Sellers Duty to Disclose Material DefectsIn any residential commercial transaction a seller has a duty to disclose any material defect with the property. What is a material defect? Material defects are anything which would impact the desirability of the home. This is judged from the buyers perspective. A buyer who would have otherwise refused to consummate the deal would be entitled to a claim for damages. For example if you were sold a house and the seller failed to disclose that mold exists on the property and that fact would have terminated the deal you would be entitled to damages. Many sellers will argue that “based on the price it was obvious that something was wrong with the property” or that they “told the seller of the defect”. Price will not alone be determinative of this issue. In fact getting a good price is not sufficient to show that there was a defect in the property. Ultimately the seller will be responsible to make disclosures regarding the property. They have a duty to make these disclosures even if they were not found during inspection. Failure to do so will hold them liable for bad faith in business dealings. This will allow the buyer to take legal action to recover for their losses. Sellers must make sure to disclose facts even if they were not determined or found during routine inspections. A seller will not be absolved of responsibility simply because a buyer had an inspection conducted. Sellers must make sure to disclose any and all material defects to the buyer. If these defects are property disclosed then the seller is not liable. However, in most cases sellers fail to make proper timely disclosures.
How Long Do I Have To Bring a ClaimIf a seller fails to disclose defects, it would be considered fraud. Under California law the statute of limitations for fraud cases is 3 years. Generally the cause of action for failing to disclose is for fraud. When you assert fraud you have 3 years to bring forth your cause of action. This time period begins from when you have actual notice of the defect. For example if you purchased the home three years ago and recently found out about the fraud or concealment, you will still be able to bring a claim for damages. The statutory time period generally does not begin to run against you until you have notice. Notice can be constructive or actual. Constructive notice refers to notice found from your own investigation. However, in most non disclosure cases involving real estate the buyer does not have constructive notice until much later. Actual notice, applies to when you knew of the defect. Generally home buyers will not have notice of the defect until a later time. Depending on the type of defect most cases will allow you to toll or delay the running of statute until you have notice of the defect.
Learn more about your options for compensation by calling (213) 389-3765.
What If I Purchased the Property As Is?As is purchases of real estate DO NOT act as a waiver. Simply because you purchase a property as is does not mean that seller will not have to disclose defects which they are aware of. Many court rulings have stated that an “as is” clause does not alleviate a seller of disclosure duties. In Loughrin v. Superior Court courts ruled that not disclosing defects which are not visible, even when the property is sold as is holds the sellers liable. You are not permitted to contract your way out of this duty to disclose. In fact the Supreme Court has ruled on this exact same issue.
Recovering for My Damages – Home Purchase Failure to Disclose LawsuitsYou are entitled to recovery for your damages. Damages essentially determine the value of the claim. In order to properly asses the value of the claim we consider a number of different factors. If you want a free case value evaluation contact us with the following information:
- Value of the property
- Type of defect
- Cost of repair
- Length of time before purchase
- Any facts which can be used to prove your case
- Any other expenses incurred
Real Estate Agent LiabilityIn most cases a real estate agent can also be held accountable when there is fraud. However, the statute of limitations applies differently to brokers and real estate agents. In such cases there is a 2 year time limit to bring your claim. This period begins to run from the moment of possession or occupancy of the property. A broker or agent owes certain duties to prospective purchasers or buyers of property. If the agent had knowledge through his communication with the seller of these defects, then he will be charged with a duty to disclose it. Failure to do so will hold the broker agent liable.
Types of NondisclosureHere is a list of the different types of non-disclosure issues.
- Non disclosure of leaky roof
- Seller non disclosure of toxic mold
- Seller non disclosure of past flooding
- Seller non disclosure of structural defects