In Ashmus v. Coughlin, 2025-Ohio-2412, the Ohio Supreme Court provided important guidance on the scope of a seller’s disclosure obligations under Ohio Revised Code 5302.30, particularly when it comes to “material defects” in residential real estate transactions. The Court held that a publicly recorded sewer easement running through a property did not constitute a “material defect” that the seller was required to disclose, reversing a divided Eighth District Court of Appeals decision.
Case Background
The dispute arose after Thomas and Melissa Coughlin entered into a contract with seller Keith Ashmus to purchase a lakefront home. The Coughlins planned to demolish the existing structure and build their dream home on a different section of the lot. They waived inspections, accepted the property “as is,” and included a 14-day due diligence clause to evaluate feasibility.
After the due diligence period expired, the Coughlins discovered a recorded sewer easement across the property, which they believed would interfere with their building plans. Citing the non-disclosure of the sewer line in the Residential Property Disclosure Form, they attempted to terminate the deal. Ashmus later sold the property to another buyer at a lower price and sued the Coughlins for breach of contract. The Coughlins countersued, alleging fraudulent nondisclosure of a material defect.
Was the Sewer Line a “Material Defect”?
The central legal question was whether the undisclosed sewer line constituted a “material defect” under Section N of Ohio’s Residential Property Disclosure Form. Section N requires sellers to disclose “any non-observable physical condition that could inhibit a person’s use of the property.”
The Court concluded that the sewer line, while it may have impacted the Coughlins’ intended use of the property, did not rise to the level of a material defect:
- The easement had been publicly recorded since 1964, and the buyers had constructive notice of its existence.
- The sewer line was fully functional and did not present any flaw or danger typically associated with a “defect” (e.g., cracked pipes, sewage backups, or code violations).
- The term “a person’s use” in the disclosure form refers to a generic, reasonable use of the property—not a specific buyer’s redevelopment plan.
The Court emphasized that while sellers are required to disclose both latent and patent material defects under the statute, a working utility line legally recorded on title does not qualify.
Impact of “As-Is” Clauses
The Court also reaffirmed longstanding Ohio law that an “as is” clause in a real estate contract significantly limits the seller’s disclosure obligations. Under Ohio’s caveat emptor doctrine, even latent defects generally need not be disclosed when the buyer accepts the property in its existing condition.
Because the Coughlins’ contract included such a clause, and because they waived further inspections, the Court held that Ashmus had no common-law duty to disclose the sewer line, regardless of the disclosure form.
Key Takeaways for Buyers and Sellers
This decision clarifies several critical points for Ohio real estate transactions:
- Sewer easements and utility lines, when properly recorded and functional, are not defects under Ohio’s residential disclosure law.
- The duty to disclose does not require anticipating a buyer’s specific intended use of the property.
- “As-is” clauses remain a strong shield against liability for nondisclosure, especially when paired with a buyer’s waiver of inspections.
- Constructive notice through public records and title searches places responsibility on the buyer to perform due diligence, even when issues are not mentioned on the disclosure form.
Conclusion
The Ohio Supreme Court’s ruling in Ashmus v. Coughlin reinforces a common-sense interpretation of what constitutes a “material defect” and highlights the importance of the buyer’s due diligence—particularly in transactions involving redevelopment or construction plans. For real estate professionals, attorneys, and their clients, this case is a significant reaffirmation of seller protections under Ohio law, particularly when accurate public records exist and the property is sold “as is.
