## Facts

- A seller contracted to sell a six-year-old home to purchasers for $42,500; the purchasers paid a $4,250 deposit held in escrow by the real estate broker.
- The contract stated the purchasers had inspected the property, were satisfied with its physical condition, no representations were made, and the seller assumed no responsibility for the premises’ condition.
- Before closing, the purchasers entered the then-unoccupied house at night, turned on the lights, and observed cockroaches running in large numbers throughout the interior.
- The purchasers, through counsel, notified the seller that the house was infested and asserted the condition rendered it unfit for habitation; they attempted to rescind and demanded return of the deposit.
- The purchasers alleged the infestation was longstanding, difficult to detect by ordinary inspection, and known to the seller, who did not disclose it.
- The trial court granted summary judgment for the seller and broker, awarding the seller the deposit and the broker a commission; the appellate court largely affirmed.

## Issues

1. Whether purchasers alleging a severe, latent cockroach infestation and the seller’s knowing nondisclosure are entitled to rescission and return of their deposit, notwithstanding contract clauses disclaiming representations and responsibility for condition.
2. Whether summary judgment was improper because disputed facts existed regarding the infestation’s materiality and the seller’s knowledge and nondisclosure.

## Decision

- The Supreme Court of New Jersey reversed the judgments for the seller and broker and remanded for trial.
- The court held genuine disputes of material fact existed concerning the extent and materiality of the infestation and whether the seller knew of it and failed to disclose it.
- The court ruled that contractual “no representations/satisfaction” language did not, as a matter of law, bar a claim based on knowing nondisclosure of a latent, material defect affecting habitability.

## Legal Principles

- Summary judgment is improper where material facts are genuinely disputed; the nonmovant receives favorable inferences.
- A seller’s knowing nondisclosure of a latent, material defect not reasonably discoverable by the buyer may constitute actionable fraud (fraudulent concealment/nondisclosure).
- Contract provisions stating the buyer inspected, is satisfied, or that no representations were made do not immunize a seller from liability for deliberate nondisclosure of known, material, non-obvious defects.
- In residential sales, caveat emptor does not foreclose relief where the seller’s silence concerns a serious latent condition bearing on habitability or value and the seller has superior knowledge.

## Conclusion

The court required a trial on whether the home’s cockroach infestation was materially serious and whether the seller knowingly failed to disclose a latent condition, holding that such nondisclosure can support rescission and recovery of the deposit despite “as-is” and no-representation clauses.


Weintraub v. Krobatsch, 64 N.J. 445, 317 A.2d 68 (N.J. 1974)