Matthews v. Kincaid
746 P.2d 470 (1987)
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Rule of Law:
A seller of real property does not have a duty to disclose facts that are obvious and would be discovered by a buyer through ordinary inspection and inquiry, particularly when the parties are dealing at arm's length.
Facts:
- Matt Matthews, a real estate broker, listed his four-plex for sale with Century 21 Heritage Homes & Investments.
- The property had no off-street parking; Matthews left the 'parking units' space blank on the listing agreement and submitted a survey and plat that showed no parking area.
- Suzanne Kincaid viewed the property with another Century 21 agent, Diane Albert, but never spoke with Matthews before the sale.
- On two occasions, Albert told Kincaid that parking was available in the adjacent lot, which belonged to a six-plex and was separated from the four-plex by a chain link fence.
- When Albert later asked Matthews about parking, he stated that parking was available on the street, his standard response to all inquiries.
- Kincaid purchased the property, allegedly under the belief that off-street parking in the adjacent lot was included.
- After the purchase, Kincaid's tenants were told they could not park in the adjacent lot.
- Approximately one year later, the city prohibited street parking, and the property was subsequently foreclosed upon.
Procedural Posture:
- Suzanne Kincaid filed suit against Matt Matthews, Diane Albert, and Century 21 in the superior court (trial court) for fraudulent or negligent misrepresentation.
- Kincaid settled her claims against Albert and Century 21 prior to trial.
- The case against Matthews proceeded to a jury trial on theories of fraud, negligent misrepresentation, and vicarious liability.
- The jury found Matthews liable for fraudulent and negligent misrepresentation and awarded Kincaid $98,258.20 in damages.
- The trial court denied Matthews’ motions for judgment notwithstanding the verdict and for a new trial.
- Matthews (appellant) appealed the judgment to the Supreme Court of Alaska.
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Issue:
Does a seller of real property have a duty to affirmatively disclose the lack of off-street parking when this fact is obvious and discoverable by an ordinary buyer through reasonable inspection and inquiry?
Opinions:
Majority - Matthews, J.
No, a seller of real property does not have a duty to disclose a fact that is obvious and discoverable through ordinary inspection. A duty to disclose is rarely imposed where parties deal at arm’s length and the information is of a type which the buyer would be expected to discover. Here, the lack of off-street parking was an obvious fact. Any ordinary purchaser could see that there was no parking area on the lot, the adjacent parking area was fenced off, and it was too small to accommodate tenants from both buildings. The parties were bargaining adversaries in an arm's-length transaction, not in a relationship of trust. Matthews took no action to mislead Kincaid; his silence on the listing agreement was not deceptive, and he provided documents (a survey and plat) that clearly delineated the property's boundaries, which did not include the neighboring lot.
Analysis:
This decision reinforces the principle of caveat emptor ('buyer beware') in arm's-length commercial real estate transactions. It clarifies that a seller's duty to disclose material facts does not extend to patent defects—those that are obvious or discoverable upon reasonable inspection. The ruling places a substantial burden on the buyer to conduct due diligence, distinguishing between a seller's silence on an obvious matter and the fraudulent concealment of a latent, or hidden, defect. This precedent limits the scope of liability for sellers for misrepresentation by omission where the buyer could have discovered the truth through their own investigation.
