David, J.
The owners of a home sold it after completing Indiana’s statutory disclosure forms, attesting to the home’s condition. Shortly after moving in, the buyers discovered a number of defects that required considerable expense to remedy. The buyers sued the former owners, alleging fraudulent misrepresentation. The question is whether Indiana’s Disclosure Statutes create such a claim or if the common law still prevails and the principle of caveat emptor effectively ends the buyers’ case. Today we hold that the General Assembly’s adoption of the Disclosure Statutes abrogated our common law jurisprudence for those transactions falling within their scope.
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All the same, the sale here is also directly addressed by the provisions of Indiana’s residential real estate sales disclosure statutes. Ind. Code chapter 32-21-5. [Footnote omitted.] Section 7 of this chapter requires the Indiana Real Estate Commission to adopt a disclosure form for sellers like the Johnsons. Ind. Code § 32-21-5-7 (2008). The disclosure must contain
the known condition of the following:
(A) The foundation.
(B) The mechanical systems.
(C) The roof.
(D) The structure.
(E) The water and sewer systems.
(F) Additions that may require improvements to the sewage disposal system.
(G) Other areas that the Indiana real estate commission determines are appropriate.
Ind. Code § 32-21-5-7(1). This form must be completed, signed, and submitted to the prospective buyer before an offer for sale is accepted. Ind. Code § 32-21-5-10 (2008). However, the form “is not a warranty by the owner or the owner’s agent, if any, and the disclosure form may not be used as a substitute for any inspections or warranties that the prospective buyer or owner may later obtain.” Ind. Code § 32-21-5-9 (2008). The statutes go on to expressly limit any potential liability that a seller may have as a result of defects discovered by a buyer after the sale has been completed:
The owner is not liable for any error, inaccuracy, or omission of any information required to be delivered to the prospective buyer under this chapter if:
(1) the error, inaccuracy, or omission was not within the actual knowledge of the owner or was based on information provided by a public agency or by another person with a professional license or special knowledge who provided a written or oral report or opinion that the owner reasonably believed to be correct; and
(2) the owner was not negligent in obtaining information from a third party and transmitting the information.
Ind. Code § 32-21-5-11 (2008).
The impact of these statutes on our common law interpretation of the caveat emptor doctrine—and the extent, if any, to which that doctrine still survives—is a matter of some debate.
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We agree with the Dickerson dissent in seeing that the Disclosure Statutes create liability for sellers when they fail to fully or truthfully disclose the condition of those certain features of their property. See Dickerson, 904 N.E.2d at 717–18. Although the relevant section frames the issue in the inverse—explaining when the seller is not liable—the statute nevertheless clearly contemplates liability for sellers flowing from “any error, inaccuracy, or omission of any information required to be delivered” under the Disclosure Statutes when that error, accuracy, or omission was within the actual knowledge of the seller. [Footnote omitted.] Ind. Code § 32-21-5-11. And while departing from the caveat emptor theory, this is actually less of a departure from the common law fraudulent misrepresentation arena than might appear at first blush.
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Therefore, as we read the Disclosure Statutes we see a codification of these requirements. The General Assembly has simply relieved the buyer of needing to initiate a specific inquiry in order to get honest disclosure about significant features of a purchase and, by the same token, it has forced the seller’s affirmative duty to initiate disclosure—and therefore full and honest disclosure—about those same features. In effect, the General Assembly has codified a portion of the normal home-buying back-and-forth between buyers and sellers, and in doing so streamlined the process with the aim of starting every such transaction on the same footing.
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Thus, for those types of residential real estate transactions to which they apply—and for the property features which are addressed within them—we hold that Indiana’s Disclosure Statutes abrogated the common law principles originally set forth in Cagney. In such transactions, the seller may be liable for fraudulent misrepresentations made on the Disclosure Form when he or she had actual knowledge that the representation was false at the time he or she completed the form. But because statutes in derogation of common law are strictly construed, and we presume that the General Assembly is aware of the existing common law and does not intend to change it “beyond what the express terms of its enactments and fair implications allow,” Town of Avon v. W. Cent. Conservancy Dist., 957 N.E.2d 598, 603 (Ind. 2011), we view our common law principles as being undisturbed for transactions falling outside the scope of the Disclosure Statutes.
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Dickson, C.J., Massa and Rush, JJ., concur.
Rucker, J., concurs in part and dissents in part with separate opinion.
Rucker, J., concurring in part and dissenting in part.
I fully concur with Part I of the majority opinion. I also concur with that portion of Part II declaring that the trial court “applied the wrong legal standard to the facts” of this case. Slip op. at 14. However, I disagree with the necessity of remanding this cause to the trial court for new findings. It is certainly true the trial court did not use the magic words “actual knowledge.” But as recounted in the Facts section of the majority opinion, the record before us is more than sufficient to support the conclusion that the Johnsons had such knowledge of the various defects prior to the time they sold the property to the Wysockis. I would therefore affirm the judgment of the trial court in all respects and put this litigation to rest. Therefore, on this point I respectfully dissent.