Do you hear a soft exhale on the summer breeze? Home sellers statewide are breathing a collective sigh of relief. Just last week, the Michigan Supreme Court overturned a 2021 Court of Appeals decision that made home sellers liable for a building code violation discovered by buyers after closing (Galvan v Poon).
In the Galvan case, the sellers gave the buyers a warranty deed that stated the home was “free from all encumbrances.” The Court of Appeals concluded that the building code violation in the home, discovered only when the buyers removed a wall while remodeling, was an “encumbrance” that violated the sellers’ warranty deed. Accordingly, the Court of Appeals made the sellers responsible for the cost of bringing the home up to code.
In reversing the Court of Appeals, the Supreme Court held that the appeals court improperly expanded the scope of “encumbrance.” Because the code violation in Galvan was not the subject of official enforcement action prior to sale and was not discoverable through the normal processes of title search or property inspection, the Supreme Court determined it “lacks the defining characteristic of an encumbrance” and therefore did not violate the sellers’ warranties of title.
If you are contemplating the purchase or sale of a home, we would be pleased to assist. Give us a call today at 248.477.6300.