Engelhart v. Kramer

Supreme Court of South Dakota · Property

PropertySeller disclosureResidential real estate defectsSDCL 43-4-38SDCL 43-4-40SDCL 43-4-41SDCL 43-4-42SDCL 43-4-44

Facts

Kramer bought a house in 1991 and, four days before listing it in 1993, cleaned the basement, removed old sheet rock, and installed paneling over basement walls that had several large cracks and falling pieces of cement. In the statutory property condition disclosure statement, Kramer disclosed a small amount of water penetration in the northwest and northeast corners when it rained, said there were cracked basement walls in some spots, and stated the basement cement walls had some crumbling behind the paneling. After Engelhart bought the house, she discovered water seepage through the south basement wall and, once the paneling was removed, multiple large cracks and severe deterioration were revealed. A structural engineer testified the walls were very badly cracked, disintegrating, not repairable, and that "some crumbling" did not adequately describe the concealed condition.

Issue

Did Kramer fail to complete the residential property disclosure statement in good faith under SDCL chapter 43-4 by describing the basement walls as having only "some spots" and "some crumbling"? Relatedly, does the statute impose strict liability, or only liability for intentional or negligent disclosure violations?

Rule

Under South Dakota's residential property disclosure statutes, a seller must truthfully and completely complete the disclosure statement and perform each act and disclosure in good faith. Good faith, for these statutes, is determined under a reasonable person standard, and liability attaches only for intentional or negligent violations under SDCL 43-4-42, not strict liability.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Rapid City, Megan Torres listed her house for sale. On the statutory disclosure form, she wrote that the crawl space had "a little dampness after storms," even though she had repeatedly seen standing water across most of the crawl space and had kept repair invoices describing widespread moisture intrusion.

If the buyer later sues under South Dakota's residential disclosure statute, which is the strongest argument for liability?

Explanation. The majority held that the statutory phrase requiring a seller to "truthfully complete" the disclosure statement demands more than isolated literal truth. The disclosure must be truthful and complete, read together, and made in good faith. A seller who knows of a substantially worse condition but minimizes it may commit at least a negligent violation.