ILNews

Sale to trust creates first impression

Back to TopCommentsE-mailPrintBookmark and Share

A sale of a home to a trust that included disputed errors in a sales disclosure form presented an issue of first impression for the Indiana Court of Appeals Monday.

Indiana Code Section 32-21-5 spells out when an owner isn’t liable for any errors, inaccuracies, or omissions of information in the disclosure form. It also states when Chapter 1 of the statute doesn’t apply, and that includes transfers to a living trust.

Rebecca Hoffmeister-Repp sold her lake-front home to Rex Breeden, who bought the home through his revocable trust. When she was preparing the home for sale, she signed a seller’s residential real-estate sales disclosure form saying that there weren’t any moisture or water problems in the basement, crawl space area, or any other area.

More than 10 years before she sold the home, Hoffmeister-Repp saw water in a floor vent and heating duct. She and her husband had a sump pump installed and after that, she never noticed water in the ducts and assumed the issue was fixed.

Breeden saw the sales disclosure form, saw issues with the roof and siding, and got the home at a reduced priced to cover the costs of repairs. Breeden also hired an inspector, who advised Breeden to hire someone else to determine if there was actual water penetration in some decayed wood trim in the house. Breeden didn’t follow through with that recommendation and purchased the home.

He later discovered damage to some structural walls and defective conditions of the duct work. On behalf the trust, he sued Hoffmeister-Repp alleging her statements on the form constituted fraud to allow for damages or rescission, and there was a mutual mistake in the contract which entitled the trust to rescission of the purchase agreement.

The trial court granted summary judgment for Hoffmeister-Repp, which the Indiana Court of Appeals affirmed. The suit brought up for the first time what liability a seller to a trust would have for errors contained in the form.

Both sides argued the statute was not ambiguous, but both interpreted it differently. The trust claimed it wasn’t required to establish that any error was within actual knowledge of Hoffmeister-Repp because of the exception involving trusts. She claimed application of the exception to include selling to trusts would allow buyers to avoid the terms of the statute by creating a living trust and having the trust act as the purchaser of record for residential real estate.

In Rex E. Breeden Revocable Trust v. Rebecca Jane Hoffmeister-Repp, No. 03A04-1003-CT-185, the judges found the statute to be ambiguous and ruled in favor of Hoffmeister-Repp. They noted that exceptions to the requirement of a disclosure form are based on a special relationship between the buyer and seller, and some exceptions take into account that the seller is unlikely to have actually lived in the home such that knowledge of the home’s components can’t be assumed.

“Because I.C. § 32-21-5-10 requires this Disclosure Form to be completed and signed prior to an offer for the sale of the residence is accepted, the ninth exception—transfer to a living trust—can necessarily only come into play if the residence is purchased by the seller’s own living trust,” wrote Judge Patricia Riley. “If the sale is occasioned between a seller and a non-related living trust, the seller will always include a Disclosure Form as he is unaware as to the identity of the prospective buyer.”

The judges also held the trust failed to show Hoffmeister-Repp had actual knowledge of the moisture problems in the duct work at the moment she completed the disclosure form, and that there was insufficient designated evidence to support a finding of mutual mistake.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. @ President Snow, like they really read these comments or have the GUTS to show what is the right thing to do. They are just worrying about planning the next retirement party, the others JUST DO NOT CARE about what is right. Its the Good Ol'Boys - they do not care about the rights of the mother or child, they just care about their next vote, which, from what I gather, the mother left the state of Indiana because of the domestic violence that was going on through out the marriage, the father had three restraining orders on him from three different women, but yet, the COA judges sent a strong message, go ahead men put your women in place, do what you have to do, you have our backs... I just wish the REAL truth could be told about this situation... Please pray for this child and mother that God will some how make things right and send a miracle from above.

  2. I hear you.... Us Christians are the minority. The LGBTs groups have more rights than the Christians..... How come when we express our faith openly in public we are prosecuted? This justice system do not want to seem "bias" but yet forgets who have voted them into office.

  3. Perhaps the lady chief justice, or lady appellate court chief judge, or one of the many female federal court judges in Ind could lead this discussion of gender disparity? THINK WITH ME .... any real examples of race or gender bias reported on this ezine? But think about ADA cases ... hmmmm ... could it be that the ISC actually needs to tighten its ADA function instead? Let's ask me or Attorney Straw. And how about religion? Remember it, it used to be right up there with race, and actually more protected than gender. Used to be. Patrick J Buchanan observes: " After World War II, our judicial dictatorship began a purge of public manifestations of the “Christian nation” Harry Truman said we were. In 2009, Barack Obama retorted, “We do not consider ourselves to be a Christian nation.” Secularism had been enthroned as our established religion, with only the most feeble of protests." http://www.wnd.com/2017/02/is-secession-a-solution-to-cultural-war/#q3yVdhxDVMMxiCmy.99 I could link to any of my supreme court filings here, but have done that more than enough. My case is an exclamation mark on what PJB writes. BUT not in ISC, where the progressives obsess on race and gender .... despite a lack of predicate acts in the past decade. Interested in reading more on this subject? Search for "Florida" on this ezine.

  4. Great questions to six jurists. The legislature should open a probe to investigate possible government corruption. Cj rush has shown courage as has justice Steven David. Who stands with them?

  5. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

ADVERTISEMENT