What is a Careful, Reasonable Inspection?
While strict application of caveat emptor or “buyer beware” has been softened over time, Washington is still often referred to as a “buyer beware” jurisdiction when it comes to sales of residential property. Consistent with Washington’s “buyer beware” reputation, Washington courts have held that where a buyer is put on notice of a defect, a buyer generally has an obligation to make further inquiries. Simply put, a purchaser of residential property who is made aware of a defect before purchasing the property is generally not permitted to cry foul if the defect turns out to be greater than anticipated.
Unfortunately, buyers are not always put on notice of a defect. In situations where a buyer is not put on notice of a defect during the course of a sale and later discovers the defect, Washington courts have developed a multi-factor test to determine whether a seller faces liability under a theory called “fraudulent concealment.” The test provides that a seller of a residential dwelling has a duty to inform a purchaser of a defect when (1) the residential dwelling has a concealed defect; (2) the seller has knowledge of the defect; (3) the defect presents a danger to the property, health, or life of the purchaser; (4) the defect is unknown to the purchaser; and (5) the defect would not be disclosed by a careful, reasonable inspection by the purchaser. Atherton Condominium Apartment-Owners Ass’n Bd. Of Dirs. v. Blume Development Corp., 115 Wn.2d 506, 524, 799 P.2d 250 (1990).
Many have wondered what is required of a buyer to fulfill their obligation to perform a “careful, reasonable inspection.” A recent opinion from Division III of the Washington Court of Appeals provides some clarity on the issue. Lions v. Evans, No. 40278-9-III, 2025 Wash. App. LEXIS 879 (Ct. App. May 6, 2025).
The facts in Lions are complex, but helpful to understand the impact of the court’s decision. In the early 2000s, Evans hired a contractor to build her a custom home. Shortly after moving in, Evans noticed substantial cracks and voids under the home’s foundation. An engineering firm hired by Evans discovered fill material under the home, tension cracks in the crawlspace, and signs of water flowing through the fill material. To remedy the issues, the engineering firm recommended a two-part solution: (1) raising the foundation and installing helical piers; and (2) stabilizing the fill material underneath the home with a subsurface pile wall to prevent future sliding of the fill material. Evans elected to follow only the first part of the proposed solution.
In 2017, Evans listed her home for sale. Evans disclosed that a portion of the lot contained fill material and the fact that she had helical piers installed consistent with a recommendation from an engineering firm. Evans even attached letters from two engineers as well as a letter from the contractor who installed the helical piers. However, Evans stated that she had “no reason to believe that there are any issues with the stability of the foundation of the home.” None of the letters that Evans provided to prospective buyers alluded to the need for, or the absence of, a subsurface pile wall.
Moore signed a purchase and sale agreement and hired a home inspector to perform a pre-purchase inspection of Evans’ home. The inspection report included pictures showing large gaps between a portion of the foundation and the soil. Consistent with the recommendation from the home inspector, Moore contacted multiple engineering firms to evaluate. After some back and forth, Evans ultimately agreed to pay the cost of injecting foam to fill large gaps between the foundation and the soil, as shown in the pre-purchase inspection. Moore proceeded to close on the purchase.
Two years after the sale, the home’s kitchen receded half an inch from the wall. When Moore contacted an engineering firm Evans had worked with in the early 2000s, Moore discovered that a subsurface pile wall was necessary to stabilize the fill material, and that Evans had not installed the wall. In simple terms, Moore discovered that Evans failed to follow through with the second part of the two-part solution recommended in the early 2000s.
In Moore’s suit against Evans, Moore asserted that Evans had fraudulently concealed a defect—the fact that fill material needed to be stabilized to prevent settling and damage to the home. The trial court dismissed Moore’s claims on grounds that Moore failed to conduct a careful and reasonable inspection.
The Court of Appeals attempted to clarify what a buyer must do to fulfill their obligation to perform a careful, reasonable inspection. The court held that a buyer may satisfy their obligation to perform a careful, reasonable inspection “by proving they took reasonable steps toward discovering the existence or scope of the possible defect.” Instead of providing a bright-line rule, the court concluded that reasonableness is a factual question and involves considering what the purchaser reasonably believed at the time of the home purchase.
As applied to Moore’s situation, the court concluded that a reasonable trier of fact could find that Moore took reasonable steps toward discovering the existence or scope of the possible defect by contacting engineering firms after receiving the pre-purchase inspection report. The court noted that a reasonable trier of fact could find that Moore reasonably believed that the soil was stable, and the foundation problem would be fixed by the foam that was injected into the gaps before closing. Therefore, the court reversed the trial court’s dismissal of Moore’s claims.
Although the decision in Lions leaves open the question of what kind of “reasonable steps” are sufficient, Lions does provide several valuable takeaways. For sellers, Lions reinforces the fact that the most risk averse strategy is to disclose any defects with respect to a property. For buyers, Lions arguably eliminates an argument that a “leave no stone unturned” approach is necessary. Future cases will almost certainly test the limits of what does and does not constitute “reasonable steps” by a purchaser to discover the existence or scope of a concealed defect.
If you have an issue related to the sale of residential property, the lawyers at Beresford Booth are available to discuss details and to help you navigate your specific situation. Do not hesitate to contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.
