Herzing student recently learned that she was left a small vacation cabin in Montana by a long lost aunt in her will. The aunt had been renting the cabin to tenants for several years, but Herzing student does not have the time to deal with tenants, nor does she want to spend time in Montana because she is afraid of bears. She offers to sell it to the tenants, but they cannot get qualified for a loan due to a recent bankruptcy. Herzing student remembers from her property law class that she can use seller financing to complete the sale to the tenants. After careful discussions and negotiations, an agreement is reached. Herzing student decides to draft her own contract to save money, and she proceeds to closing. Herzing student was sick the second week of class and did not complete all of her readings. Thus, she does not include an entire agreement clause.

• After about three years, the buyers contact the Herzing student to inform her that the roof needs replaced. Herzing student remembers that during the negotiations, the buyers mentioned the disrepair of the roof, but nothing was agreed upon. She remembers acknowledging the condition, but not agreeing to pay for the replacement. The buyers remember Herzing student agreeing to replace the roof within three years as part of the deal. The student refuses to pay and buyers sue.
  • Can the buyers enter into evidence the conversations from the negotiation?
  • What is the parol evidence rule and how is it relevant to the parties?
  • What language should the Herzing student have included in the contract?
  • Do you believe Herzing students will be forced to replace the roof?
  • Please explain your answer.

Now imagine the lawsuit is over and Herzing student won! The judge determined that even though there was no entire agreement clause, the conversations were inadmissible under the parol evidence rule. Upset, the buyers have replaced the roof to make the property more attractive for resale. They no longer wish to associate with Herzing student; instead, they wish to move to Alaska where they are told there are less bears.

The buyers find a new buyer, Hawaii Bob, who is ready to escape all of the lizards infesting his home. A much savvier buyer, Bob requires a title search and home inspection before going to closing. The title search reveals that a tax lien was placed on the property 45 years ago when the aunt still owned it. The bill is over $25,000. There was no seller disclosure form signed in the original transfer.

• What is caveat emptor and how is it relevant to our scenario?
• Was the sale to the original buyers valid with the tax lien?
• Why or why not.
• What are the original buyers' options?
• What are Bob's options?
• Who owns the house and why?