Buying a home is often the biggest investment a person will make in their lifetime. The decision to own a home involves weighing many factors such as affordability; proximity to work; quality of children’s schools; as well as features of the neighborhood such as walkability, crime rates, and demographics. Once the various factors are considered and evaluated, house hunting can begin in earnest. Obviously, the decision of which home to purchase can be complicated.
Sometimes the search is easy, with the first home checking all the boxes. Most of the time, the search for a home involves spending time and effort finding what will work and which concessions are doable. Buyers should carefully weigh whether to invest in a newer home or a so-called fixer upper. Although personal preference may inform that decision, sometimes emotions can play an outsized part. Getting attached to a home on first sight can happen. However, home buyers are well advised to think practically about whether their financial resources and repair skills are up to the task of taking on an older home or one with obvious need for repairs.
What is Due Diligence?
A legal concept called caveat emptor means buyer beware. Applied to home purchases, it stands for the idea that a buyer is responsible for learning of any defects of the home. Due diligence involves the home buyer using the time before a contract for sale is executed to ensure the property is sound. It is up to the home buyer to figure out whether the property is as advertised and to evaluate it for any detectable defects that were not already disclosed by the seller. A seller may indicate that the property is in good working order. However, there may be some underlying issues that either the seller does not realize or that the seller has decided not to disclose. It is best if these issues can be uncovered using due diligence.
Typical due diligence practices include obtaining an appraisal to ensure the price of the property reflects the current market value of the property. Mortgage companies typically require an appraisal be performed before authorizing a loan. An appraisal is a good idea even if the home will be bought with cash. Another practice is to have the property inspected by a qualified home inspector. The inspection is performed to determine whether there are any undisclosed defects or problems that could require repairs that would negatively impact the property value.
What Happens during an Inspection?
A home inspection professional has the experience and credentials necessary to perform an on-site inspection of a residential property. They can find problems that may not be obvious on visual inspection. A contract to purchase a home will usually include a home inspection contingency clause after a buyer makes an offer and puts down a good-faith deposit. The clause allows the buyer to back out of the contract based on the home inspection findings. The buyer is given a certain number of days to arrange for an inspection. The inspector prepares a report stating findings of the condition of the real estate. It describes any major identifiable problems such as defects in the foundation, roof, HVAC, plumbing, or electrical system. It may also report pests or environmental contamination such as radon or mold.
Following the inspection and based on the findings, a buyer can request the seller either repair defects or adjust the purchase price. A negotiation usually ensues before the contract is signed. If the negotiation fails to resolve differences, the contingency clause allows the buyer to back out of the sale. The seller refunds the deposit to the buyer, and the contract is void.
Most states require sellers to advise all buyers of material defects through completion of a standard disclosure form prior to sale. When this is a requirement, it applies to all sales, even when a buyer buys a home as-is.
What Happens if I Find a Defect after the Sale?
The due diligence process is not always perfect. Sometimes problems come to light days, weeks, or even years after the sale. Homeowners wonder if they have any recourse other than paying to make the necessary repairs. Sometimes they do. It will depend on the type of problem and whether one or more of those involved in the contract failed to live up to their responsibilities.
Most states require home sellers to disclose all material defects to prospective buyers. In addition, home inspectors are required to identify and report material defects of the visible and accessible structure, systems, and components of a residential property. Some states impose liability on sellers’ real estate agents for failure to disclose problems they observe. If these parties failed to disclose defects and/or lie about them, the buyer might be able to seek compensation to pay for repair costs.
The International Association of Certified Home Inspectors (InterNACHI) has adopted standards for residential home inspections. It defines a material defect as a specific issue within a system or component that may have a significant adverse impact on the value of the residential property or that poses an unreasonable risk to people.
Material defects are different than normal wear and tear. A system nearing the end of its working life is not considered a material defect. It is part of normal and expected wear and tear. Accordingly, if an owner’s old air conditioning unit breaks down from normal wear and tear, he or she is responsible for paying costs to fix or replace it. Neither the seller nor the home inspector would have had any responsibility to the buyer on failure of the unit.
Material defects need to be detectable for a home buyer to have a chance to recover from a responsible party for costs of repair. A fault in wiring or plumbing behind walls that is neither evident nor detectable at the time of sale would be the responsibility of the owner to fix.
Legal Requirements for Recovery
For a buyer to prevail in a case involving home defects, they must be able to establish a number of facts. First, that the condition existed at the time of purchase. Second, that it was not an obvious defect that could have been detected on purchase. In addition, either no one told the buyer about the defect, or it was concealed from the buyer. The buyer must also show that they relied on the representations of the condition of the property, and they incurred monetary damages from that reliance.
The legal theory of the case can be one or more of the following:
- Breach of contract
- Failure to disclose
Buyers have a limited time after purchase to bring a claim. In most states, that is within from two to 10 years after purchase. A skilled lawyer familiar with the laws and practices of the state where the real estate is located can evaluate the circumstances of the case and pursue the best options for seeking to recover damages.
Towson Real Estate Lawyers at Huesman, Jones & Miles, LLC Protect the Rights of Homeowners
If you have purchased a home in which material defects were not disclosed as required, the experienced Towson real estate lawyers at Huesman, Jones & Miles, LLC are ready to help recover costs of repair. For more information and 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.