What You Need to Know About Disclosing Home Defects
Can I sue the seller for not disclosing defects?
Unfortunately, many sellers know about defects. Often, they will do things to mask the defect, like repainting or putting in new carpet. They will try to pass the defective house onto an unsuspecting buyer. Sometimes they get away with it, leaving you with repair costs. Not only is hiding latent defects immoral, but it’s illegal as well.
Keep reading to learn more about your protections as a homebuyer, then contact a Howard County real estate lawyer at Coover Law Firm for more information regarding your case consultation.
What Sellers are Required to Disclose
Fortunately, Maryland homebuyers are protected from sellers’ dishonesty through a law requiring sellers to disclose latent defects. A latent defect is something that neither the buyer nor their inspectors would reasonably discover – something that the buyer could discover weeks or even months after buying the home.
When it comes to latent defects, the buyer must prove that the seller knew about the defect. Just because you find a defect after you buy the house does not mean the seller knew about it. A latent defect is one that is not visible but the seller did know about.
If you’re wondering, “Can I sue the seller for not disclosing defects?”, it’s important to understand that every defect is not necessarily a latent defect. By definition, latent defects are not visible.
For example, here are some of the most common home defects that sellers try to cover up:
Maryland has seen historic flooding in recent years, and many basements have flooded. When floodwater enters a basement, the moisture can cause damage to the foundation, sheetrock, and paneling, not to mention the growth of harmful molds and fungi that can cause allergies and sickness.
Almost all the water that gets into a house comes in through the foundation, through the basement stairwell, or up through a floor drain – usually not from burst pipes.
Sometimes the extent of damage is unclear, but there are telltale signs that most competent or experienced people can see, especially home inspectors. One sign is called effervescent, which is a fuzzy-looking white growth that shows up on the inside of basement foundation walls. Effervescent is a mineral deposit left by moisture as it dries, and those minerals are pulled from the ground with the water through the foundation wall and deposited on the inside surface as the water dries.
Water and mold go hand in hand. Even though mold may not always seem like a big deal, these spores can cause serious illness and structural complications. Sellers may try to scrape, hide, or paint over the mold so they can get to the settlement table and get money for the house.
Of course, the seller may not have been aware of some structural defects, but many times, they just don’t want to disclose them. These could include a bad design, a ceiling or roof that’s not properly supported, or a basement foundation wall that is caving in or cracked.
It’s just as important to discuss what a latent defect is as what it is not. A loose screw behind a piece of paneling isn’t a latent defect – it has to be something serious.
All homes have broken things, even brand-new homes. There are cracks in the sheetrock, nail pops, tape joints between the ceiling and the walls, or gaps in the wood floors. Sellers do not have to disclose those types of defects.
Maryland law does not oblige sellers to disclose anything besides latent defects. Instead, they can disclaim, and most sellers do. A form called “Real Property 10-702” gives the seller the option to either disclose all kinds of information about the various systems and components in the house or to disclaim all representations other than latent defects.
Real Property 10-702 is a form two or three pages in length with lots of checkboxes for the seller to fill in. Most sellers just put a diagonal line through that page reflecting or indicating that they are disclaiming any representations, but the buyer should be cautious.
They should look for a diagonal line; if there is one on one page, they should flip through every page to make sure there are no boxes filled in that mention latent defects. Read whatever is written in the boxes very carefully.
You might be amazed at what’s in there. In our experience at Coover Law Firm, the vast majority of buyers and realtors pay no attention to those seller disclosures. They just pass over those pages as they’re initialing each page, racing to the finish line because they’re excited to get their offer in so nobody else grabs the house. That’s a mistake.
Suing the Seller
If you find evidence of a cover-up (effervescent, paint streaks, etc.), you should document the evidence with photographs, but do not remove anything. Even if you discover a serious problem, contact Coover Law Firm first.
You’ll have to prove that the seller knew of the defect. You and your attorney will have to prove:
- The defect was there before you purchased the home
- The defect isn’t so obvious that you could see it yourself
- You have suffered monetary damage as a direct result of the defect
If you are able to prove these things, you may be able to go after the seller for fraud. Depending upon the form of the contract, there may even be an attorney’s fee clause that gives the buyer the ability to claim their attorney’s fees in addition to their damages.
That means that the seller would be responsible for the cost of the repairs and the attorney’s fees incurred by the buyer to make the seller do what they should have done in the first place.
What kinds of things are not considered latent defects?
This part of the law can be tricky. If you think your home might have a latent defect that the seller did not disclose, you should speak with an attorney before contacting anyone else or taking any steps to remove or fix the defect.
This is because what you believe to be a defect may not be at all. For example, an easement would not be a latent defect because it does not impose any harm to the health or safety of an occupant.
Another example is property lines. A property line is not a latent defect, although it could be fraud on the part of the seller. Different parts of the contract deal with things like encroachments, which should be picked up by a competent location survey and visual inspection of the property.
Do I have to disclose a past problem with my house if it has been repaired?
Think about the disclosure as your opportunity to document everything so that you can protect yourself against any possible lawsuits. Assume that the buyer is going to be unreasonable; assume that they will blame you when they don’t clean the leaves out of their basement stairwell and the water backs up under the basement door.
If you repair something, the repair doesn’t negate that you had a problem. The point here is although the defect may have been corrected, the house has a history. And that history can be used against you by an unrealistic or unreasonable buyer. The best way to deal with the house’s history is to disclose the house’s history.
Here’s another example: you have your yard regraded after bad grading caused water to run into the basement. Reasonably, that wouldn’t happen again, but you should still disclose it. You should have all of the receipts and the contract for the grading work available.
Realtors will often tell you not to do that, as they’re afraid that will discourage a buyer from buying. That’s one of the biggest differences between lawyers and realtors. Realtors are anxious to get that deal to the settlement table. Lawyers are more concerned about what happens next.
The reality is, unless you’re a big risk taker (because you would be the one taking a big risk), the very best thing you should do is disclose everything properly in the Disclosure Statement. If there’s not enough room, make the realtor write an addendum. If you’re uncomfortable with the realtor’s ability to deal with the issue, then consult with a lawyer.
In our experience, buyers are not afraid of something that occurred but was dealt with properly; they’re more scared about what the seller’s not telling them. At Coover Law Firm, we know just what to look for if a seller might be hiding something.
We understand that you could lose invaluable time and money, so let us prevent the seller from being dishonest. Call Coover Law Firm at (410) 553-5042 for a case consultation.