Under Georgia law, can a home buyer sue a seller who is unhappy with the house? Unless the house seller is also the house builder, the answer is “Generally no.”
Fortunately for sellers, the law in Georgia protects home owners who sell their house to people who later suffer from “buyers remorse” and want to sue them to rescind the sale. Unfortunately for buyers, unless the seller was also the home builder, there is not much you can do to rescind a sale agreement even if the home seller fraudulently misrepresented or hid a housing defect. Nevertheless, the law is very specific, so if you find yourself in this situation, time is of the essence and it is imperative you seek competent legal counsel right away to ascertain your rights.
In general, home sellers are protected from home buyers who later try to rescind the sales agreement by a number of Georgia doctrines. Today’s article, the final in a three part series discusses the Doctrine of Merger by Deed:
Doctrine of Merger by Deed:
Finally and most importantly, a Plaintiff buyer’s claims will generally always be denied if once the sale was closed, the seller and buyer never had any warranty against a defect/problem surviving the real estate closing and being included in the warranty deed.
The rule in Georgia is this: the survival of terms and conditions found in the purchase and sales agreement do not survive the closing unless specifically reserved or unless they are not performed by delivery and acceptance of the deed.” Bickerstaff Real Estate Mgmt., LLC v. Hanners, 292 Ga. App. 554, 557 (Ga. Ct. App. 2008).
Other than the responsibility to pay a real estate commission and the warranty of title, oftentimes there are no such obligations that survive the closing. Consequently, if a buyer is relying on certain representations that the seller has made, they must be specifically reserved under the warranty deed.
Even in the event of fraud where the defendant fraudulently induced buyers into purchasing a property by failing to disclose defects, any reliance on these representations are unreasonable. Id at 558. The only exception to this rule that the Court has carved out is for builder-sellers. Id. Thus, if the person who build the house fraudulently hid defects prior and during the sale—a buyer may have a claim. In all other cases however, merger by deed is a viable and absolute defense to all land sales contracts. Id. Once the sale was closed, any representations that were not specifically reserved in the purchase and sales agreement failed to survive. Id.
Thus, if the home seller and the buyer never had any warranty against a specific defect that would survive the real estate closing, and because the warranty deed never contained any warranty against such a defect, all claims against the seller are defeated due to the defense of Merger by Deed.
The Supreme Court justices have opined that these laws protect Georgia homeowners and our state’s housing market from being vexed to economic death. Cendant Mobility Financial Corp. v. Asuamah, 285 Ga. 818, 821 (2009).
Thus the morale of the story is Buyer Beware! Regardless, if you are a home seller who is being threatened by a lawsuit, or if you are a home buyer contemplating a lawsuit against a seller—the laws are very specific to one’s situation and it is absolutely important that you seek competent legal counsel as soon as possible in order to protect your rights.