Sandra purchases a home in Chattanooga. The seller completed and delivered the Tennessee Property Condition Disclosure form before the contract was signed, and the form indicated no known environmental hazards. After closing, Sandra discovers that the property has radon levels significantly exceeding EPA action levels, and that the seller's neighbor had warned the seller about elevated radon in the neighborhood two years before the sale. The seller claims radon was simply not on his mind when completing the form. Which statement best describes the legal exposure and remedies available under Tennessee law?

Correct Answer

B) Sandra may have a claim against the seller for fraudulent or negligent misrepresentation based on the seller's failure to disclose a known material fact, despite the pre-contract delivery of the disclosure form.

The three-business-day statutory rescission right under Tenn. Code Ann. § 66-5-201 et seq. applies only to late delivery of the disclosure form and is a pre-closing remedy; it does not apply here. However, the timely delivery of the disclosure form does not immunize a seller from liability for knowingly providing false or incomplete information. If Sandra can establish that the seller had actual knowledge of the elevated radon risk (evidenced by the neighbor's warning) and failed to disclose it, she may pursue a civil claim for fraudulent misrepresentation or negligent misrepresentation under Tennessee common law. The disclosure form's pre-contract delivery does not extinguish claims based on the seller's deliberate or negligent concealment of known material facts.