What To Do If The Seller Or The Broker / Real Estate Agent Has Misrepresented The Condition Of The Home?

If you’ve recently purchased a home only to discover that it was misrepresented by the seller or their agent, you may be wondering what the next course of action is. In this article, we will take a broad look at issues relating to a property sold with undisclosed defects and what actions buyers can take.

The Need for Disclosure on a Property’s Condition

One of the most important obligations in a real estate transaction is for the seller to disclose any issues with their home or property before finalizing a sale to a buyer. This can include the condition of the home as well as related concerns, such as neighborhood nuisances and environmental hazards. Many states require sellers to complete a disclosure form from the states real estate commission with a detailed description of issues relating to the home sale.

Unfortunately, some sellers mistakenly try to hide issues in an effort to maintain their homes price. Often, this can be aesthetic issues such as water damage from a leaking roof, but structural issues can put the buyers life in danger. For example, a cracked foundation can shift over time and weaken flooring.

The Importance of a Home Inspection Before Closing

While not all problems can be found or known by a seller, it is usually their responsibility to have the home properly and professionally inspected before selling a home – unless the home is sold in “as is” condition. Buyers will often push for a proper inspection and if defects are found, the repairs can be addressed by the seller or fixed by the buyer (usually as a discount added to the closing price).

What Can Buyers Do?

If issues are not discovered until after the home is sold, the buyer has the option to sue the seller for damages and other costs. Arbitration is also another course of action, as legal proceedings in court can be lengthy and prevent buyers from receiving compensation for a faulty property. In some cases, the seller may be required to buy back the property from the buyer and reimburse them for costs relating to their failure to disclose.

Buyers who believe they were misled should consult a real estate attorney as soon as possible. A real estate attorney will advise the buyer on the proper course of action depending on state laws and what types of recourse is available.

In actuality, it is in the best interest of both parties to hae a real estate attorney present for a home sale before closing, as this can prevent sales going wrong in the first place.

Real Estate Brokers and Disclosure

Legal proceedings can quickly become complicated if real estate agents are involved, especially those that may use their own choice of inspectors that choose to overlook issues to expedite a home sale.

Real estate agents and brokers are bound by state laws on how they disclose their knowledge of property issues. The relevant rules may be found in state statutes or administrative regulations governing real estate transactions, as well as guidelines for ethics in a real estate agents’ professional conduct. Violating these may lead to the agent losing their real estate license and being the defendant in a legal battle against the buyer. Or, the buyer may seek damages from the seller, who in turn sues the broker.

However, most states will hold the seller accountable unless they were deliberately misleading. Only California requires agents to fill out an Agent Disclosure form. Other states, such as Oklahoma, require the broker to make sure the home seller’s disclosure statement and any amendments to it are available to any potential homebuyer.

It’s important to remember that not every state in the United States requires seller disclosures. For example, home sellers in Wyoming do not need to give buyers a formal disclosure statement; instead courts enforce caveat emptor clauses (“let the buyer beware”) in these types of purchase contracts.

As you can see from these examples, state laws tend to regard brokers’ disclosures as a backup. The liability generally falls on the seller for defects to the home. These defects not disclosed can fall into what the seller may have failed to mention, but may also include defects that are forgotten or have become blind to after living in the home for years.