4 Completely Avoidable Reasons Home Sellers Get Sued
Selling a home isn’t always sunshine and rainbows. From choosing the right asking price to open houses, paperwork, inspections, and more — there are a million things to check off the to-do list before closing. One thing that’s probably not on most seller’s to-do lists? Getting sued. Yet, it happens more often than you may think!
Most lawsuits against home sellers stem from the seller’s disclosure paperwork. You can imagine the scenario: the buyer and seller close on the sale and, shortly after, the buyer uncovers a problem with the home. This could be anything from a water leak to mold or something more simple. The buyer feels as though they’ve been deceived and they retain a lawyer to sue the seller — maybe even going as far as to sue the listing agent, their agent, and the inspector.
With that being said, let’s look at a bit closer at the ways a home seller could be sued:
#1. Not disclosing important details about the property to potential buyers, in writing
In California, as well as many other states, sellers are required to disclose any details about the property that could impact the potential buyer’s desire to purchase the home — or the amount they’re willing to pay — in writing. This, in the case of California, is done via the “Transfer Disclosure Statement”.
While this action (or lack thereof) may not itself instigate a lawsuit, it can lead to the next point …
#2. Not disclosing material facts
On the seller disclosure paperwork, sellers are asked a myriad of questions regarding their home including items like any roof or water leaks, termites or pest issues, plumbing or air conditioning issues, zoning ordinance violations, building code violations, and more.
It is vital that a seller makes every effort to disclose past and present issues, even if they’ve been resolved and even if they happened before they owned the house. If it is a known defect, it needs to be disclosed.
Failure to disclose a material fact can certainly lead to a lawsuit. And, it can be fairly simple for a buyer to learn a seller knew of a defect. It’s not uncommon for a neighbor to provide a statement outlining a previously-known issue.
#3. Concealing a defect
Another way a seller can be sued? By concealing a defect through fraudulent misrepresentation. An example of this would be a seller who freshly painted over a ceiling leak just in time for an inspection or who, on the extreme end of the spectrum, collaborated with a home inspector to create a fictitious report.
#4. Making a disclosure mistake
It should be mentioned that not understanding a question on the seller disclosure paperwork or making a mistake when filling out the documents does not negate a seller from their responsibility to disclose what they know.
This is why it is vitally important to read the paperwork carefully and, if needed, ask for assistance from your real estate agent or lawyer. As a best-practice, ask your agent if they’re using Glide. It’s a state-of-the-art technology helping buyers (and agents) limit their risk, save time, and make completing the seller’s disclosure paperwork easier.