A fear of many home sellers is that months or even years after the sale, the buyer will sue for fraud, claiming a serious defect or problem was not disclosed. Fortunately, there are easy steps sellers can take to help prevent this from happening.
Rules For Disclosure
The old rule in real estate sales used to be “caveat emptor” — “buyer beware.” The law put the burden on the buyer to inspect the property for defects. Generally, the seller was liable only if it lied (for example, if it told the buyer there was no termite problem when it knew there was one) or it deliberately concealed defects.
Most states have abolished the “caveat emptor” rule and now require sellers to make full disclosure about the property to buyers. Though rules for which problems are required to be disclosed vary from state to state, generally what must be disclosed are "material problems" the seller knows about that affect the value of the home or its desirability — things a reasonable home buyer would want to know. If there is a question about whether a problem is serious enough to warrant disclosure, it's usually best to err on the side of caution and disclose it. Not only will this help shield you from future liability, it will also help show the buyer you are fair in dealing with him or her.
In many states, sellers are required to give buyers a written document, usually called a “disclosure statement,” listing defects in the home. As a recent case shows, if there are false statements in this document, the buyer may be able to make a claim and recover a large amount of damages.
Steve and Bonnie T. bought a home from another couple. After moving in, they discovered serious problems with the house. They made a claim against the sellers and were awarded money for repairs as well as the loss in value of the home. Evidence showed that before the couple put the house up for sale, they took steps to hide defects, including covering a crack with carpet. They had put in their disclosure statement that they were unaware of defects in the walls or foundation.
As this case shows, sellers should take steps to avoid potentially expensive legal problems. One way is to have the home inspected by a professional before putting it up for sale. Though this isn't required by law, it's a good way to discover potential problems. You can then decide if you want to fix the problems or lower the price of the home. If you choose not to make repairs, most states require you to disclose these problems to the buyer in order to avoid future liability.
Another way sellers can avoid problems is to make sure the buyer gets his or her own inspection report. This way, the buyer will be alerted to a defect and won’t be able to claim later that he or she was unaware of it. You should encourage the buyer to be present at the inspection.
Many sellers think they can protect themselves by selling their home “as is.” But in most states, selling a home “as is” just means the seller will not pay for repairs. It does not mean the seller can conceal known defects from the buyer.
Special Lead Paint Rules
Lead paint poisoning is a major environmental health hazard for young children. Many children get lead in their body by breathing in lead dust, touching lead-based paint and then putting their hands in their mouth, and eating paint chips that contain lead. Ingesting lead can result in many serious problems, including nervous system and kidney damage, learning disabilities, behavioral problems and low muscle and bone growth. Though children are more susceptible to problems from lead exposure, lead can be dangerous to adults too.
A federal law aims to reduce lead paint injuries by requiring home sellers to disclose if lead-based paint was used. The rules apply to all homes built before 1978, the year in which lead was outlawed in household paint. Among other things, the law requires sellers to:
1) Disclose to buyers any information they have about the existence of lead-based paint in the home. They must also give buyers copies of any reports from tests done on the home.
2) Include in sales contracts warning language about lead-based paint.
3) Give buyers a copy of a federally-approved pamphlet discussing lead paint hazards (this can be obtained from the U.S. Environmental Protection Agency).
4) Give buyers up to 10 days to inspect the property for lead paint.
Sellers who fail to comply with this federal law can be sued by the buyer for triple the amount of damages suffered.
Lawsuits between buyers and sellers over problems with a home are extremely common. Having the home professionally inspected before listing it, making repairs, and making sure buyers get their own inspection report can help sellers avoid problems. Sellers should also check with their attorney to find out what specific disclosures are required by state law to reduce the chance of a buyer making a successful claim for an undisclosed problem.
Contact an attorney at Triscaro & Associates today. Please call us for all your legal needs. We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.