Commentary: No tort claims in home sales.

Byline: David Ziemer

The buyer of a residential home cannot recover from the seller for misrepresentation, even if the seller intentionally failed to disclose that the home's sewer line was broken.

However, the effect will be minimal in most cases, because homebuyers can still pursue contract and statutory remedies.

Writing for the majority, Justice N. Patrick Crooks concluded, Clearly, purchasers have adequate contractual and statutory remedies, if needed.

Nevertheless, it will affect some cases.

Writing in dissent, Justice Ann Walsh Bradley noted that the statutory remedies are governed by a three-year statute of repose, and the contract remedies by a six-year statute of limitations.

Tort claims, on the other hand, are subject to the discovery rule, which tolls running of the statute of limitations until the fraud is revealed.

Bradley wrote, [T]here remain fraud cases where tort is the only remedy. The majority bars those homeowners from recovering for latent defects hidden by sellers' deceit.

Broken Sewer

Shannon Below bought a house from Dion R. and Dana Norton.

The Nortons' property condition report did not disclose that the sewer line that ran between the house and the street was broken.

Below sued, alleging intentional, negligent, and strict liability misrepresentation (tort claims); and misrepresentation in violation of secs. 100.18, 895.446 and 943.20(1)(d) (statutory claims). A contract claim was later added, but the complaint was not properly served.

The Supreme Court held that the tort claims were barred by the economic loss doctrine (ELD), but the sec. 100.18 claim could proceed. The court declined to address whether the 895.446 claim could proceed, because it found the proceedings in the circuit court unclear as to why the claim was dismissed.

Although the Supreme Court has never previously addressed application of the ELD to a residential real estate sale, the majority found that previous cases militate in favor of its application.

In Linden v. Cascade Stone Co., 2005 WI 113, 283 Wis.2d 606, 699 N.W.2d 189, the court applied the ELD to bar a tort suit against a subcontractor who worked on the construction of the plaintiff's home.

Also, in Wickenhauser v. Lehtinen, 2007 WI 82, 302 Wis.2d 41, 734 N.W.2d 855, the court applied the doctrine to the sale of farmland.

The majority interpreted these cases as extending the ELD to all noncommercial real estate transactions.

In addition to these precedents, the majority emphasized the...