I’m Eric Lanigan of Lanigan and Lanigan attorneys in Winter Park, Florida. In this final series on the seller’s property disclosure form, I will explain the seller’s liability for nondisclosure and what, if any, liability the home inspector has.
Liability and Damages Related to Seller’s Disclosure
Q: Can I be sued and have the home sale cancelled or will there be a lawsuit against me for damages?
That goes to the issue of damages versus rescission. Rescission – put everybody back where they were before the deal was made – is going to require fraud in the inducement. And fraud is the intentional misrepresentation of fact or the intentional omission of material facts that induced the buyer into buying the property.
In that type of situation, rescission is a potential or alternative remedy. Generally, the lawsuit will be for damages. What’s going to be the cost of repair or what is the diminished value of the property? Because you may get something that a repair is not going to put the property in the same position as it would be if the damage didn’t exist and in Florida probably the number one example of that is sinkholes.
There are many people in the engineering field who will tell you that there really is no such thing as a guaranteed fool proof sinkhole repair and I think almost any realtor will tell you that once a property has sinkhole damages it is the property equivalent of a leper. Nobody’s going to get anywhere near it. They’re going to immediately going to say drive on I don’t want anything to do with a sinkhole property.
So if it’s a sinkhole property, that’s the situation where you’re going to start seeing that the damage claim is going to be diminished value because in most people’s opinion even doing the repair is not going to put the property value where it would be without a sinkhole.
Does the Home Inspector Have Any Liability?
Q: What if I used an incompetent inspector? Can I sue the inspector?
Yes, you can. What you need to be very careful of is the agreement that hires the inspector.
Whether you hire the inspector or the other party to the transaction hired the inspector, you need to know what exemptions or exclusions has the inspector put in their contract because I’ve seen contracts written for inspectors that while they’re doing the inspection, the exclusions are so comprehensive and so broad that they’re basically not liable for anything. Which begs the question why even bother to hire them if that’s the case?
So, you want to look and see whether you are the person who hired the inspector or you are merely the recipient of the inspector’s report. What exclusions are there in there? And for instance if you’re the homeowner and you hire the inspector what is your liability for what they do and if you’re the buyer and you didn’t hire the inspector, somebody else did, the seller did, what right do you have to pursue against somebody you didn’t even hire.
So, you need to make sure you understand to whom is the inspector contractually liable and what exclusions have they put in their inspection contract.
If you are a buyer or seller with legal concerns about the seller’s property disclosure form schedule a legal consultation with a licensed real estate attorney.