What to do if a seller didn't disclose a problem
Buyers rarely believe that the home they are considering buying is in perfect condition, but they also expect that they will have a good sense of any flaws. Not only will a professional home inspector be able to point out any problems, but a seller is required to honestly provide information about the issues they have faced while in the residence.
Unfortunately, buyers can still be surprised by a faulty electrical system, waterlogged basement, or other problems after they move in. In some cases, the seller may have been unaware of a flaw; it might even be a new problem that only arose they left the property. But a buyer might also suspect that the seller actively tried to conceal an issue to help make the home seem more appealing.
Buyers who believe a seller has failed to disclose a problem have a few options for redress. These range from backing out of a deal if the issue is discovered early enough to filing a lawsuit.
Seller disclosure laws can be a fickle thing. The only disclosure required by federal law relates to lead paint, which was banned in 1978. Elizabeth Weintraub, writing for the financial site The Balance, says buyers will also get a 10-day period to conduct inspections for lead paint if they so choose.
Beyond that, each state will have its own requirements. Warren Christopher Frieberg, writing for the National Association of Realtors, says this can result in some strange disparities across state lines. Sellers in Kansas City have to disclose the former presence of a meth lab in the home if they know about this criminal activity, but only on the Missouri side of the city; Kansas state law does not mandate this type of disclosure.
A variety of other issues may also require disclosure by the seller. These include neighborhood nuisances or disputes, deaths that occurred on the property, pest infestations, and drainage issues.
The disclosure form for Connecticut home sales is more basic. It asks the seller to disclose issues such as whether the home is in a flood zone; whether an underground fuel tank is present; problems with the HVAC system, plumbing, or other home systems; roof leaks; land use restrictions; and the presence of any leased items.
Moreover, this disclosure form is optional, not mandatory. A seller can choose to omit it in exchange for granting the buyer a $300 credit at closing.
Sellers are typically encouraged to be as transparent as possible with any potential buyers. Jeanne Sager, also writing for the National Association of Realtors, says disclosures can help reassure a buyer that the seller has been keeping up with home maintenance and is being honest in any information they are providing.
Sellers may be willing to provide a record of any repairs and upgrades they have completed at the home. While this record may not show every minor improvement made on the property, it will show more significant work such as the replacement of a roof.
If a buyer discovers a problem with the property that the seller has not disclosed, they should first check to see whether the seller could have reasonably known about it. Will Van Vactor, writing for the legal site Nolo, says sellers may indicate on a disclosure form that they do not know whether there is a problem with a system. Connecticut's form stresses that sellers are not expected to have knowledge of the condition of some home features and systems, and that the buyer is responsible for inspecting them if they so choose.
In some cases, however, you may suspect that a seller omitted information about a flaw that might have affected the transaction. For example, a buyer might be skeptical that a seller was unaware of a faulty water heater since they would have noticed the lack of hot water whenever they tried to take a shower. A buyer might also discover attempts to conceal any problems, such as cracks that have been covered by a false ceiling or mold that has been painted over.
One option for buyers who have not yet closed on the transaction is to simply back out of the deal. Contingencies in the contract may even allow the buyer to recover any earnest money they have deposited. While they will likely be disappointed to resume their home search, they may also be glad to cease working with a seller they consider to be dishonest.
A few circumstances have to be present for a buyer to demand compensation from a seller if they discover a problem after a purchase. Ilona Bray, also writing for Nolo, says the defect needs to have been present before the sale and that it can't be obvious enough that a buyer should have spotted it. A buyer may also be able to show that they relied on faulty information from a seller, that inaccurate information was provided, or that they suffered monetary damage. The buyer may also be able to show that the listing agent or home inspector were culpable in failing to disclose an issue.
While these conditions can be grounds for a lawsuit, a buyer might want to try other avenues first. They can send a demand letter to the seller asking them to cover the costs of any necessary repairs. Remediation may also be able to resolve the conflict.
Before filing a lawsuit, a buyer should consider whether the legal costs will outweigh any financial benefit they might see. Sager says the litigation might demand damages as well as a sum equal to the difference between the amount of money the buyer paid for the property and its fair market value.
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