Buying real property typically means making a long-term commitment to a specific residential neighborhood. Buyers often scrutinize properties to ensure that they are in reasonable condition.
Banks and mortgage lenders financing residential real estate transactions typically require professional inspections and appraisals to help ensure that the property acquired is worth the amount of money invested. Sellers also have to provide written disclosures affirming the condition of different property systems.
Unfortunately, some people who have just invested hundreds of thousands or even millions of dollars in a real estate purchase discover that the property is not in the condition they expected. It may have significant latent defects that only show up when there is a major storm or when the new owners try to have minor improvements performed on the property. What happens when there are significant undisclosed defects that people identify after closing?
Buyers may need to take legal action
Occasionally, enthusiasm about a property may result in buyers failing to truly perform appropriate due diligence. They may barely read the disclosure statement made by the seller or the inspection report received before closing.
In those cases, there may have been warnings about specific property defects that the buyer overlooked. Provided that the defect was not addressed in disclosure statements or identified during the inspection, the buyer may be able to hold the seller, their agent or even the inspector accountable.
In some cases, frustrated buyers dealing with substantial latent defects can hold the agent representing the seller responsible. When there are indicators that an agent may have advised the seller not to inform others of a known property defect, their errors and omissions insurance coverage could potentially help compensate the buyer. Similar coverage carried by inspectors can help buyers demand accountability for the failure to identify costly property defects.
Some latent defects are unlikely to come to light during pre-sale inspections. In scenarios where it is unclear whether the agent knew but likely that the seller knew about the defect, litigation might be necessary.
A lawsuit brought against the seller for violating disclosure rules might result in compensation. Buyers can seek financial compensation for the difference in property value or for the cost of repairing the defect. In many cases, buyers may need help evaluating disclosure documents and reviewing their options after discovering undisclosed latent defects at a residential property.
Learning more about the rules that govern residential real estate transactions may help people protect themselves when sellers don’t fulfill their obligations, including the responsibility to provide a thorough and accurate disclosure statement.