Serious Defects in Your Recently Purchased Home? Here’s What to Know about Bringing a Claim
For most people, buying a home will be the biggest single purchasing decision of a lifetime, one requiring much time, deliberation, and money. But imagine moving into a newly acquired home only to be surprised by major problems like recurring water intrusion or a faulty foundation. It doesn’t just break your heart. It can also bust your budget.
What if you know or suspect the problem was there before you were, but no one bothered to tell you? Are you simply stuck in a “money pit” like Tom Hanks in a wacky comedy from the 80s, or can you hold someone else accountable for what you didn’t know and weren’t told? As some ancient Roman legal scholar must have said at some point, “Dependet.” Because lawyers have been giving out the answer “it depends” for about that long.
“As Is” Contract
As a starting point, an “as is” contract is commonly used in the sale of residential property. A buyer who purchases property “as is” chooses to rely entirely upon their own determination of the property’s value and condition without any assurances from the seller. It will take more than a simple case of buyer’s remorse to overcome an “as is” contract. But a seller’s false representation or failure to disclose known information might get you over this hurdle.
(NOTE: “As is” contracts are the norm for already inhabited residential properties, but newly built homes generally come with common law implied warranties of good workmanship and habitability. Problems with newly built homes are outside the scope of this post but these warranties are often the source of a solution).
While buyers assume the burden of risk in an “as is” contract, sellers cannot just put up a “For Sale” sign in the yard and keep what they know to themselves. A seller must typically furnish a “Seller’s Disclosure” to a buyer of residential property. The Seller’s Disclosure is a standard form designed to elicit information from the seller about any known problems, conditions or defects with the property.
Caveat Emptor
Bear in mind the Seller’s Disclosure isn’t intended to provide a guarantee to the buyer. It’s not necessarily even a complete list of the property’s problems, conditions, or defects, but rather what the seller knows about the property at the time of sale. Moreover, a seller is charged only with disclosing material facts sufficient to put a buyer exercising reasonable diligence on notice of the property’s condition. Phrased another way, sellers owe a duty to provide a reasonable level of information about the property’s known conditions but not necessarily to divulge all the gory details. It is on the buyer to follow up and investigate any hints of a problem that may lurk in the Seller’s Disclosure.
In addition to whatever information a buyer may receive from a Seller’s Disclosure, it is customary and advisable for a buyer to have an independent inspection of the property performed by a licensed professional prior to closing. The purpose of the inspection is to alert the buyer to any issues with the property that a seller might not disclose, either because the seller is unaware of the issue or otherwise does not see fit to mention. While there is no guarantee that a professional inspection will detect every conceivable problem with a property, it reduces the risk of making an ill-informed purchase. A buyer may want to renegotiate the terms of their offer based upon information revealed by an inspection or even withdraw from the deal altogether.
Do You Have a Claim?
Where does all this leave the buyer who moves in and soon discovers that even moderate rainfall invariably leads to leaking windows? Or signs of a distressed foundation? It is appropriate and even advisable for a buyer in such a situation to consult an attorney with experience in consumer protection or real estate litigation.
In preparing for that consultation, a buyer would do well to consider:
whether any specific representation relevant to the problem was made by the seller or seller’s agent prior to sale;
whether the Seller’s Disclosure provided any clue about the problem;
whether there is any evidence or reason to believe the seller, in fact, knew about the problem;
whether the condition was flagged or even alluded to by the independent professional inspector; and
whether the condition reasonably should have been discovered during the inspection.
Depending on the answers to these questions, and some others, a buyer may have a viable legal claim for compensation against a seller.
This update is for informational purposes only and should not be considered legal advice. Each situation is different, could change any time, and should be analyzed by an attorney.
About Cawthon Law, PLLC
Cawthon Law provides affordable high-quality legal representation for clients in litigation over business, real estate, consumer protection, and governmental matters. Lance Cawthon helps individuals, small businesses, professionals, and local governmental entities reach favorable resolutions to their conflicts. For more information, contact Lance at Lance@CawthonLaw.com or (512) 322-9396