What You Need To Know About Buying a Home With Defects

If your dream home turned out to come with a few surprises like cracks, leaks, broken mechanicals, or other defects, the good news is that you may have some legal recourse. Of course, getting into a lawsuit is never an ideal outcome but there are many steps you can take before things get to that point. However, it’s still important to know what your options are.

New York Laws About Housing Defects

New York state law requires sellers disclose certain defects before the home is sold. This is typically done by filling out a standard disclosure form. The form details features of the home (the roof, the foundation, water and heating systems, and more) and asks the seller to self-assess the condition of each. You’ve probably already guessed the problem. There’s a whole lot of subjective wiggle room when people are asked to self-assess anything—much less one of the biggest financial decisions of their life. Note too that the seller isn’t necessarily mandated to research problems they may be in the dark about. So the tricky part comes in trying to figure out whether deception was involved or simply ignorance. Some states can also allow the seller’s agent or home inspector to be sued for failure to disclose. 

The best course of action is to have a thorough home inspection performed and know your state’s disclosure laws ahead of time. Your realtor can help you with this. If, in theory, you do get to the point where you land in court, know that should you win, any monetary award will likely cover only the amount to fix the problem and no additional compensatory amount

What if something was wrong with your newly bought house at the time of purchase, and someone — the seller, the seller’s agent, or the inspector — could or should have told you about it beforehand, but didn’t? Such problems may come to light days, weeks, or years later, leaving you wondering whether you should have to shoulder the entire financial burden. Indeed, in such cases, you may be able to ask the responsible person to pitch in. Ideally, you’ll be able to resolve matters without filing suit in court. But this article will start by analyzing whether a lawsuit is possible, so that you can work your way up to one, if need be.

Of course, you probably knew at the time of purchase that the house wasn’t in perfect condition. Some problems, such as a crack in the front walk, may have been obvious. Others, such as aging plumbing, the seller may have disclosed to you in the course of the sale. Your home inspector, assuming you hired one, probably told you about a few more problems. And even after the sale, your home probably continued its normal process of aging and decaying, leaving you to deal with the consequences — without any grounds to run back to the seller to complain

Will your insurance company cover the damage? If so, there may be no need to take action on your own. 

Who’s Responsible for Home Defects?

Even if you think you’ve been wronged, you can’t sue everyone involved in the sale of your home. The responsible parties might include one or more of the following:

The seller. Nearly every U.S. state has laws requiring sellers to advise buyers of certain defects in the property, typically by filling out a standard disclosure form before the sale is completed. (This responsibility remains even if you bought the house “as is.”) The standard form usually asks the seller to state whether the property has certain features (like appliances, a roof, a foundation, systems for electricity, water, and heating, and more) and then rate or describe their condition. Some states’ disclosure laws are more comprehensive than others, and if a feature isn’t on the list, the seller may not be required to speak up. Also, the seller isn’t usually required to scout out problems. But if there’s clearly a place where the seller should have stated a problem but denied it, your job is to try to figure out whether the seller in fact knew about the problem. For example, if the seller patched over or hid problem areas, or if the neighbors have told you about the seller’s efforts to deal with a problem, the evidence is on your side.

The seller’s real estate agent. Some states’ laws make sellers’ agents liable for failing to disclose problems they observed or were told of by the sellers; though often their duties are fairly limited. Again, check your state’s disclosure laws and try to figure out whether the problem would have been apparent to the broker, but not to you, before the sale.

Your inspector. Hopefully, you got a home inspection before buying. In theory, the inspector should have spotted problems that the seller wasn’t even aware of. If the inspector missed problems that an expert (a professional peer) should have noticed, the inspector may be liable. Read over your inspection report to see what it said about the area in question. Some buyers are embarrassed to find that the problem is spelled out right in the report, or that the problem falls within an area that the inspector rightfully excluded from the report.

How to tell if you have a case when suing for failure to disclose home defects

Once you’ve figured out the possible responsible parties, you’ll want to know whether their action—or inaction—entitles you to compensation. If your situation meets the criteria below, you may have a case. We’ve collapsed a few legal principles into this list, but it will apply to most situations in most U.S. states.

The defect was there before you bought the home. Problems that started since you bought or are a natural result of your home’s aging or your lapses in maintenance are yours to deal with. Of course, determining when a problem started can get complicated. For example, a blockage in your sewer line may be a new problem, or it may be a recurrence of a long-time issue with roots growing into the pipes. You may need a professional’s analysis. But if the problem could have started before you bought the house, keep reading.

It’s not an obvious defect that you could have seen yourself before buying. If there was a huge crack running across the living room ceiling at the open house and you’ve only now decided to bring it up, no dice. But if it was hidden by a false ceiling, the matter may be worth pursuing. Don’t worry if your inspector should have seen the problem. That just means you’ve got a potential claim against the inspector, too.

No one told you about the defect before the sale, or someone actually lied to you about it. The responsible party may have been the seller, the seller’s agent, or the inspector, as explained above.

You relied on the lies or nondisclosures. This one’s probably easy. If, for example, you took the seller’s word that a remodel job was up to code in deciding to buy or in setting your price, you acted in reliance.

You’ve incurred monetary damage as a result. Your costs of repairs or related damages (such as destruction of your personal property due to a flooded basement, or a decrease in your property value due to an undisclosed environmental hazard) will become legally speaking, the “damages” that you may collect — even if you haven’t paid any out-of-pocket costs yet (for example, you need a new foundation but haven’t actually hired a contractor to build it). But don’t expect to collect any damages that go beyond the house itself, such as for your pain and suffering.

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