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31 APPENDIX A REAL ESTATE FAIR DISCLOSURE LAW The purpose of residential real property disclosure laws is to provide prospective home buyers with suffi- cient information to enable them to make informed decisions about the purchase of residential property. I. SELLER'S DUTY TO DISCLOSE PROPERTY DEFECTS OR OFF-SITE CONDITIONS According to the National Association of Realtors, approximately two-thirds of the states have enacted residential real property disclosure laws.262 A survey of state statutes conducted for this report reveals that, although the statutes vary, at least 36 states have laws requiring a seller to disclose to a buyer de- fects in or conditions affecting residential real property that is offered for sale. 263 In those states without a disclosure act, a seller's obligation or duty to disclose defects of conditions af- fecting property likely is limited by the rule of caveat emptor, a doctrine of "long standing" in the United States.264 As explained by an Ohio court, [t]he principle of caveat emptor applies to sales of real estate relative to conditions open to observation. Where those conditions are discoverable and the purchaser has the opportunity for investigation and determination without concealment or hindrance by the vendor, the purchaser has no just cause for complaint even though there are mis- statements and misrepresentations by the vendor not so reprehensible in nature as to constitute fraud.... A seller of realty is not obligated to reveal all that he or she knows. A duty falls upon the purchaser to make in- quiry and examination.265 Thus, at common law for a seller to be able to defend against a claim under the caveat emptor doctrine the defect must be one that is observable or discoverable upon reasonable inspection. A purchaser must have an unimpeded opportunity to examine the property, and a seller must not engage in fraud.266 Pat- ent defects are those that are open and observable to an ordinarily prudent person conducting a reasonable inspection.267 Under the caveat emptor doctrine, a buyer is obligated to investigate a property to discover any defects or adverse information before purchasing the property "as is."268 Generally, the rule pre- 262 Tanya D. Marsh & Robert G. Solloway, Survey: Property Law: Let the Seller Beware: The Slow Demise of Caveat Emptor in Real Property Transactions and Other Recent Developments in Indiana Real Property Law, 38 IND. L. REV. 1317, 1320 (2005). 263 The following states have residential real property disclosure acts: Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, New Hampshire (limited to water and sewage), New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Virginia, Washington, Wisconsin. 264 Layman v. Binns, 35 Ohio St. 3d 176, 177, 519 N.E.2d 642, 643 (Ohio 1988). 265 Id., 35 Ohio St. 3d at 177, 519 N.E.2d at 643644 (holding that the sellers did not engage in fraud because the defect could have been detected by inspection and that the buyers failed to show any affirmative misrepresentation of a material fact). 266 Id., 35 Ohio St. 3d at 178, 519 N.E.2d at 644. In regard to the rule of caveat emptor and commercial property, see Kathleen McNamara Tomcho, Note: Commercial Real Estate Buyer Beware: Sellers May Have the Right to Remain Silent, 70 S. CAL. L. REV. 1571, 157576 (1997). See also Holmes v. Couturier, 452 N.W.2d 135, 137 (S.D. 1990) (holding that fraud will "vitiate any contract" even if the other party accepted the property "as is"); Haygood v. Burl Pounders Realty, Inc., 571 So. 2d 1086 (Ala. 1990); Nei v. Burley, 388 Mass. 307, 310, 446 N.E.2d 674, 676 (1983) (stating that "[s]ellers and brokers who represent sellers are not liable in fraud for failing to disclose every latent defect known to them which reduces materially the value of the property and of which the buyer is ignorant"). 267 Tomcho, supra note 266, at 1571, 1585. 268 Van Camp v. Bradford, 63 Ohio Misc. 2d 245, 252, 256, 623 N.E.2d 731, 736, 738 (Ohio C.P. 1993) (stating, however, that the legislature's enactment of a residential real property disclosure law (citing OHIO REV. CODE ANN. 5302.30) was "a bold step toward ameliorating the harsh application of caveat emptor in even patent defect real estate transactions" and that "[a] seller who is under a duty to disclose facts and fails to do so will be held liable for damages directly and proximately resulting from his silence").

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32 vents a buyer from suing a seller to rescind a transaction or for damages even though the seller knew of undisclosed defects or conditions affecting the property.269 Th e r u l e o f c a v e a t e mp t o r d o e s n o t exclude a buyer's rights to rescission or damages when a seller has committed a fraud in connection with a sale or when a buyer purchases property subject to express or implied warranties.270 A seller also may be held liable for misrepresentations by his or her bro- ker or agent.271 Disclosure may concern either on-site conditions associated with a building or property or off-site con- ditions, such as nearby highways, sewage treatment plants, or stadium lights. In the states where sellers have a duty at common law to disclose off-site defects, disclosure is required for defects that are known to the seller, that are unknown to and not readily observable by the buyer, and that are material.272 In Cali- fornia, a seller has a common law duty to disclose facts known to the seller that materially affect the value or desirability of the property--facts that are known by or are accessible only to the seller, who also knows that the facts are not observable by a buyer.273 A New York court held that a seller had no duty to disclose a local government's plan to remove a nearby subway location, because the transit authority's application to remove the station and the city's denial of the application were facts that were readily ascertainable by the plaintiffs' simple perusal of the public records.274 In contrast, New Jersey has "long since discarded the doctrine of caveat emptor with regard to the sale of real estate."275 In Strawn v. Canuso,276 New Jersey's Supreme Court held that a builder-developer and its broker had a duty to advise prospective purchasers of off-site physical conditions known to [the seller] and unknown and not readily observable by the buyer if the exis- tence of those conditions is of sufficient materiality to affect the habitability, use, or enjoyment of the property and, therefore, render the property substantially less desirable or valuable to the objectively reasonable buyer.277 Not long after the Strawn decision, the New Jersey legislature enacted a New Residential Construction Off-Site Conditions Disclosure Act. 269 Layman, 35 Ohio St. 3d at 177, 519 N.E.2d at 644 ("A seller of realty is not obligated to reveal all that he or she knows. A duty falls upon the purchaser to make inquiry and examination"). 270 Haygood, 571 So. 2d at 1089 (holding that when a real estate purchase agreement states that there is no warranty or guarantee of the condition of the property or any equipment therein, the purchasers may not rely on a seller's previous statements); Nei, 388 Mass. at 310, 446 N.E.2d at 676 (sellers' failure to disclose a seasonal stream that ran through a pipe or culvert onto the property was a mere nondisclosure that failed to amount to fraud). 271 Norton, 443 A.2d at 5 (holding that one who delegates the power to act to an agent is responsible for what is done pursuant to that authority and that a seller may not assert innocence or lack of knowledge of the agent's actions as a defense). 272 Florrie Y o u n g Roberts, Off-Site Conditions and Disclosure Duties: Drawing the Line at the Property Line, 2006 BYU L. REV. 957, 960 (2006) (citing cases applying "the traditional analysis for the duty to disclose on-site conditions to determine whether sellers also have a duty to disclose off-site conditions"). 273 Alfaro v. Cmty. Hous. Improvement Sys. & Planning Ass'n, Inc., 171 Cal. App. 4th 1356, 1382, 89 Cal. Rptr. 3d 659 (2009) (cit- ing Lingsch v. Savage, 213 Cal. App. 2d 729, 735, 29 Cal. Rptr. 201, 205 (1963); Reed v. King, 145 Cal. App. 3d 261, 265, 193 Cal. Rptr. 130, 131 (1983). The Alfaro court noted that there is now a statutory duty in California to disclose deed restrictions in a real estate transfer disclosure statement. Id. (citing CAL. CIV. CODE 1102.6). 274 Saslow v. Novick, 19 Misc. 2d 712, 713, 191 N.Y.S.2d 645, 64849 (1959). 275 Boschen v. Campanelli, 2007 N.J. Super. LEXIS 994, at *3 (N.J. Super. Ct. App. Div. 2007 (Unrpt.)) (citing Weintraub v. Kro- batsch, 64 N.J. 445, 317 A.2d 68 (1974) (holding that a seller of real estate had a duty to disclose to a prospective purchaser that the house was infested with cockroaches and that a breach of that duty could entitle the purchaser to rescind the contract). 276 140 N.J. 43, 657 A.2d 420 (1995), superseded by statute as stated in Aden v. Fortsh, 169 N.J. 64, 776 A.2d 792 (2001). 277 Id. at 65, 657 A.2d at 431.

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33 II. STATE RESIDENTIAL REAL PROPERTY DISCLOSURE LAWS A. Real Property Subject to a Disclosure Requirement Disclosure statements required by state residential real property disclosure laws have many common features. Most of the present disclosure laws do not require the disclosure of an airport affecting property offered for sale. Many of the current disclosure laws define the term real property to mean residential real property con- sisting of one to four dwellings units.278 Vacant or unimproved land usually is not subject to the disclo- sure laws. Minnesota's act exempts "real property that is not residential property,"279 whereas Maryland's statute specifically excludes "[a] sale of unimproved property" from any disclosure requirement.280 Disclo- sure statutes in general have not been applied to sellers of commercial real property.281 B. Timing, Proof of Delivery, Amendments, and Waiver of Disclosure Statements B.1. Time of Disclosure Many disclosure laws require that sometime before or at the time of a buyer's offer to purchase residential real property, or before or at the time of the execution of a real estate contact, a seller must deliver to a buyer in person or by mail a written disclosure statement, the form of which may be prescribed by the statute.282 Another example of timing is to require that a disclosure must be made prior to the time of transfer of the title to the real property. 278 ALASKA STAT. 34.70.200 (2010); DEL. CODE ANN. tit. 6, 2571 (2010); HAW. REV. STAT. 508D-1 (2010); 765 ILL. COMP. STAT. 77/5 (2010); ME. REV. STAT. ANN. tit. 33, 171(6) (West 2010) (stating that "`[r]esidential real property' means real estate consisting of one or not more than 4 residential dwelling units"); MD. CODE ANN., REAL PROP. 10-702(b)(1) (2010); MICH. COMP. LAWS 565.952, 2 (2010); MISS. CODE ANN. 89-501(1) (2010); NEB. REV. STAT. 76-2,120(1)(c) (2010) (stating that "[r]esidential real prop- erty shall mean real property which is being used primarily for residential purposes on which no fewer than one or more than four dwell- ing units are located"); NEV. REV. STAT. 113.100(4) (2010); N.C. GEN. STAT. 47E-1 (2010); PA. CONS. STAT. tit. 68, 7302 (2010) (stat- ute applicable to all real estate transfers with some exceptions); S.C. CODE ANN. 27-50-10(8) (2010) (providing that "`real property' means lot or parcel and the dwelling unit"); S.D. CODIFIED LAWS ANN. 43-4-37 (2010); TENN. CODE ANN. 66-5-201 (2010) (applicable to residential real property of not less than o n e or more than f o u r dwelling units); VA. CODE ANN. 55-517 (Michie 2010) (resi- dential property of one to four units); WASH. REV. CODE 64.06.005 (2010). 279 MINN. STAT. 513.54(1) (2010). 280 MD. C O D E ANN., REAL PROP. 10-702(b)(2)(vii) (2010). See also MISS. CODE ANN. 89-1-501(h) (2010) (exempting "[t]ransfers of real property on which no dwelling is located"). 281 Tomcho, supra note 266, at 1571, 1573 (1997). 282 ALASKA STAT. 34.70.010(a) and (b) (2010) (requiring that disclosure must occur prior to "transfer of title" and "as soon as practicable before execution" of a real estate sales contract); CAL. CIV. CODE 1102.3(a) and (b) (West 2010); CONN. GEN. STAT. 20-327b(a) (2010) ("Except as otherwise provided in this section, each person who offers residential property in the state for sale, ex- change or for lease with option to buy, shall provide a written residential condition report to the prospective purchaser at any time prior to the prospective purchaser's execution of any binder, contract to purchase, option, or lease containing a purchase option."); DEL. CODE ANN. tit. 6, 2572(b) and 2573 (2010); HAW. REV. STAT. 508D-4(1)(A) and (B) (2010) (requiring the delivery of a disclosure state- ment "within six months before or ten calendar days after the acceptance of a real estate purchase contract by the buyer"); IDAHO CODE 55-2509 (2010); 765 ILL. COMP. STAT. 77/20 (2010); IND. CODE ANN. 32-21-5-10(a) (Burns 2010); IOWA CODE 558A.2(1) (2010); LA. REV. STAT. ANN. 9:3198B.(2) (West 2010); ME. REV. STAT. ANN. tit 33, 174(1) (West 2010); MD. CODE ANN., REAL PROP. 10-702(e)(4)(f)(1) (2010); MICH. COMP. LAWS 565.954, 4(1) (2010); MISS. CODE ANN. 89-1-503(a) and (b) (2010); NEB. REV. STAT. 76-2,2120(7) (2010); NEV. REV. STAT. 113.080(1) (2010) (applicable to counties whose population is 400,000 or more relating to the disclosure of gaming enterprise districts) and 113.130(1) (2010); N.J. STAT. ANN. 46:3C-8 (2010); N.C. GEN. STAT. 47E-5(a) (2010); OHIO REV. CODE ANN. 5302.30(C) (Baldwin 2010); OKLA. STAT. 60-834(A) (2010); OR. REV. STAT. 105.464 (2010) (see buyer's acknowledgment); R.I. GEN. LAWS 5-20.8-2(a) (2010); S.D. CODIFIED LAWS ANN. 43-4-38 (2010); TENN. CODE ANN. 66-5-203(a) (2010) (requiring delivery of disclosure statement prior to acceptance of the real estate contract); VA. CODE ANN. 55-520(A) (Michie 2010); WASH. REV. CODE 64.06.030 (2010) ("Unless the buyer has expressly waived the right to re- ceive the disclosure statement, not later than five business days or as otherwise agreed to, after mutual acceptance of a written agreement between a buyer and a seller for the purchase and sale of residential real property, the seller shall deliver to the buyer a completed, signed, and dated real property transfer disclosure statement."); WIS. STAT. 709.02(1) (2010).

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34 B.2. Proof of Disclosure Current real property disclosure laws require that there must be proof that a disclosure statement was delivered to a buyer. Although the states' approaches vary, the disclosure laws ordinarily require that a disclosure statement be signed, that the signed real estate contact include the disclosure statement as an addendum, or that a buyer sign a receipt for the delivery of a disclosure statement.283 For example, in Delaware a seller or a seller's agent must give a copy of the disclosure form "to all prospective buyers or prospective buyer's agent prior to the time the buyer makes an offer to purchase," and the disclosure form signed by the buyer and seller must "become a part of the purchase agreement."284 However, unlike Dela- ware's statute, very few of the disclosure laws require that a disclosure statement must be made a part of the parties' real estate contract; in fact, some states provide that a "statement is for disclosure only and is not intended to be a part of any contract between the purchaser and the seller."285 B.3. Amendments to a Disclosure Statement A disclosure statement may become inaccurate after its initial delivery to a buyer, or there may be a material change affecting the property after the statement's delivery.286 Some disclosure laws require that after a seller delivers a disclosure statement and prior to an executed contract or a transfer of the property by deed a seller must amend a disclosure statement that fails to include required information or that has become inaccurate.287 B.4. Waiver of Disclosure Statement A majority of the states' disclosure laws that address the issue permit a buyer to waive the require- ments of the disclosure act.288 A minority of the states expressly prohibit a buyer's waiver of disclosure requirements.289 283 CAL. CIV. CODE 1102.3 and 1102.12 (West 2010) (authorizing delivery by a real estate agent); CONN. GEN. STAT. 20-327b(a) (2010); HAW. REV. STAT. 508D-4(2) (2010); IDAHO CODE 55-2509 (2010); MISS. CODE ANN. 89-1-503 (2010); NEB. REV. STAT. 76- 2,120(7) (2010); NEV. REV. STAT. 113.070(2) (2010) (stating that "[t]he seller shall retain a copy of the disclosure document which has been signed by the initial purchaser acknowledging the date of receipt by the initial purchaser of the original document"); N.Y. REAL PROP. LAW 462 (Consol. 2010) (stating that "[a] copy of the property condition disclosure statement containing the signatures of both seller and buyer shall be attached to the real estate purchase contract"); OHIO REV. CODE ANN. 5302.30(I) (Baldwin 2010); OKLA. STAT. 60-834(D) (2010); R.I. GEN. LAWS 5-20.8-2(a) and 5-20.8-5(a) (2010) ("Every agreement for the purchase and sale of resi- dential real estate located in the state shall contain an acknowledgement that a completed real estate disclosure form has been provided to the buyer by the seller."). 284 DEL. CODE ANN. tit. 6, 2573 (2010). 285 ME. REV. STAT. ANN. tit. 33, 176(1) (West 2010); see also IND. CODE ANN. 32-21-5-7(3) (Burns 2010). 286 ALASKA STAT. 34.70-040; CAL. CIV. CODE 1102.5 (West 2010) ("If information disclosed in accordance with this article is subse- quently rendered inaccurate as a result of any act, occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this article."); IDAHO CODE 558A.3(2) (2010); ME. REV. STAT. ANN. tit. 33, 175(2) (West 2010) ("If prior to settlement or occupancy a seller has actual knowledge of an error, inaccuracy or omission in the disclosure after delivery of the property disclosure statement to purchaser, the seller shall supplement the property disclosure state- ment with a written supplemental disclosure."); MINN. STAT. 513.58, Subd. 1 (2010) ("A seller must notify the prospective buyer in writing as soon as reasonably possible, but in any event before closing, if the seller learns that the seller's disclosure required by section 513.55 was inaccurate."); N.Y. REAL PROP. L A W 464 (Consol. 2010); N.C. GEN. STAT. 47E-7 (2010); OHIO REV. CODE ANN. 5302.30(G) (Baldwin 2010); OKLA. STAT. 60-834(C) (2010); PA. CONS. STAT. tit. 68, 7307 and 7312 (2010); TENN. CODE ANN. 66-5-205 (2010); VA. CODE ANN. 55-522 (Michie 2010). 287 WASH. REV. CODE 64.06.040(1) (2010) (requiring an amendment when a "seller becomes aware of additional information, or an adverse change occurs which makes any of the disclosures made inaccurate"). 288 ALASKA STAT. 34.70.110 (2010); ME. REV. STAT. ANN. tit. 33, 174(4) (West 2010); MINN. STAT. 513.60 (2010); S.C. CODE ANN. 27-50-110 (2010); N.Y. REAL PROP. L A W 462 (Consol. 2010) Nothing contained in this article or this disclosure statement is intended to prevent the parties to a contract of sale from entering into agree- ments of any kind or nature with respect to the physical condition of the property to be sold, including, but not limited to, agreements for the sale of real property " as is." TENN. CODE ANN. 66-5-202(2) (2010) (purchaser may waive); WASH. REV. CODE 64.06.010(7) (2010). 289 CAL. CIV. CODE 1102(c) (West 2010) (stating that "[a]ny waiver of the requirements of this article is void as against public policy"); MD. C O D E ANN., REAL PROP. 10-702(K)(1) (2010) (stating that "[t]he rights of a purchaser under this section may not be waived in the contract of sale and any attempted waiver is void"); WASH. REV. CODE 64.06.010(7) (2010) (providing that a buyer may not waive receipt of environmental section of the disclosure statement).

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35 C. Seller's Disclosure Obligations C.1. Duty to Disclose Limited to Seller's Actual or Personal Knowledge Under present disclosure laws, sellers and/or their agents generally are not liable for errors or omissions regarding matters of which they had no actual or personal knowledge. In addition, a seller is not liable or responsible for the accuracy or veracity of information supplied by governmental agencies that a seller provides to a buyer.290 Some of the disclosure laws allow a seller to provide a buyer with the report of an expert.291 C.2. Disclosure as a Representation or Warranty by a Seller The distinction between a representation and a warranty is quite important, because for a buyer to re- cover for a breach of a representation, the buyer must prove fraud, whereas for a breach of warranty. a buyer must prove only that a statement was made or implied and that it was false.292 Some disclosure laws provide that a seller's representation in a residential disclosure report does not constitute a warranty to the buyer.293 For either a representation or a warranty in a disclosure statement to be actionable after a transfer of ti- tle. the better practice is to attach the disclosure statement to the sales contract and include an anti-merger clause in the contract so that the contract and disclosure statement are not merged in a deed of convey- ance.294 C.3. Seller's Good Faith or Honesty in Fact Some disclosure laws require sellers to act in good faith when disclosing property defects and conditions affecting a property offered for sale. Often the term "good faith" is defined to mean "honesty in fact."295 290 CAL. CIV. CODE 1102.4(a) (West 2010); CONN. GEN. STAT. 20-327c (2010); GA. CODE ANN. 10-6A-5(b)(2) (2010) (applicable to brokers); HAW. REV. STAT. 508D-9(1) (2010) (stating "[f]acts based on only the seller's personal knowledge"); IDAHO CODE 55-2507 (2010) ("actually known by the transferor"); 765 ILL. COMP. Stat. 77/25(b) (2010) ("The seller shall disclose material defects of which the seller has actual knowledge."); IND. CODE ANN. 32-21-5-11(a) (Burns 2010); LA. REV. STAT. ANN. 9:3198E.(2) (West 2010); ME. REV. STAT. tit. 33, 177(1) (2010); MD. C O D E ANN., REAL PROP. 10-702(e)(2)(viii) and 10-702(e)(3)(iv)(1) and (2) (2010); MICH. COMP. LAWS 565.955, 5(1) (2010); MINN. STAT. 513.57, Subd. 1 (2010); MISS. CODE ANN. 89-1-505 (2010); NEB. REV. STAT. 76-2,120(8) (2010); NEV. REV. STAT. 113.150(5)(a) (2010); N.C. GEN. STAT. 47E-4 (2010); OHIO REV. CODE ANN. 5302.30(F)(1) (Baldwin 2010); OKLA. STAT. 60-833(B)(1) and 60-835(C) (2010); PA. CONS. STAT. tit. 68, 7309(b) (2010); R.I. GEN. LAWS 5- 20.8-2(a) and 5-20.8-9 (2010); S.C. CODE ANN. 27-50-40(B) and (C) (2010); TENN. CODE ANN. 66-5-204(a) and (b) (2010); VA. CODE ANN. 55-521(A) (Michie 2010); WASH. REV. CODE 64.06.050(1) (2010). 291 COMP. LAWS 565.955, 5(3) (2010); MINN. STAT. 513.53, Subd. 3 (2010); MISS. CODE ANN. 89-1-505(3) (2010); NEV. REV. STAT. 113.150(5)(b) (2010); N.C. GEN. STAT. 47E-6 (2010) (The owner may discharge the duty to disclose imposed by this Chapter by providing a written report attached to the residential prop- erty disclosure statement by a public agency or by an engineer, land surveyor, geologist, pest control operator, contractor, home inspector or other expert, dealing with matters within the scope of the public agency's functions or the expert's license or expertise. The owner shall not be liable for any error, inaccuracy, or omission of any information delivered pursuant to this section if the error, inaccuracy, or omission was made in reason- able reliance upon the information provided by the public agency or expert and the owner was not grossly negligent in obtaining the infor- mation or transmitting it.) R.I. GEN. LAWS 5-20.8-8(a) (2010); TENN. CODE ANN. 66-5-204 (2010); VA. CODE ANN. 55-521(C) (Michie 2010); WIS. STAT. 709.02(1) (2010). 292 Marsh & Solloway, s u p r a n o t e 2 6 2 , a t 1317, 1321 (2005). 293 CONN. GEN. STAT. 20-327b(d)(2)(D) (2010); DEL. CODE ANN. tit. 6, 2574 (2010); Md. CODE ANN., REAL PROP. 10- 702(e)(3)(iv)(1) and (2) and (i)(1) (2010) ((providing that a "disclosure statement is not a warranty by the vendor as to...[t]he condition of the property of which the vendor has no actual knowledge; or...[o]ther conditions of which the vendor has no actual knowledge"). 294 Tomcho, supra note 266, at 1571, 1579. 295 ALASKA STAT. 34.70.060 (2010); CAL. CIV. CODE 1102.7 (West 2010); HAW. REV. STAT. 508D-7 (2010) (requiring "good faith and due care"); IDAHO CODE 55-2507(5) and 55-2516 (2010) (stating that "good faith means honesty in fact"); LA. REV. STAT. ANN. 9:3198B.(1) (West 2010); MICH. COMP. LAWS 565.960, 10 (2010); MINN. STAT. 513.55, Subd. 1(b) (2010); MISS. CODE ANN. 89-1-511(2010); OHIO REV. CODE ANN. 5302.30 (Baldwin 2010) (good faith meaning "honesty in fact"); S.D. CODIFIED LAWS ANN. 43-4-41 (2010).

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36 C.4. Disclosure as Precluding a Seller's Liability According to state disclosure laws, a seller's compliance with a disclosure requirement precludes the seller's liability for defects or conditions affecting the seller's property.296 In Delaware, a buyer does not have a cause of action against a seller or his agent for material defects that were disclosed prior to a buyer's offer to purchase, material defects that developed after a buyer's offer but that were disclosed prior to final settlement, or material defects that occurred after final settlement.297 D. Transfers Exempt from Disclosure Requirement Current disclosure laws commonly exempt from as few as four to as many as 12 specific types of trans- fers of residential real estate. One fairly common exemption is for a first sale of residential property that has never been occupied or inhabited.298 Although such an exemption may be justified for defects in new dwellings that may be under warranty, it is questionable whether such an exemption is appro- priate in an airport disclosure act. The California statute is an example of a disclosure law with an extensive list of exemptions, including transfers pursuant to various kinds of court orders;299 transfers to a mortgagee resulting from a default un- der a mortgage or because of a foreclosure sale;300 transfers by a fiduciary;301 transfers between co-owners302 or spouses;303 and some transfers or exchanges to or from a governmental entity,304 as well as other exempt transfers.305 296 ALASKA STAT. 34.70.030 (2010); CAL. CIV. CODE 1102.9 (West 2010); HAW. REV. STAT. 508D-13 (2010); PA. CON. STAT. tit. 68, 7314 (2010); VA. CODE ANN. 55-521(B) (Michie 2010). 297 DEL. CODE ANN. tit. 6, 2575(1) and (2) (2010). 298 ALASKA STAT. 34.70.120; CONN. GEN. STAT. 20-3276(b)(4) (2010) (exempting "newly constructed residential real property"); HAW. REV. STAT. 508D-3(6) (2010) (exempting "[i]nitial sale of new residential property"); IDAHO CODE 55-2505(12) (2010) (exempt- ing "[a] transfer that involved newly constructed residential real property that previously has not been inhabited"); 765 ILL. COMP. STAT. 77/15 (9) (2010); IND. CODE ANN. 32-21-5-1(b)(8) (Burns 2010); KY. REV. STAT. ANN. 324.360(7) (2010); MD. CODE ANN., REAL PROP. 10-702(b)(2)(i)(1) (2010); MINN. STAT. 513.54(10) (2010); NEB. REV. STAT. 76-2,120(6)(k) (2010); N.Y. REAL PROP. L A W 463(12) (Consol. 2010); N.C. GEN. STAT. 47E-2(9) (2010); OHIO REV. CODE ANN. 5302.30(B)(2)(l) (Baldwin 2010); OKLA. STAT. 60-838(9) (2010); R.I. GEN. LAWS 5-20.8-3(8) (2010); S.C. CODE ANN. 27-50-30(10) (2010); S.D. CODIFIED LAWS ANN. 43-44- 43(6) (2010); TENN. CODE ANN. 66-5-209(9) (2010) (exempting first sale "provided the builder offers a written warranty"); VA. CODE ANN. 55-518(9) (Michie 2010). 299 CAL. CIV. CODE 1102.2(b) (West 2010). 300 Id. 1102.2(c) (West 2010). 301 Id. 1102.2(d) (West 2010). The subsection also states that "[t]his exemption shall not apply to a transfer if the trustee is a natural person who is sole trustee of a revocable trust and he or she is a former owner of the property or an occupant in possession of the property within the preceding year." 302 Id. 1102.2(e) (West 2010). 303 Id. 1102.2(f) and(g) (West 2010). 304 Id. 1102.2(j) (West 2010). See also CONN. GEN. STAT. 20-327b(b) (2010); DEL. CODE ANN. tit. 6, 2577(1)-(9) (2010); HAW. REV. STAT. 508D-3(1)-(8) (2010); IOWA CODE 558A.1(4) (a)-(h) (2010); ME. REV. STAT. ANN. tit. 33, 172(1)-(12) (West 2010); MD. CODE ANN., REAL PROP. 10-702(b)(i)(2)(ii-(vii) (2010); MICH. COMP. LAWS 565.953, 3(a)-(i) (2010); MISS. CODE ANN. 89-1- 501(2)(g) (2010) (exempting as do some other acts "[t]ransfers or exchanges to or from any government entity"); NEB. REV. STAT. 76-2,120(6)(a)- (l) (2010); NEV. REV. STAT. 113.115(3)(a)-(d) (2010); N.Y. REAL PROP. LAW 463(1)-(14) (Consol. 2010); N.C. GEN. STAT. 47E-2(1)-(11) (2010); OHIO REV. CODE ANN. 5302.30(B)(2)(a)-(n) (Baldwin 2010); OKLA. STAT. 60-838(A)(1) (2010); R.I. GEN. LAWS 5-20.8-3(1)-(10) (2010); S.C. CODE ANN. 27-50-30(1)-(15) (2010); S.D. CODIFIED LAWS ANN. 43-4-43(1)-(6) (2010); TENN. CODE ANN. 66-5-209(1)-(12) (2010); VA. CODE ANN. 55-518(1)-(9) (Michie 2010); WASH. REV. CODE 64.06.010(1)-(7) (2010); WIS. STAT. 709.01(2)(a)-(d) (2010). 305 CAL. CIV. CODE 1102.2(h) (West 2010) (exempting "[t]ransfers by the Controller in the course of administering Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure") and 1102.2(i) (exempting "[t]ransfers under Chapter 7 (commencing with Section 3691) or Chapter 8 (commencing with Section 3771) of Part 6 of Division 1 of the Revenue and Taxation Code").

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37 E. Disclosure of All Material Facts or Off-Site Conditions Several states' disclosure laws require a seller to disclose all "material defects."306 In Minnesota a seller must disclose "all material facts of which the seller is aware that could adversely and significantly affect (1) an ordinary buyer's use and enjoyment of the property; or (2) any intended use of the property of which the seller is aware."307 (emphasis supplied). Furthermore, a seller's "disclosure must be made in good faith and based upon the best of the seller's knowledge at the time of the disclosure."308 Statutes in some states are more specific regarding the disclosure of off-site conditions. Disclosure stat- utes may require a seller to disclose a "former federal or state ordnance location"309 or when a "property is adjacent to, or zoned to allow, an industrial use."310 A seller may be obligated to disclose "transportation maps and plans;"311 adverse physical conditions in the immediate neighborhood within 1 mi of the property that could not be discovered by a buyer upon a diligent inspection or review of government documents;312 or property that is near "grazing on the open range"313 or agricultural operations.314 It is not uncommon for a disclosure law to require a seller to disclose matters relating to zoning and land use affecting a prop- erty offered for sale.315 For example, a seller may be required to disclose designations in a master plan regarding land use for the adjoining parcels of land.316 In contrast, under the Connecticut disclosure stat- ute, a seller is not liable "for [the] failure to disclose [the] existence of hazardous waste facilities."317 In some states, local governments are authorized to decide whether to require the disclosure of conditions affecting residential real property, as in Michigan.318 However, in Pennsylvania, a municipality or local authority does not have the power to mandate that a seller make "any particular d isclosures" to a buyer regarding a residential real estate transfer319 or require that "provisions on any particular subject be included in an agreement of transfer."320 Although an airport safety zone and an airport must be disclosed as off-site conditions under two New Jersey acts, as set forth in Section II of this report, no disclosure laws in other states, as well as cases, were located that specifically require the disclosure of an airport as an off-site condition. 306 DEL. CODE ANN. tit. 6, 2572(a) (2010); HAW. REV. STAT. 508D-1 (2010) ("`Material fact' means any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential real property being offered for sale."); IDAHO CODE 55-2508 (2010) (requiring disclosure of "[a]ny other problems"); 765 ILL. COMP. STAT. 77/30(1) (2010) (In this form, "material defect" means a condition that would have a substantial adverse effect on the value of the residential real property or that would significantly impair the health or safety of future occupants of the residential real property unless the seller reasonably believes that the condition has been corrected.). 307 MINN. STAT. 513.55, Subds. 1(a)(1) and (2) (2010). 308 Id. 513.55, Subd. 1(b) (2010). 309 CAL. CIV. CODE 1102.15 (West 2010). 310 Id. 1107.17 (West 2010). 311 GA. CODE ANN. 10-6A-5(b)(2) (West 2010). 312 Id. 10-6A-5(b)(1) (2010) (emphasis supplied) (e.g., reasonably available governmental regulations, documents, records, maps, and statistics; land use maps and plans; zoning ordinances; recorded plats and surveys; transportation maps and plans; maps of flood plains; tax maps; school district boundary maps; and maps showing the boundary lines of governmental jurisdictions). 313 NEV. REV. STAT. 113.065(1) and (3) (2010). 314 WASH. REV. CODE 64.06.022 (2010). 315 N.C. GEN. STAT. 47E-4(b)(5) (2010) (requiring a seller to disclose "[t]he zoning laws, restrictive covenants, building codes, and other land use restrictions affecting the real property, any encroachment of the real property from or to adjacent real property, and notice from any governmental agency affecting this real property"). 316 NEV. REV. STAT. 113.070(1) (2010). 317 CONN. GEN. STAT. 20-327f(c) (2010). 318 MICH. COMP. LAWS 565.959, 9 (2010) (stating that a "city, township, or county may require disclosures in addition to those dis- closures required by [state law], and may require disclosures on a different disclosure form in connection with transactions subject to this act"). 319 PA. CONS. STAT. tit. 68, 7311 and 7315(a)(1) (2010). 320 Id. 7315(a)(2) (2010).

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38 F. Buyer's Obligation to Inspect Property In several states a seller's compliance with a disclosure requirement is not a substitute for an inspection of the property by a buyer or an excuse for a buyer not to exercise reasonable care.321 Some disclosure laws state that a seller's disclosure statement is neither a warranty nor "a substitute for any expert inspec- tion, professional advice, or warranty that the buyer may wish to obtain."322 G. Effect of Nondisclosure on a Transfer of Real Property Current disclosure laws typically provide that a transfer of real property that was made without a seller's compliance with a disclosure requirement is not void or invalidated323 or does not create any defect in title.324 H. Buyer's Remedies for a Seller's Violation of a Disclosure Act H.1. Buyer's Right to Withdraw an Offer or Rescind a Sales Contract Current disclosure laws usually provide that if a disclosure statement has not been delivered to a buyer or if a disclosure statement is discovered to be inaccurate or misleading prior to the closing on the property, a buyer within a specified number of days may withdraw an offer or rescind a resulting sales contract in the manner specified by the statute.325 Although a buyer presumably may withdraw an offer a t any time prior to a seller's acceptance, clearly specifying a buyer's right to withdraw could be important, for ex- ample, when a buyer bids at an auction or makes a firm offer.326 321 DEL. CODE ANN. tit. 6, 2574 (2010) (seller's completed disclosure form not a substitute for any inspections or warranties that the seller or buyer may wish to obtain); GA. CODE ANN. 10-6A-5(b)(2) (2010); IDAHO CODE 55-2507(4) (2010); NEV. REV. STAT. 113.140(3) (2010) ("Neither this chapter nor chapter 645 of NRS relieves a buyer or prospective buyer of the duty to exercise reasonable care to protect himself."); OHIO REV. CODE ANN. 5302.30(D)(1) (Baldwin 2010); OKLA. STAT. 60-833(B)(2)(c) (2010); R.I. GEN. LAWS 5-20.8-2(b) (2010); S.C. CODE ANN. 27-50-80 (2010). 322 HAW. REV. STAT. 508D-1(3) (2010). See also DEL. CODE ANN. tit. 6, 2574 (2010) (not a warranty); IDAHO STAT. 55-2507(3) (2010); IND. CODE ANN. 32-21-5-9 (Burns 2010); KY. REV. STAT. ANN. 324.360(7) (2010); LA. REV. STAT. ANN. 3198(D)(1) (West 2010); ME. REV. STAT. ANN. tit. 33, 176(1) (West 2010) ("A property disclosure statement and any supplement to a property disclosure statement are not a warranty by the seller. The information in the disclosure statement is for disclosure only and is not intended to be a part of any contract between the purchaser and the seller."); MICH. COMP. LAWS 565.951, 7(1) (2010); MISS. CODE ANN. 89-1-509 (2010); NEB. REV. STAT. 76-2,121(3)(e), (f), and (g) (2010); NEV. REV. STAT. 113.130 (2010) ("A completed disclosure form does not constitute an express or implied warranty regarding any condition of residential property."); OHIO REV. STAT. ANN. 5302.30(D)(1) (2010); OKLA. STAT. 60-832(10) (2010); OR. REV. STAT. 10, 105.464 (2010); R.I. GEN. LAWS 5-20.8-2(b) (2010); S.D. CODIFIED LAWS ANN. 43-4-44 (2010); TENN. CODE ANN. 66-5-201 and 66-5-210 (2010); VA. CODE ANN. 55-518(B) ( Michie 2010); and WASH. REV. CODE 64.06.015 (2010). 323 ALASKA STAT. 34.70.090(a) (2010); CAL. CIV. CODE 1102.13 (West 2010); IDAHO CODE 55-2517 (2010); IND. CODE ANN. 32- 21-5-10(c) and 32-21-5-7(3) (Burns 2010); IOWA CODE 558A.8 (2010); LA. REV. STAT. ANN. 9:3198B.1(3)(c) (West 2010); ME. REV. Stat. Ann. tit. 33, 176(1) (West 2010); MICH. COMP. LAWS 565.964, 14 (2010); MINN. STAT. 513.59 (2010); MISS. CODE ANN. 89- 1-523 (2010); NEB. REV. STAT. 76-2,120(11) (2010); OHIO REV. CODE ANN. 5302.30(K)(1) (Baldwin 2010); OKLA. STAT. 60-837(E) (2010); PA. CONS. STAT. tit. 68, 7311(a) (2010); R.I. GEN. LAWS 5-20.8-5(b) (2010); S.C. CODE ANN. 27-50-50(B) (2010); S.D. CODIFIED LAWS ANN. 43-4-42 (2010). 324 R.I. GEN. LAWS 5-20.8-5(b) (2010). 325 ALASKA STAT. 34.70.020 (2010); CAL. CIV. CODE 1102.3 (West 2010); HAW. REV. STAT. 508D-16(b) (2010) (requiring return of all deposits); 765 ILL. COMP. STAT. 77/40 (2010) (providing for termination of the contract); LA. REV. STAT. 9:3198B.3(a) (2010); ME. REV. STAT. ANN. tit. 33, 174(2) (West 2010); NEV. REV. STAT. 113.130(b)(1) and 113.150(1) and (2) (2010); N.C. GEN. STAT. 47E-5(b) (2010); OHIO REV. CODE ANN. 5302.30(K)(2) (Baldwin 2010); OR. REV. STAT. 105.475(1) (2010); R.I. GEN. LAWS 5-20.8-4(a) and (b)(1) and (2) (2010); S.D. CODIFIED LAWS ANN. 43-4-38 and 43-4-39 (2010); VA. CODE ANN. 55-520(B) (Michie 2010); WASH. REV. CODE 64.06.030 and 64.06.040(3) (2010). 326 See Rosin v. First Bank of Oak Park, 126 Ill. App. 3d 230, 234, 466 N.E.2d 1245, 1249 (Ill. Ct. App. 1984) (stating that in ad- dition to general principles of contract formation there are several additional factors unique to auction sales that must be con- sidered). As for firm offers, see generally Mark B. Wessman, Retraining the Gatekeeper: Further Reflections on the Doctrine of Consideration, 29 LOY. L.A. L. REV. 713, 719 n . 52 (1996) (stating that "the formal requisites for an irrevocable offer...are a signed writing and a mere recitation of consideration" (citing Restatement (Second) of Contracts 87(1) and (2)).

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39 H.2. Rescission After Transfer of Title Several states' disclosure laws provide that a buyer has no right to rescind a transaction after a transfer of property because of a seller's noncompliance with the disclosure law.327 In Maryland, "[a]ny rights of the purchaser to terminate the contract provided by this section are waived conclusively if not exercised be- fore...[c]losing or occupancy by the purchaser, whichever occurs first, in the event of a sale...."328 H.3. Buyer's Right to Sue The existing disclosure laws also provide guidance regarding a buyer's remedies for a seller's noncompli- ance. Under Tennessee's disclosure law, a buyer may not institute an action for the seller's "failure to pro- vide the disclosure or disclaimer statement required by this part;"329 rather, the buyer may bring an "action available in law or equity against an owner for misrepresentation or failure to disclose material facts regarding the subject property...."330 Thus, if a seller makes a misrepresentation on a disclosure statement, a buyer may bring "[a]n action for actual damages suffered as a result of defects existing in the property as of the date of execution of the real estate purchase contract."331 However, a seller must have "actually presented" a required disclosure statement, and the buyer must not have been aware of an undis- closed defect.332 A buyer's second remedy is when there has been a misrepresentation in a disclosure state- ment: the buyer may terminate the contract, but the termination must occur prior to the closing.333 Fi- nally, a buyer may rely on any other remedies available at law or in equity against a seller for his or her intentional or willful misrepresentation of the condition of the property.334 A related issue that should be addressed in an airport disclosure act is whether a buyer's other remedies are pre-empted. Several disclosure laws do not affect other disclosures required by law or affect other remedies that may be available to a buyer.335 Minnesota's disclosure law does not preclude a seller's liabil- ity for fraud, negligent misrepresentation, or other actions.336 In contrast, Oklahoma's disclosure act "sup- plants and abrogates all common law liability, rights, duties, obligations and remedies therefor."337 H.4. Damages, Penalties, Attorney's Fees, and Costs Several states' disclosure laws allow a buyer to claim "actual damages" for a seller's negligence or other failure to comply with the law.338 Mississippi's statute, for example, provides that "any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of [the disclosure law] shall be liable in the amount of actual damages suffered by a transferee."339 Some disclosure statutes prescribe a 327 HAW. REV. STAT. 508D-6(2) (2010); 765 ILL. COMP. STAT. 77/40 (2010); MICH. COMP. LAWS 565.954, 4 (2010) (providing that a "transferee's right to terminate the purchase agreement expires upon the transfer of the subject property by deed or installment sales contract"). 328 MD. CODE ANN., REAL PROP. 10-702(k)(2)(i) (2010). 329 TENN. CODE ANN. 66-5-208(b) (2010). 330 Id. 66-5-208(b) (2010). 331 Id. 66-5-208(a)(1) (2010). 332 Id. 333 Id. 66-5-208(a)(2) (2010). 334 Id. 66-5-208(a)(3) (2010). 335 ALASKA STAT. 34.70.070 (2010); CAL. CIV. CODE 1102.1(a), 1102.8, and 1102.13 (West 2010); HAW. REV. STAT. 508D-14 (2010); IDAHO CODE 55-2514 (2010); 765 ILL. COMP. STAT. 77/45 (2010); LA. REV. STAT. ANN. 9:3198B.(d) (West 2010); ME. REV. STAT. ANN. tit. 33, 178 (West 2010); OHIO REV. CODE ANN. 5302.30(J) and (L) (Baldwin 2010); PA. CONS. STAT. tit. 68, 7313(a) (2010); WASH. REV. CODE 64.06.070 (2010). 336 MINN. STAT. 513.57, Subd. 3 (2010). 337 OKLA. STAT. 60-638(F) (2010). 338 ALASKA STAT. 34.70.090(b) (2010); HAW. REV. STAT. 508D-16(c) (2010); IDAHO CODE 55-2517 (2010); 765 ILL. COMP. STAT. 77/55 (2010); IOWA CODE 558A.6 (2010); MINN. STAT. 513.57, Subd. 2 (2010) ("recover damages and receive other equitable relief as determined by the court"); NEB. REV. STAT. 76-2,120(12) (2010); N.Y. REAL PROP. L A W 465(2) (Consol. 2010) (applying to a "willful failure"); OKLA. STAT. 60-837(B) (2010); PA. CONS. STAT. tit. 68, 7311(a) (2010); S.D. CODIFIED LAWS ANN. 43-4-42 (2010); TENN. CODE ANN. 66-5-208(a)(1) (2010) (for owner's misrepresentations on residential disclosure statement); VA. CODE ANN. 55-524(B)(2) (Michie 2010). 339 MISS. CODE ANN. 89-1-523 (2010) (citing 89-1-501 through 89-1-523).

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40 civil penalty for a seller's noncompliance,340 whereas others permit a buyer to recover treble damages.341 In Nevada, if a seller fails to comply with the disclosure law, the purchaser may recover from the seller treble the amount necessary to repair or replace the defective part of the property, together with court costs and reasonable attorney's fees.342 In a few states, an aggrieved buyer may recover a relatively small monetary penalty for each infraction by a seller of the disclosure statute.343 However, a seller in New York also is liable in actual damages "for a willful failure to perform the requirements of this article...in addition to any other existing equitable or statutory remedy."344 Finally, a buyer's attorney's fees and costs are recoverable in some states.345 H.5. Statute of Limitations Under the disclosure laws that authorize a civil action by a buyer, the applicable statute of limitations is either 1 year346 or 2 years,347 usually commencing from the date the purchaser received the disclosure statement, the date of settlement,348 or the date of occupancy of a leased property.349 III. MERGER BY DEED DOCTRINE For the purpose of binding successive owners of a property, a deed of conveyance would have to include a disclosure statement or notification or a disclosure statement would have to be recorded with the deed and become part of the land records and the title to the property. First, the reason for requiring a real estate purchase contract to stipulate that a disclosure statement survives the delivery of a deed is that under the merger-by-deed doctrine, prior agreements between a buyer and a seller may be merged in the deed upon the deed's delivery and acceptance.350 According to one court, strictly speaking, the doctrine of merger does not serve to make the contract and deed one, but on a buyer's acceptance of a deed all prior negotiations and agreements are deemed to have been merged in the deed.351 Elsewhere, it is held that a deed generally supersedes the real estate purchase contract and "becomes the only binding instrument between the parties."352 Thus, after passage of title, the con- tract ceases to be a viable basis upon which a buyer may sue.353 The purpose of the merger-by-deed doc- trine is to protect the security of land titles and bring finality to real estate purchases.354 340 R.I. GEN. LAWS 5-20.8-5 (2010) (providing for a "civil penalty" in the amount of $100 "per occurrence"). 341 ALASKA STAT. 34.70.090(c) (2010) ("three times actual damages"); S.C. CODE ANN. 27-50-65 (2010). 342 NEV. REV. STAT. 113.150(4) (2010) (but stating "[e]xcept as otherwise provided in subsection 5" of the statute). 343 N.Y. REAL PROP. L AW 465(1) (Consol. 2010) (a $500 credit against the agreed upon purchase price of the residential real prop- erty); R.I. GEN. LAWS 5-20.8-5 (2010) ($100 "per occurrence"). 344 Id. 465(2) (Consol. 2010). 345 ALASKA STAT. 34.70.090(d) (2010); HAW. REV. STAT. 508D-16(c) (2010); 765 ILL. COMP. STAT. 77/25 (2010); NEB. REV. STAT. 76-2,120(12) (2010); NEV. REV. STAT. 113.150(4) (2010); OKLA. STAT. 60-837(D) (2010); S.C. CODE ANN. 27-50-65 (2010); S.D. CODIFIED LAWS ANN. 43-4-42 (2010). 346 765 ILL. COMP. STAT. 77/60 (2010) ("No action for violation of this Act may be commenced later than one year from the earlier of the date of possession, date of occupancy, or date of recording of an instrument of conveyance of the residential real property."); NEB. REV. STAT. 76-2,120(12) (2010) ("Any action to recover damages under the cause of action shall be commenced within one year after the purchaser takes possession or the conveyance of the real property, whichever occurs first.") 347 HAW. REV. STAT. 508D-17 (2010); MINN. STAT. 513.57, Subd. 2 (2010); OKLA. STAT. 60-837(c) (2010); PA. CONS. STAT. tit. 68, 7311, 7311(b) (2010). 348 VA. CODE ANN. 55-524(C) (Michie 2010). 349 TENN. CODE ANN. 66-5-208(a)(1) (2010); VA. CODE ANN. 55-524(C) (Michie 2010). 350 Czarobski v. Lata, 227 Ill. 2d 364, 369, 882 N.E.2d 536, 53940 (Ill. 2008) (stating that the doctrine is well established but noting exceptions to the doctrine). 351 Purbaugh v. Jurgensmeier, 240 Neb. 679, 683, 483 N.W.2d 757 (1992). 352 Czarobski, 227 Ill. 2d at 369, 882 N.E.2d at 540. 353 Carey v. Shellburne, Inc., 42 Del. ch. 496, 504, 215 A.2d 450, 455 (Del. ch. 1965) (stating that when "a deed is executed and deliv- ered pursuant to a contract of sale of realty, the latter merges with the former and becomes void"). 354 Czarobski, 227 Ill. 2d at 36970, 882 N.E.2d at 540.

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41 However, the presumption of the merger-by-deed doctrine may be negated by a real estate pur- chase contract providing that its terms will survive the execution of a deed to the property.355 The impor- tance of the anti-merger clause in a contract is illustrated by a Maryland case in which the real estate contract at issue provided that the grantees were to receive a general warranty deed to their property.356 Although the mistake was not noticed until after the closing, the plaintiffs and grantees received only a special warranty deed. The plaintiffs' position was saved by an anti-merger clause in the contract, which provided that the contract "shall survive the execution and delivery of the deed...and shall not be merged therein...."357 Based on the anti-merger clause, the court affirmed a trial court's order that the prior owners re-convey the property with a general warranty deed.358 There is authority that the doctrine does not apply to the provisions of an antecedent contract that are not necessarily performed or satisfied by the execution and delivery of a deed359 or to covenants in a con- tract that are independent of a deed's provisions.360 Collateral agreements, therefore, are not necessarily merged in a deed.361 In New Jersey, it has been held that an oral warranty did not merge in the deed.362 A Florida appellate court held that there was no merger by the deed to landlocked property because the real estate contract contained a provision affirming that there was ingress and egress to the land.363 Likewise, in Illinois there is an "exception or qualification to the merger rule [if] the contract contains provisions that delivery of the deed does not fulfill."364 In such circumstances, "the contract is not merged in the deed, and the contract remains in force until the contract has been fully performed."365 Illinois courts have applied this exception where, for example, the contract created an easement that was not referenced in the deed...; the contract expressly warranted the condition of the heating system at closing...; and the contract called for con- struction of a building on the conveyed property.... In each instance, the court determined that the contractual provision was an in- dependent or collateral undertaking, incidental to the main purpose of the agreement, and did not merge with the deed.366 If the disclosure statement is regarded as a representation and not a warranty then there may be an even greater likelihood that a court would hold that in the absence of an anti-merger clause in the contract a disclosure statement does not survive.367 B. Covenant Running with the Land If it is unclear whether a collateral agreement or declaration survives the delivery of a deed, then a court would be required to determine what the parties intended to be incorporated in the deed or what was not necessarily performed or satisfied by the deed.368 For the protection of a buyer or other transferee, as well as to avoid the merger-by-deed rule, an airport disclosure act should require that a disclosure state- 355 Erlewine v. Happ, 39 Md. App. 106, 109, 383 A.2d 82, 84 (1978). 356 Id. at 109, 383 A.2d at 84. See also A.G. Shepard, Deed as Superseding or Merging Provisions of Antecedent Contract Imposing Ob- ligations Upon the Vendor, 38 A.L.R. 2d 1310 (1933 and 2010 Supp.); M.O. Regensteiner, Deed as Imposing Upon Vendee Obligations Additional to, or as Superseding or Merging Obligations Imposed by Antecedent Contract, 52 A.L.R. 2d 647 (1954 and 2010 Supp.) 357 Erlewine, 39 Md. App. at 109, 383 A.2d at 84. 358 Id. at 112, 383 A.2d at 8586. 359 New Prospect Area Fire Dist. v. New Prospect Ruritan Club, 311 S.C. 402, 40405, 429 S.E.2d 791, 793 (1993) (The court held that the doctrine of merger did not apply because "a deed constitutes only part performance of a preceding contract" and that "other distinct and unperformed provisions of the contract are not merged in the deed.") 360 Opler v. Wynne, 402 So. 2d 1309, 1311 (Fla. 3d DCA 1981). 361 Caparrelli v. Rolling Greens, Inc., 39 N.J. 585, 59091, 190 A.2d 369, 372 (1963). 362 Id., 39 N.J. at 591, 190 A.2d at 372. 363 Opler, 402 So. 2d at 1311. 364 Czarobski, 227 Ill. 2d at 369, 882 N.E.2d at 540 (Illinois Supreme Court recognizing a mutual mistake exception to the merger-by- deed doctrine). 365 Id. at 369, 882 N.E.2d at 540. 366 Id. at 370, 882 N.E.2d at 540 (citations omitted). 367 See also Beal v. Schewe, 291 Ill. App. 3d 204, 683 N.E.2d 1019 (1997) (legal description of land merged in the deed although the buyer determined later that the land conveyed was deficient by 32 acres). 368 Purbaugh, 240 Neb. 679, 683, 483 N.W.2d 757, 1992 Neb. LEXIS 151 at *911.

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42 ment be recorded as part of the deed or require that an airport disclosure statement be included in the deed.369 The weight of authority is that an owner of land is bound by an agreement only if it appears in his own chain of title.370 For example, an agreement imposing restrictions on the use of land will be con- sidered duly recorded if the agreement is attached to a duly-recorded warranty deed from the grantor to the grantee such that the grantee is charged with notice of the agreement.371 Declarations or agreements with respect to real property may be recorded independently in the land records and still bind the property and provide constructive notice.372 In Southeast Toyota Distributors, Inc. v. Fellton,373 the court held that an agreement containing certain restrictive covenants that was re- corded by a grantor of property as part of the deed of conveyance was binding on Toyota as a successor in title to the property.374 A second agreement was recorded independently that was not referenced in the deed of conveyance; nevertheless, "Toyota had constructive knowledge of [the agreement] and took the property subject to the equitable servitude thereby created."375 369 Committee to Save Beverly Highlands Homes Ass'n v. Beverly Highlands Homes Ass'n, 92 Cal. App. 4th 1247, 1269, 112 Cal. Rptr. 2d 732, 748 (2001) (stating that "[a] covenant running with the land is created by language in a deed or other document showing an agreement to do or refrain from doing something with respect to use of the land"); Flying Diamond Oil Corp. v. Newton Sheep Co., 776 P.2d 618, 62223 (Utah 1989) (stating that a covenant runs with the land when the covenant touches and concerns the land, the cove- nanting parties intend that the covenant runs with the land, and there is privity of estate); Ticor Title Ins. Co. v. Rancho Santa Fe Ass'n, 177 Cal. App. 3d 726, 734, 223 Cal. Rptr. 175, 180 (1986) (stating that "one of the usual requirements for covenants to run with the land and to bind subsequent owners is recordation"); Shunk v. Palm Beach County, 420 So. 2d 394, 39596 (Fla. 4th DCA 1982) (holding that because "the purported covenant...does not appear in the record chain of title [the] covenant could not run with the land"). 370 Shunk v. Palm Beach County, 420 So. 2d 394 (Fla. 4th DCA 1982) (holding that an unrecorded contractual agreement to furnish water and sewer service to the property line that was never included or referred to in any deed of record was not a covenant running with the land). 371 Se. Toyota Distributors, Inc. v. Fellton, 212 Ga. App. 23, 25, 440 S.E.2d 708, 711 (1994). 372 Id. at 26, 440 S.E.2d at 711. See also Cavaliere v. Skelton, 73 Ark. App. 188, 40 S.W.3d 844 (2001); Javna v. D. J. Fredricks, Inc., 41 N.J. Super. 353, 125 A.2d 227 (1956). 373 212 Ga. App. 23, 440 S.E.2d 708 (1994). 374 Id. at 25, 440 S.E.2d at 711. 375 Id. at 26, 440 S.E.2d at 712.