Q:       I’m thinking of buying a home, and my friend says a house purchase is a “buyer beware” situation. What does that mean?

A:        “Buyer beware,” also known as the doctrine of “caveat emptor,” is an age-old doctrine. It means that, if you intend to buy property, you generally bear the responsibility for finding out about the property’s condition before purchasing it. This doctrine appears to place the entire risk on the shoulders of the homebuyer, but only does so if 1) the condition of the property is open to observation or discoverable upon reasonable inspection to the buyer; 2) the buyer had the opportunity to examine the property; and 3) there is no fraud or wrongdoing on the part of the seller.

Q:       What do I, as a buyer, have to do about a defect that may be found during a home inspection?

A:        A defect that is open, observable and can be discovered through inspection and inquiry is called a “patent defect.” You, as a buyer, are responsible for making efforts to obtain all information about such obvious defects or problems with the property. Also, you will be held responsible and liable for all defects that you could have discovered upon inspection, so make sure you make reasonable efforts to view and inspect the property before buying it.

            For example, you may notice such “patent” obvious defects as large cracks in the concrete foundation of the home, a hole in the roof or rotten wood on the home’s front porch. If you decide to buy the home in spite of these obvious defects, you could not later seek damages or a remedy against the seller for the costs of repairing them. The burden is on you to notice these issues before buying the property.

Q:       What about defects that are not obvious?

A:        The home may have “latent,” defects that are known to the seller, but cannot be easily discovered by the buyer or may present a dangerous condition. They are hidden in nature. As an exception to the doctrine of the caveat emptor/buyer beware doctrine, sellers must disclose latent defects to the buyer. This requirement provides protection for the innocent buyer.

            Latent defects are more complex than patent defects. For example, if a leaking roof can only be noticed when it rains, and an inspection shows no evidence of water damage, this would be a latent defect. Similarly, if a septic tank produces a bad smell occasionally, this would not be a readily observable problem. In such instances the burden falls on the seller. If the seller fails to disclose such issues, the buyer can seek a remedy, if necessary, in court.

            It is very important to retain a licensed property inspector to inspect the property before purchase, and make the purchase agreement contingent upon the property passing inspection. An inspector has the knowledge, skills, and experience necessary to thoroughly evaluate the property and notice issues you may never discover until it is too late.

            A seller is also liable for fraud or misrepresentations to the buyer. For instance, a seller cannot lie and tell the buyer the foundation is in great condition if the seller knows it is in need of repair or in danger of collapsing. Similarly, a seller cannot tell a buyer a roof has never had any leaks if the seller has replaced the ceiling’s drywall and paint to conceal the fact that the roof leaks every time there’s a severe storm.

Q:       What is an “as-is” clause?

A:        In certain circumstances, a seller does not have to disclose latent defects. If a real estate agreement contains an “as-is” clause, then the buyer assumes the risk that latent defects may exist. An “as is” clause relieves the seller of any duty to disclose, and means that the buyer cannot bring a lawsuit against the seller for any passive non-disclosure.

            For example, in Ferguson v. Cadle, 2009-Ohio-4285, the court held that sellers had no liability under an “as is” home sale contract for failing to disclose the existence of a steel support structure that was installed in a basement wall after the wall had sustained water damage.

This “Law You Can Use” consumer information column was provided by the Ohio State Bar Association. It was prepared by Andrew L. Smith, a senior associate attorney in the Cincinnati office of Smith, Rolfes & Skavdahl Company, LPA. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

An estimated 1.2 million drug-addicted people are currently involved in the justice system.  “Drug courts” provide effective intervention, save money and significantly reduce drug use and crime through intensive supervision and treatment. Such court dockets exist throughout Ohio’s adult and juvenile courts and there are more than 2,000 across the nation. Over the last 20 years, state and federal studies have consistently shown that drug courts are the most cost-effective way to reduce drug-related crime.

 
Q:       How does a drug court work?
A:        Usually administered through a traditional court, a “drug court” is a specialized docket created to manage cases involving drug-addicted offenders. The cases that qualify for management through a drug court can be drug-related (i.e., possession of drugs), or seemingly non drug-related (i.e., theft), but all involve drug-addicted offenders. An arrested person who is determined to have a drug addiction, and otherwise meets the court’s criteria, is screened for eligibility and enters the drug court program shortly after arrest. If appropriate, drug offenders begin treatment within two weeks of arrest. While in the community, they must comply with intensive probation requirements. They meet frequently with case managers, probation officers and the presiding drug court judge. They must prove sobriety through urine testing and must comply with all requirements set by the managers.

            In Ohio, the Supreme Court has adopted rules outlining requirements for drug court certification.  These standards create a minimum level of uniform practices for each court, and permit two “tracks” by which offenders may enter the program. Under a “probation track,” offenders enter the program as a condition of probation. Under the “intervention in lieu of conviction” track, offenders are eligible to have the charges dismissed upon successful completion of the program. Intervention in lieu of conviction requires 12 consecutive months of sobriety for eligible offenders. 

            The program requires each offender to complete an individualized case management plan and remain drug and alcohol-free. Offenders may obtain GEDs and/or employment, work with Children’s Services to be reunited with their children, perform volunteer work, attend AA (Alcoholics Anonymous) and NA (Narcotics Anonymous) meetings, and do whatever is necessary to re-enter society as sober, responsible people.
            Offenders in a drug court program must appear in court on a regular basis to and take responsibility if they do not comply with the program’s expectations. If they fail to comply (for example, by missing a meeting or testing positive for drugs), the court imposes a series of graduated sanctions. The first sanction, for example, may require sitting in court for one day. The second sanction may require two days of community service, and three days of jail time may be required for the third sanction, and so on. The offender will not be removed from the program unless he or she is unwilling to try, but the offender’s willingness to try is gauged on actions, and not just words.  Some offenders decline to enter the program, opting for jail or prison instead because they feel the program’s requirements are too difficult. 

Q:       Are there rewards for offenders who successfully complete a drug court program?
A:        Yes. Successful participants receive court commendations for sobriety or other achievements. Rewards can range from praise to tangible items such as certificates and gift cards.  Also, the amount of their fines may be reduced. A formal graduation ceremony acknowledges their successful completion of the program. If the offender entered the program on probation, that probation is concluded. Offenders who enter under intervention in lieu of conviction are eligible to have their cases dismissed.

Q:       Why not just send drug users to jail?
A:        Drug courts reduce crime as much as 45 percent more than other sentencing options. Without drug treatment, more than 70 percent of drug addicts will commit new crimes, but75 percent of drug court graduates nationwide remain arrest-free for at least two years after leaving the program.

            Also, incarceration is an expensive punishment, and national corrections expenditures exceed $60 billion annually. In both the short and long term, drug courts are less expensive than traditional approaches. For every $1 invested in drug courts, taxpayers save as much as $3.36 in criminal justice costs alone. Drug courts reduce police overtime for court appearances and lawyers’ fees for defendants who cannot pay for their own attorneys. Also prosecutors can devote more time to other cases, which helps reduce the court’s docket, and jail beds can be used for other offenders.
            In addition, taxpayers realize long-term savings because rehabilitated offenders can hold jobs, pay taxes, participate in the community, and care for their children rather than neglecting them or leaving them to the care of the state. Finally, a rehabilitated offender’s children are much less likely to become offenders. This effectively ends the cycle of crime for many people.

This “Law You Can Use” column was provided by the Ohio State Bar Association (OSBA). It was prepared by Hon. Joy Malek Oldfield, a municipal court judge and the presiding judge of a drug court in Akron. The column offers general information about the law.  Seek an attorney’s advice before applying this information to a legal problem.

Q:       What are liens and encumbrances? Are they different?

A:        An encumbrance is a claim, liability, or other right that is attached to real property and may lessen its value. A lien is simply a type of encumbrance that can be satisfied with the payment of money. 

A good example of a lien is a mortgage lien. As long as you have a mortgage, the mortgage lender has a lien against your property. If you don’t pay your mortgage on time, the lender can foreclose on your property. However, once you pay your lender all the money you owe under the mortgage, the mortgage is satisfied and no longer affects title to your real property. Another type of lien that may affect your property is a mechanic’s lien. If, for example, you own a home and hired a contractor to do work, but failed to pay for it, the contractor may put a mechanic’s lien on your property which, for practical purposes, will force you to pay for the work before you can sell or refinance your home.  

There are other types of encumbrances that are not liens because they cannot be satisfied by paying money and generally stick with the property for a number of years, or even perpetually. The most common example of such an encumbrance is an easement. Utility companies generally will have perpetual easements along the front, side, or rear of your real property so they can install and maintain various utilities to service the neighborhood. Also, if you have leased your property, the lease constitutes an encumbrance that will last for the number of years stated in the lease.
 

Q:       What are the most common types of liens and encumbrances affecting residential real estate?

A:        All residential real estate is subject to a real estate tax, the most common type of lien. A mortgage is also a very common lien, since most homeowners buy their homes through mortgage financing. Utility easements are very common encumbrances. Finally, homes located within a planned development are usually subject to another common encumbrance, which is a declaration or other document that includes the restrictions, rules and regulations governing the use of the real estate.

Q:       What should I know about liens and encumbrances before signing on the dotted line?

A:         You should review and understand the specific liens and encumbrances which will affect title to your real property. This is especially true if your property is subject to a declaration or other rules and regulations of a homeowners’ association. You need to know, for example, if there are restrictions on how many pets you can have and how big the pets can be, or if you are allowed to put in a fence and what type of fence it can be, and whether or not you can paint your house a certain color or put a shed in the backyard. All of these matters are usually addressed in the declaration and affect the way you can use your home. It’s best to know what the issues are before buying a home. 

Q:       When I buy a home, how can I protect myself against liens and encumbrances that may my hurt my home’s value?  

A:         You should obtain title insurance. In Ohio, the seller usually pays for this. The title insurance commitment shows you what liens and encumbrances will affect title to the real property after closing, and lets you know if, for example, the property is subject to a mechanic’s lien that the seller should pay before closing. 

Q:       I recently put a chain link fence around my property, and my homeowners’ association said that this type of fence is not allowed and must be taken down. The declaration does say that I cannot install a chain link fence, but do I have to abide by this rule, and is there any way to change it?  

A:        Unless the rule is arbitrary, discriminatory or against public policy, you must abide by all of the declaration’s rules and regulations. If the rules do not specifically address declaration amendments, it may be possible to change the terms of a declaration, but only if a large percentage (at least 75 percent) of homeowners in the development approve the change. Because it is usually very difficult to get such approval, it is especially important for you to review the governing declarations before you buy the home.

This “Law You Can Use” consumer legal information column was provided by the Ohio State Bar Association. It was prepared by Columbus attorney Ryan P. Aiello of Dinsmore & Shohl LLP. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

Q:       What is subrogation, exactly?

A:        Subrogation is an old legal doctrine that has to do with substituting one person (or entity) for another in the settling of a debt or claim. The purpose of subrogation is to make sure that a debt is paid by the person (or entity) who should ultimately be responsible for it. Subrogation also gives certain rights to the substituted person (or entity) who takes responsibility for the debt or claim.

Q:       I’ve seen the term “subrogation” in my insurance policy. How does subrogation apply to an insurance claim?

A:        Subrogation frequently arises in the context of insurance claims. When you buy auto insurance, the insurance company gives you a policy that says what will be covered in case you are involved in an accident that causes personal injury or property damage.  Let’s say, however, that you are involved in an accident that was not in any way your fault and was not caused by your negligence. Instead, the damage was caused entirely by the other driver. In such a case, your insurance carrier can collect full reimbursement from the insurance carrier of the driver who was at fault. In this way, subrogation has to do with equity, and in this instance, it allows your insurance carrier to “step into your shoes” and, on your behalf, collect reimbursement against the other driver, who was the actual negligent party.

Q:       What if there is more than one person who caused the damage?

A:        In a civil “tort” lawsuit, a “plaintiff” brings legal action “for damages” against one or more persons (or entities) whose action has caused suffering or harm. Subrogation regularly arises in tort lawsuits involving multiple defendants stemming from a single incident or transaction. Torts involve any civil wrong against a person or property. They can range from automobile accidents, product liability claims and medical malpractice situations to claims of defamation, nuisance or even emotional distress. 

            Frequently, a plaintiff may be able to collect an entire judgment against only one defendant under the rules of “joint and several liability.” This means that, even if several people shared responsibility for the harm, any one of them can be held liable for the entire amount of the damages. Subrogation may allow a single defendant who got stuck paying the whole amount of the damages to seek reimbursement from the other defendants.

Q:       If I am injured in an accident that was someone else’s fault, can my doctor collect from that person to cover my medical bills?

A:        Yes. It’s possible for medical providers and insurers who have given you medical care and treatment or paid your medical bills to pursue their subrogation rights so that the person who caused your accident will be held responsible for those bills.

Q:       How does subrogation work in business situations?

A:        Business contracts, including construction contracts, often contain subrogation clauses and provisions. It is common for project owners to place subrogation clauses in agreements for work involving contractors, subcontractors, architects, builders or other professionals. In such a situation, the subrogation clause can shift risk and potentially place reimbursement burdens on your shoulders, which you would not otherwise expect. For this reason, you should always review and analyze such clauses carefully and consider consulting with a qualified attorney before signing.

            Contracts may also include “waiver of subrogation clauses.” If your contract includes a waiver clause and you waive your subrogation rights in a contract, you won’t be able to seek reimbursement from the other party to the contract, even if that party is at fault.

Q:       How can I protect my subrogation rights?

A:        The doctrine of subrogation is widely considered to be a highly technical area of law, and often is applied to very complex situations. Do not miss an opportunity to obtain reimbursement through subrogation, and always read the terms of a subrogation clause carefully. When in doubt, contact an attorney with knowledge in this convoluted area of the law so you can protect and defend your rights.

This “Law You Can Use” consumer information column was provided by the Ohio State Bar Association. It was prepared by Andrew L. Smith, a senior associate attorney in the Cincinnati office of Smith, Rolfes & Skavdahl Company, LPA. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.