Can A Buyer Sue a Seller for Non-Disclosure of a Defect?
Imagine this scenario: After months of searching, you locate the perfect home for your family. It’s the right size, it’s in the right neighborhood, you love the yard, and the price fits your budget. You put in an offer, are approved for a mortgage, and proceed to closing. After moving into the home, you discover evidence of a roof leak. A roofer tells you it will cost several thousands of dollars to repair, and you’re understandably upset. Now you wonder whether you can sue the seller of the home for non-disclosure.
The answer to that question seems simple on the surface: in most cases, you cannot. Once you have signed all of those papers on closing day, the home is yours – in whatever condition it happens to be. That’s why it’s so important to obtain a home inspection, consult with a real estate attorney if you have questions or concerns during the process, and check out every aspect of a property before proceeding with your purchase. In the vast majority of these cases, you will not be able to sue for alleged non-disclosure of a problem with the property.
There are, however, some exceptions to this general rule. California law is very strict with regard to disclosures, requiring sellers to disclose everything that “might reasonably affect the value or desirability of the property” – that’s the standard. Do you have evidence that the seller knew of the issue and failed to disclose it? Remember that the burden is on the buyer to prove that fact. In order to sue for non-disclosure, a buyer must be able to prove active, intentional concealment of a defect. If the defect was right out there in the open and you simply failed to discover it before taking possession of the property, then the mistake is all yours.
If you do believe the seller engaged in purposefully deceitful behavior, which prevented you from discovering a problem, then you might have good cause for a lawsuit. These cases are tricky to prove, however, so seek the counsel of our real estate attorney before attempting to proceed in court. There are also procedural issues. The standard California purchase agreement requires that you mediate any claim first, before proceeding with litigation (or mandatory arbitration, if that provision of the contract is initialed), or risk losing the right to recover attorney fees if one fails to do so. There is an exclusion to that requirement for claims that fall under the small claims limit, which is currently $10,000 in damages for an individual. The bottom line is that there are multiple considerations if a buyer believes that he/she has been deceived by a seller in the purchase of a home. Do not head down that path, with its many pitfalls, without first consulting with a real estate attorney.