The home buying experience can be an overwhelming experience that can be exhilarating, fun, stressful and exhausting. The process of securing a mortgage, successfully bidding on a home and completing the transaction can be lengthy, complex and involve seemingly endless professionals. Those professionals may include a buyer’s agent, a loan officer, a home inspector, title […]
Your legal rights of something isn’t disclosed during a home sale
Every state has laws that govern what should be disclosed during a home sale. Even if the home is sold “as is,” the seller still has to disclose issues like lead paint, asbestos, and other problems. That’s why disclosure forms cover everything from the roof to the foundation.
If you notice that the home has a severe problem that the seller didn’t disclose after you move in, you may wonder if you hold the seller liable? What are your rights?
Know the disclosure laws in your state
Federally, there are few disclosure laws other than requiring that sellers disclose lead-based paint and hazards if the home was built before 1978. Otherwise, what is considered mandatory disclosures are up to the states, which vary from state to state.
Here’s a quick overview of disclosure laws in states where our agents are licensed.
In California, seller disclosure requirements are typically more strict than other states and include not only federal requirements, but:
- Natural Hazard Disclosure Report/Statement that disclose whether the property is in a special flood zone, forest fire risk, or earthquake fault zone.
- Structural information about the home.
- Any deaths on the property in the last three years.
- Information on all appliances in the home, including which are included in the sale and their condition.
- Room additions
- Damage to the home
- Neighborhood noise problems
- Information regarding the location of registered sex offenders.
In Colorado, sellers must disclose whether the property is in a special taxing district, as well as details about the community and where the buyer can obtain further information. Other laws include:
- If the property has been used as a methamphetamine laboratory, but it’s not required if it’s been fully remediated.
- The home’s source of drinkable (potable) water.
- Any proposed transportation projects that affect, or are expected to affect, the property.
- Specific information regarding mineral and surface estate rights.
- Oil and gas activity.
In Florida, the seller of coastal properties must disclose the potential for erosion and any regulations regarding construction, coastal protection structures, beach nourishment, and other environmental protection regarding endangered species.
- Dangers of radon gas, including radon reports.
- HOA or condo information regarding mandatory membership, fees, assessments, rules, and other documents.
- A property tax summary stating that a buyer shouldn’t rely on the seller’s current property taxes as the amount the buyer may be obligated to pay in the year subsequent to purchase.
- Any conditions about the property that may have a substantial impact on its value or desirability that the buyer cannot easily see themselves.
In the past, Illinois sellers weren’t required to volunteer information about the property to buyers but the law has worked to close this oversight. As such, sellers must give buyers a written list of all known material defects that affect the value, health, and safety of the property. These defects include:
- Past flooding and flood risk.
- Environmental issues like radon and mine subsidence.
- Municipal code violations.
- Boundary line disputes.
- Defects in specified structures, components, and systems.
All of these disclosure requirements must be presented to the buyer before they sign the sales contract.
In Kansas, all adverse material facts that the seller knows about must be disclosed to the buyer. These include, but aren’t limited to:
- Environmental hazards.
- The home’s physical condition, including the condition of systems like heating and cooling, and electrical.
- Any material defects in the property itself.
- Any material defects in the property title.
- Any material limitation on your ability to follow through with the terms of the purchase agreement.
- Boundary disputes
- Flooding risks
Unlike in other states, Kansas doesn’t have a single specific disclosure form, nor does it state what areas or aspects of the property require disclosure.
Michigan has a standard disclosure form, the Seller Disclosure Statement, that sellers are required to use. This statement includes disclosures like:
- The condition of the property, including appliances, roof, basement, and HVAC systems.
- Encroachment issues
- Environmental issues
- Pending legal issues
The state doesn’t require sellers to disclose if the property is stigmatized.
In Missouri, a few statutory sections specifically discuss disclosures sellers must make. Specifically:
- If the property is/was used as a site for methamphetamine production.
- If the property contains a permitted or unpermitted solid waste disposal site or demolition landfill, and its location.
- Lead-based paint or other sources of lead if the home was built before 1978..
The state also has the “Missouri Merchandising Practices Act” that makes it unlawful to use “deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce or the solicitation of any funds for any charitable purpose.”
In Ohio, sellers must disclose the following:
- The source of water supply to the property
- The nature of the sanitary sewer system
- Past and present water problems, including leaks and flooding
- Roofing problems
- Electrical problems
- Past and present pest problems
And more. In some cases, sellers are not required to complete a disclosure form. Namely, if it was a forced sale, a transfer from one co-owner to another, or a home transferred to the buyer via inheritance but hasn’t been occupied within the last year.
Much like Ohio, sellers in South Carolina must disclose:
- The water supply and sanitary sewage disposal system.
- The roof, chimneys, floors, foundation, basement, and other structural components.
- The plumbing, electrical, heating, cooling, and other mechanical systems.
- Past or present, unrepaired infestations of wood-destroying insects or organisms.
- Any restrictive covenants.
If there is a rental, rental management, vacation rental, or other lease contract in place on the property at the time of closing, it must be disclosed as well. This includes any outstanding utility charges owed by the tenant.
In Texas, disclosures need to be filled out “to the best of seller’s belief and knowledge” and given to the buyer on or before the effective date of the property purchase contract. If not, the buyer can terminate the deal within seven days of receiving it.
Otherwise, sellers must fill out whether the property:
- Has specific elements, like a pool, and its condition.
- Has any known defects.
- Has had prior problems and its repairs.
- Has a history of termite and other pest problems.
- Has evidence of radon gas and other environmental hazards.
Contact an attorney and your real estate agent
Your next step after discovering a problem with the home that was not disclosed is contacting an attorney specializing in real estate law. You will also need to notify your real estate agent. They’ll be able to help you determine your legal obligations and rights. They will also review your home sale contract, including the disclosure form, to determine if those problems were present/acknowledged previously.
Then, they will work to identify the potentially responsible parties. This could be the seller, the home inspector, or the listing broker.
The responsible party could be held liable for damages
Did you get a guarantee from the seller or inspector that all was well with the home and the inspection? If so, you could pursue damages so the seller will fix the problem. If it turns out that the sellers knew about the issue and lied about them, you could take them to court for fraud. The seller cannot be held liable if a new defect appears after the home was purchased though, so you will need to make sure you can prove this.
You can request that the purchase be rescinded or repairs made
There are ways you can settle without bringing it to court, including writing a letter outlining the defect, the reasons you believe the party is responsible, and your desire to resolve the problem. If an agreement cannot be reached, you can seek mediation.
If you decide to sue for misrepresentation and the court rules in your favor, the responsible party can be responsible for the following:
- Repairing the defect
- Paying for your legal fees
- Punitive damages in the case of fraud
Thankfully, cases of intentional non-disclosure aren’t common. Sellers usually want the home to be sold as problem-free as possible. They aren’t interested in getting caught up in legal disputes. When purchasing a home, do your due diligence and research the house to make an informed purchase. Also, it’s rarely in your best interest to waive the inspection, which does sometimes come up as an option in competitive housing markets. Your home is the biggest investment you are likely to make, and you want to make sure you’re happy with it.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.