A buyer and seller sign a purchase agreement for a Des Moines property. The agreement contains an 'as-is' clause stating the buyer accepts the property in its current condition. After signing, the buyer discovers that the seller knew about and actively concealed a severely deteriorated roof by painting over visible water stains before showings. The buyer seeks to void the contract. Under Iowa law, which of the following best describes the likely outcome?
Correct Answer
D) The buyer may void the contract because active concealment of a known material defect by the seller constitutes fraudulent misrepresentation, which overrides an 'as-is' clause
Under Iowa law and Iowa Code Chapter 558A, an 'as-is' clause does not protect a seller who actively conceals a known material defect. Active concealment — such as painting over water stains to hide roof damage — constitutes fraudulent misrepresentation or fraud in the inducement. Iowa courts have consistently held that 'as-is' clauses cannot shield sellers from liability for their own fraudulent conduct. The buyer may rescind the contract on grounds of fraud regardless of the 'as-is' language.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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