Honesty isn’t just the best policy. It’s actually very often the only lawful way to go. A common occurrence in the real estate world that enters the legal realm is nondisclosure of property defects. While in many cases the seller was aware of the problem and did not disclose it to the buyer, there are many circumstances where the seller was unaware of the problem when they sold the property and is now being sued for damages. Most states require a formal property disclosure during a sale and California is no exception. Regardless of which side you’re on in such matters, it’s important to know your options for legal recourse to secure the best outcome in your case.
What is Considered a Property Defect?
There are lots of things that may fall under the category of a property defect. Obvious things may include electrical problems, but even chips in paint or barely noticeable flaws in things like wood cabinets are expected by some to be outlined in a property disclosure. These are known as “material facts” or “material defects”, meaning that they have the potential to make the property less valuable to the seller.
Other things include if a death occurred in the home. California does offer a loophole on this issue, however. The incident must have occurred within three years of the offer placed on the property. Technically, a property could be the site of a mass murder and the seller would not have to legally disclose it if it hadn’t occurred within three years.
Purpose of Property Disclosures
Assuming you’re not facing a case at this time, knowing now the importance of being proactive is the best course of action, whether you’re a seller or a buyer. Many sellers see property disclosures as simply a burden, and they certainly can be. However, property disclosures are a way to protect buyers. Respecting the disclosure as just that is important in understanding all the reasons why being thorough is important. If your septic system is having major issues, it’s obviously worth mentioning. However, even minor issues are worth mentioning like a window that doesn’t shut just right or a small ding you put in the wall with a ladder when you were fixing a light fixture. It’s pretty common when some little things fall between the cracks, but generally it’s the big things that cause lawsuits. This doesn’t mean it’s worth trying to hide those little things to make a sale. If anything, you should be as thorough as possible for peace of mind and being an honest person if nothing else. However, trying to hide a case of black mold or a foundation rotting with termites is what is going to destroy you in the end. This isn’t always the case though. Many sellers are not aware of the problems and still end up getting sued. This is why hiring a professional inspector is so important.
If you’re the buyer in this situation, make sure the property has been looked over by a certified property inspector. If you have a trusted inspector, that is usually the best course of action. If the seller insists on using their own, make sure the inspection has been done professionally. On higher value property especially, it’s not unheard of for the seller to request more than one inspection. See the property disclosure as your protection and your assurance of peace of mind.
If you’re already involved in a case where you are either being sued for a property sale or looking at suing someone else for nondisclosure of property defects, it’s important to know the potential consequences and the correct course of action for either situation.
Potential Consequences of Nondisclosure of Property Defect Cases
There are many potential consequences of nondisclosure of property defects to a buyer. If found guilty, the seller may be responsible for damages. This includes:
- Paying for repairs of the defect or defects and any damages that may have resulted from not immediately disclosing the problem.
- Paying any attorney fees and costs associated with the lawsuit paid by the buyer.
- Taking back the house in the event the court invalidates or “rescinds” the sale. This is rare, but it can happen.
- Paying additional “punitive” damages intended to further punish the nondisclosure. This only happens if it was very clear the seller maliciously hid the problem from the buyer and the nondisclosure is viewed as an act of fraud.
The consequences can be very severe in some cases, particularly with property that is very expensive. Regardless of which side you represent in a case, it’s important to know the correct course of action to take.
When Being Sued for Nondisclosure of Property Defects
Collect all relevant documentation pertaining to the selling of the property. If you hired an inspector that did not notice the problem, this may be grounds in defending yourself. Prior to hiring an attorney, be very careful in how you speak with the buyer. Just like being arrested, anything you say can and will be used against you. If the property defect only caused minor problems, it may be worthwhile to settle the issue out of court. Otherwise, lawyer up.
When Suing for Nondisclosure of Property Defects
Similar to when being sued as a seller, as a buyer, be very careful in what you say to the seller. Review all the documentation pertaining to the sale, particularly any inspection paperwork. Any recorded information regarding the state of the property made by the seller can be used against them. Get an attorney immediately if the seller is unwilling to resolve the issue or the matter has caused severe problems.
Hiring an Attorney for Nondisclosure of Property Defects
WB Law Group is a reputable business litigation firm with experience in matters involving California real estate law, such as nondisclosure of property defects. If you feel you need legal representation, we are happy to review your case and provide consultation.
For questions, or to schedule a consultation, contact us today at 559.431.4888 (Fresno) or 619.399.7700 (San Diego).