expected life.
The ruling also limits the effect of an inspection waiver at summary judgment. Whether buyers knowingly accepted a condition can depend on what the seller disclosed, whether the condition’s true nature was apparent, what contractual remedies remained available, and whether the buyers reasonably relied on the seller’s explanation.