Real estate law is complex because the purchase and sale of property involves contracts covering a variety of necessary agreements from both buyer and seller. When clients enter into a contract of any sort, both sides agree to certain responsibilities and attest that specific conditions will be met. From a buyer’s perspective, this includes making a payment arrangement.
If the buyer fails to make payments as agreed, they are in breach of their contract. For sellers, it works the same way. When selling a property, the contract should clearly define what the buyer is receiving and its condition. This is where property disclosures come into play. If a seller neglects to disclose known defects, there could be legal issues as the failure to disclose can be determined to violate the seller agreement.
What is a Property Disclosure Statement?
A property disclosure statement is a legal document to disclose certain information to the buyer. Information that must be disclosed varies from state to state and can cover a range of issues, but typically includes material defects and any other problems that affect the property.
In many areas, property owners can be held legally liable for failure to disclose any information prior to the sale. Sellers can find themselves facing serious legal challenges if they do not exercise caution and ensure that property information is both complete and accurate.
What are Property Defects in Real Estate?
Property defects can refer to any number of real estate issues. Essentially, a property defect is any flaw, damage, or prior history that could negatively impact a property’s value.
Common examples of property defects include:
- Foundation damage or cracks.
- Broken, damaged, or leaking roofs or ceilings.
- Pest issues, like an infestation of rodents, roaches, bedbugs, or termites.
- History of flooding or flood damage in the home.
- Any natural hazards applying to the property location, like being in a flood zone or on an earthquake fault line.
- Toxic conditions, like asbestos, mold, or lead paint, in walls and ceilings.
- Deaths on the property having occurred within a specified time period, depending on state laws.
- Any electrical or mechanical problems, including heating and cooling defects or faulty wiring.
Do I Have to Disclose Property Defects When Selling My Home?
Both sellers and listing agents have a legal duty to disclose latent defects in a property and can be held liable for failing to do so. Latent defects refer to issues that may not be immediately observable but are reasonably discoverable by the owner.
In some areas, the seller may not only be required to disclose known defects but could be legally responsible for uncovering any defects prior to selling that a buyer could encounter after purchase. Essentially, this means that ignorance of defects does not necessarily remove liability from the seller when they could have reasonably identified them. For this reason, it is a good idea to be diligent in identifying potential issues prior to listing a property for sale.
Suing for Failure to Disclose Property Defects
Lawsuits for failure to disclose property defects are a common form of real estate litigation. Both buyers and sellers should take care to learn about the law prior to entering into a real estate contract. If a buyer discovers issues after the purchase that should have been disclosed, they may pursue legal action. There are, however, multiple considerations to take into account when considering a lawsuit for property defects.
These types of lawsuits are typically geared toward covering the cost of repairs or replacements related to the specific defect but could include additional damages. A buyer can make the case that they are not responsible for repairs of pre-existing issues if they were not made aware of them before closing.
It is worth noting that there are some factors that buyers need to consider before filing a lawsuit:
- A buyer cannot sue for new defects. The purpose of a disclosure form is to ensure that the buyer is aware of any issues affecting the property’s value before signing the paperwork at closing. It is not a guarantee that the property will remain in any certain condition. Therefore, a buyer cannot sue a previous owner or real estate agent for defects that occur after the sale.
- A buy cannot sue for defects that the buyer was aware of before closing. If the buyer knows about an issue before closing, whether it is on the discloser form or not, they knowingly made the purchase and would have trouble arguing that liability is with the seller.
A buyer may opt not to sue because of the following:
- The repairs are inexpensive. Lawsuits are often brought to cover repair costs, but if filing a suit costs more fixing the defects, many homeowners will choose to pay for the repairs themselves.
- The repairs are covered by insurance. Insurance will not cover all property defects and damages resulting from them, however, issues that are covered may be easier and less expensive to address through insurance rather than through the courts.
- Proving their case can be challenging. Proving that the seller knew about the defects prior to closing and that the buyer discovered them after can be challenging. Some buyers may opt to avoid the lawsuit altogether.
Whether one is buying or selling, it is important to understand the legal steps to ensure that the buying and selling process is as smooth as possible for everyone involved. If questions about liability and disclosure arise after a sale, the advice of a knowledgeable lawyer can be invaluable.
Towson Real Estate Lawyers at Huesman, Jones & Miles, LLC Help Clients Find Answers to Complicated Real Estate Problems
Our Towson real estate lawyers at Huesman, Jones & Miles, LLC offer a variety of services and real estate legal advice designed to give clients the best outcome in their case. If you are dealing with real estate litigation, you probably have questions. We have answers and are available to help you find solutions. For a free consultation, complete our online form or call us at 443-589-0150. Located in Hunt Valley and Towson, Maryland, we serve clients throughout Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, and Howard County.