I’m Eric Lanigan of Lanigan and Lanigan attorneys in Winter Park, Florida. In the first series of questions about the seller’s property disclosure form, I answered questions from the seller’s perspective. In this series, I will answer questions asked by buyers concerning problems that were or were not disclosed in the property disclosure form.
Lawsuits Can Result if Property Defects are not Disclosed
Q: What can I do if the seller didn’t disclose a very obvious problem like a leak that caused rain to pour through the roof or if they patched a hole or problem and I subsequently find the problem and the resulting damages?
Well the seller has made a huge mistake and we see this all the time. From the seller’s perspective, a little caulk, a little fresh paint a couple of patches on a roof that is obviously shot. All they’re doing is buying themselves a much bigger problem down the road.
Because I can tell you from experience the very first jury trial I ever did 35 years ago was defending the realtor in a situation where the home had been purchased. Several months after buying the house, the new owner decided to take out a wall they pulled up the drywall and are immediately inundated with a massive swarm of termites that are in the process of eating his whole house. And the lawsuit was then against the seller, the realtor, the home inspector all on the basis that they knew or should have known that this problem existed.
Now in representing the realtor, I probably had the easiest defense in that I was able to get the case against the realtor dismissed on the basis that their limited time within the home did not create a situation where they knew or should have known that the house had termite infestation. Ultimately, the inspector was dismissed from the case because they were able to establish that at the time they did the inspection there was no visible sign of termite damage or termites and when you do a home inspection you don’t knock holes in the wall to see what’s going on behind the drywall. And they had that type of exclusion in their contract.
But the homeowner in that case did get tagged because the wall that was torn down was part of something that they had put up and the buyer brought in an expert who was able to testify that the drywall was fairly fresh and given the extent of the damage that the termite damage was there when the new drywall had been put up. So with that evidence they were able to establish that the seller knew or should have known that he had termite damages.
And I can assure you that regardless of what it would have cost the seller to tent the house and treat it for termites, by the time that trial was over he had spent ten twenty maybe thirty times that in legal costs and then ended up with a judgment to do all the repairs anyway. So, if you’ve got a significant problem and you’re the seller, get it out there, get it fixed, it’s only going to cost you a tremendous amount more when the buyer finds it and you didn’t disclose it.
Withholding Information Can Result in a Lawsuit
The other thing is the extent to which you disclose it. I’ve had situations where somebody wrote on their disclosure somebody wrote sinkhole. And that’s all that’s said. Sinkhole. And they gave the person who was from somewhere out in the Midwest didn’t even know what a sinkhole was. But they disclosed the word sinkhole and they actually gave the lady, buyer, an engineering study of the sinkhole and said that the estimated cost of repair was going to be about $35,000 – $40,000.
So doing what she thought was reasonable, the buyer made an offer and built into the offer, reduced what she was willing to pay by $40,000 which had been given to her as the estimated cost of repairing the sinkhole. After buying the house and moving in, she brings out an engineer who looks at the report and looks at the property and tells her that he’s familiar with this property because he’s seen this report before because his firm is actually the firm that had ordered the report from the sinkhole specialist.
Then he told her that what she had was half the report and asked where the rest of it was. Well, she didn’t have it. They got it. And surprise what the rest of the report had is the work that would need to be done to get the property into a usable condition and the estimate of that cost which was $325,000 and this is a property that on it’s best day would be valued at around $250,000.
So although they made the disclosure they clearly committed fraud in that they committed fraud by omission. It’s what they left out, what they failed to disclose in part of their disclosure that created the deception and as a result they will end up owning that property again and the buyer will recover all of her purchase price.
In the second part of this series, I will answer some questions about the buyer’s liability and what to do when you discover a problem.