UCC-1 as substitute for Mechanics’ Lien on a Coop

Thomas Tripodianos
May 14, 2009 — 1,785 views  

Question.  Prior to closing on their home, the Purchasers hired an Engineer who performed an inspection of the house.  The inspection revealed the presence of termites in the crawl space in front of the house. In his inspection report, the Engineer noted, in addition to the termite condition, among other things, the boiler was in "good shape, showing no sign of leaking activity." 

In accordance with certain provisions in the Rider attached to the Contract of Sale, upon being advised of the results of the inspection, the Seller hired a Pest Control Company to treat the termite condition, which it did by spraying in the crawl space and placing termite baits around the perimeter of the house. After taking possession of the premises, the Purchasers discovered extensive termite damage throughout the house and a leak in the oil line feeding the boiler tank, resulting in contamination of the soil under the house, (which ultimately had to be removed by a specialty company, monitored by the Department of Environmental Conservation).  The Purchasers would like to sue the Pest Control Company, the Seller, and the Engineer for breach of contract with regard to all, negligence with regard to the Engineer and the Pest Control Company, and fraud in the inducement with regard to the Seller.  May they do so?

Answer. NO as to the Seller.  MAYBE as to the Engineer.  NOT LIKELY as to the Pest Control Company.

The Seller made the premises fully available for inspection by the Purchasers and their agents without restriction as to length or scope of inspection.  Under these circumstances, the facts represented were not matters peculiarly within the Seller's knowledge and the Purchasers had the means available to them of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation.  It was their responsibility to make use of those means, (which they did through the Engineer) and cannot now complain that they were induced to enter into the transaction by misrepresentations  Since, the Seller or his agents did not thwart the Purchasers efforts to fulfill their responsibilities fixed by the doctrine of caveat emptor (buyer beware) they have no claim against the Seller.

In addition, pursuant to the Contract of Sale the Purchasers specifically disclaimed reliance on any representations, written or oral, of the Seller and/or his representative. and declared that the buyers had inspected the premises and agreed to accept it "as is", and understood that no representations were made as to its condition.  Any claim of fraud against the Sellers was therefore extinguished upon closing.

As to the Pest Control Company, there can be no breach of contract claim against them by Purchasers since they were hired by Seller.  There is also no indication that there were any representations made to the Purchasers by the Pest Control Company or that there continues to be a termite infestation problem so it would seem that a negligence (or third party beneficiary) claim would not survive either.

As to the Engineer however there remains a question fact as to whether he properly executed his duties to the Purchasers.  In other words, a claim may be stated against the Engineer but it remains to be seen whether he actually did anything wrong.  Nor can the Engineer avoid the claim by relying on his invoice which is entitled an "inspection agreement".  Neither the invoice nor the inspection report, which also contained a provision limiting liability, was signed by either of the Purchasers. Absent documentary proof of the Purchasers' agreement to these provisions limiting liability the claim would be allowed.

Thomas Tripodianos


Thomas S. Tripodianos received a Bachelor of Arts degree from St. John's University with a major in Government and Politics and dual minors in Philosophy and Psychology. He went on to obtain a Juris Doctor from Hofstra University School of Law. He is admitted to practice law in the State of New York, as well as the U.S. District Court for the Northern, Southern and Eastern Districts with admission pending in the State of Pennsylvania, and the State of Massachusetts.