Question 1

What is the materiality standard for disclosure in Florida?

Accepted Answer

The materiality standard determines what information must be disclosed in Florida real estate transactions. Under Johnson v. Davis, a fact is material if: a reasonable person would consider it important in deciding whether to buy or at what price, it significantly and adversely affects the value of the property, it is not readily observable or known to the buyer, and it is within the seller’s knowledge. The standard is objective, not subjective: the question is whether a reasonable buyer would consider the fact important, not whether the specific buyer did. Florida courts have held that the following are material: structural defects, environmental contamination, flood history, sinkhole activity, Chinese drywall, active litigation, and code violations.

Question 2

How does materiality differ in residential vs. commercial transactions?

Accepted Answer

Differences: residential transactions: sellers have a strong duty to disclose under Johnson v. Davis, buyers are presumed less sophisticated and more reliant on seller disclosures, agents have an independent duty to disclose material facts (Section 475.278), and the materiality threshold is lower (more facts are considered material because of the buyer’s reliance). Commercial transactions: the parties are presumed sophisticated (represented by counsel and experienced in business), buyer’s due diligence is expected to be more thorough, "as-is" clauses are more commonly enforced (limiting the seller’s disclosure obligation), and the materiality threshold is higher (sophisticated parties are expected to discover more information independently). However, even in commercial transactions, active fraud and concealment are actionable.

Question 3

What is the role of "as-is" clauses in Florida disclosure?

Accepted Answer

"As-is" effect: an "as-is" clause states that the buyer accepts the property in its current condition without warranties. In Florida, "as-is" clauses: do NOT eliminate the seller’s duty to disclose known material defects (Johnson v. Davis still applies), do NOT protect the seller from fraud claims (if the seller actively concealed a defect), DO shift some risk to the buyer (the buyer acknowledges that they are accepting the property without relying on the seller’s representations about condition), and DO affect the buyer’s ability to sue for defects that could have been discovered through reasonable inspection. The "as-is" clause is not a license to conceal; it is a risk allocation tool.

Materiality Standard in Disclosure

Materiality Standard for Disclosure in Florida

Objective Standard

Residential vs. Commercial

"As-Is" Clauses

Related Terms

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