Steps to Take if A Property Seller Conceals a Defect

GOMEZ LAW, APC Oct. 10, 2018

There can be a scenario wherein someone buys a dream home but soon realizes that there is a defect in the property, which was not disclosed by the seller. Such instances can make you feel cheated and disgusted. A leaking roof or a malfunctioning plumbing system can be examples of defects that you may notice after moving into a new residence. You may end up incurring plum bills to fix the issue. Now, it is important to understand that paying such bills is not your responsibility if the seller concealed the defects. You can also file a lawsuit to ensure fair compensation for the damages incurred.

Sellers Required to Make Written Disclosures Regarding Defects

According to California law, a seller must share true and real disclosures regarding their property with a buyer. Anything that may dissuade a buyer from making the purchase should be disclosed in writing at the very outset. These vital details about a property are commonly called “material” facts, and a property seller may have to face harsh penalties if any of these facts is not disclosed on time.

Defining Material Facts in California

The information about a housing facility’s walls, floors, insulation, roof, doors, windows, building foundation, sidewalks, boundary walls or fences, electrical systems, plumbing systems, and other structural elements comprises material facts. It basically means that any fact of the concerned property is a material fact and it can affect the value of the property or its desirability for a potential purchaser.

Under California law, a seller must disclose the material facts by completing a “Transfer Disclosure Statement” form. Through this form, the current status or condition of a property is described accurately. Before you decide to sue your seller, you should minutely verify the TDS to see if a defect that is upsetting you now was actually disclosed by the buyer or not.

Proving the Seller Hid a Defect

Once you are sure that the seller kept a known defect secret, you have the right to sue them for deceitful misrepresentation. Proving the seller’s fault in concealing the defect would be easy if you have sufficient evidence. For instance, a leaking roof that was intentionally covered with paint can act as solid proof. Another evidence to prove the seller’s wrongful intent would be the property agent’s statement suggesting the seller had instructed them to conceal the defect from you and other buyers.

Speaking to neighbors and your agent will assist you in collecting various related facts. If you decide to file a lawsuit, a competent attorney would interview the relevant people and try to establish that the seller knew about the defect, but kept it secret.

Seller’s Responsibility Toward Damages Because of Cover-Up

Instead of unveiling the truth, if the seller knowingly hid a defect, you can sue them for wrongful misrepresentation. When you file a lawsuit, you may be eligible for the following damages:

  • Compensatory Damages: The court may order the seller to compensate you for the expenses you incur because of the concealed defect. These can include repair costs and reduction in the value of the property as a result of the defect.

  • Punitive Damages: You would be able to avail punitive damages if you prove that the selling party acted with malice while hiding the defect. Punitive damages are meant to punish people for their wrongful acts and they can be awarded to you along with the compensatory damages.

  • Rescission: This is a rare case wherein the purchase contract is nullified or rescinded, your payment is fully refunded, and the seller gets their property back.

Remember that suing a seller is not the only option, and resolving issues informally too can help you save a lot of time and money. It is recommended that you call up a home warranty company to find out if a problematic item in the house is under warranty. Repairs can be done free of cost if the warranty is still on. Ideally, you should write a letter to the seller explaining in detail all the issues you are facing. You can demand payments for all the expenses required for repairing or changing the defective items. If all these actions aren’t fruitful, you can always approach an attorney for legal help.