Cherry v. McCall

Rule of Law:

An 'as is' clause in a real estate contract, when it is a significant part of the bargain between parties of relatively equal bargaining power, effectively transfers the risk of unknown defects to the buyer, thereby barring claims for breach of contract and mutual mistake that arise from the discovery of such defects.

Facts:

• Robert and Maria Cherry entered into a contract to purchase a home from Brian and Rebekah McCall.
• The sales contract contained a clause stating the property was being accepted 'in its present condition,' which functions as an 'as is' clause.
• After the purchase was complete, the Cherrys discovered a previously unknown, walled-in room in the basement of the home.
• The hidden room was filled with trash, including rusty plumbing fixtures, bathtubs, sinks, boards, and used building materials.
• The debris in the room was damp and contaminated with mold.
• During her deposition, Mrs. Cherry acknowledged that she 'agreed to purchase the property in its current condition' and 'accepted the risk' that the property might have deficiencies.

Procedural Posture:

• The Cherrys filed a declaratory judgment action against the McCalls in a Texas trial court, alleging breach of contract and mutual mistake.
• The McCalls answered, asserted the contract's 'as is' provision as an affirmative defense, and moved for summary judgment.
• The Cherrys responded to the motion and requested additional discovery time, which the court implicitly denied.
• The trial court granted a take-nothing partial summary judgment in favor of the McCalls on all of the Cherrys' claims.
• The trial court severed the partial summary judgment from the McCalls' counterclaim for attorney fees, making the judgment final and appealable.
• The Cherrys (appellants) appealed the summary judgment to the Texas Court of Appeals, Fourth District.