COA: Seller not liable for undisclosed septic system

The Indiana Court of Appeals affirmed judgment against a man who claimed fraud because he was not told the property he bought was connected to a septic system.

Gary Fisher inherited property from his mother and stepfather after his mother’s death, but never lived in the home. Before her death, he had paid the bills for them through power of attorney. Seeing a city water bill, he thought the house was connected to city water.

Fisher sold the property to Duane Harmon and on the real estate disclosure form Fisher checked “yes” that the property was connected to a public sewer system and checked “no” under septic/holding tank and septic mound.

After taking possession of the property, Harmon attempted to turn off the water for work he was doing and found the property was connected to a septic system. He paid the expenses for having the property connected to city water and then filed a small claim for $3,925. During the trial, Fisher said he believed the home was connected to city water and sewer and was surprised it was not. He did not know a home in the middle of a community could have a septic field. The trial court denied Harmon’s claim.

Harmon appealed arguing for the first time the decision was clearly erroneous because his amended complaint alleged fraud and misrepresentation and the evidence established Fisher committed constructive fraud.

The COA affirmed Fisher had no prior knowledge of the septic field and that Harmon waived this issue by bringing it up on the first time on appeal. But even if the issue had not been waived, Harmon’s claim would fail.

Indiana Code 32-21-5-11 states in a buyer/seller relationship, the owner is not liable for any error, inaccuracy or omission unless the error was within the knowledge of the owner. Fisher had no knowledge of the septic field, and he had no element of duty to Harmon.

The case is Duane Harmon v. Gary Fisher, 48A02-1511-SC-1957.