WHAT CONSTITUTES FULL DISCLOSURE IN HOME PURCHASES
TED AND SALLY’S STORY
CAVEAT EMPTOR NO MORE!
Years ago, Ted and Sally would have been out of luck legally when the seller of their home didn’t disclose that he had had water in the basement coming in through cracks in the walls. That’s because the rule of “caveat emptor”, which is Latin for “Let the buyer beware!”, applied. Fortunately for Ted and Sally, the law has changed substantially in the buyers favor since that Rule prevailed.
TYPES OF MISREPRESENTATION
Generally, there are two types of misrepresentation or fraud for which a home seller may be liable to the buyers when it comes to undisclosed defects. The first involves a false statement of fact, such as; “the basement never had water in it before”, when the sellers knew that in fact it did. The second type of misrepresentation involves concealment or nondisclosure of a known defect. This occurs when the sellers remain silent altogether about the defect, but took measures to cover it up or, given the fact that it was hidden, had a duty to speak up and tell the buyers about it.
BAD NEWS, GOOD NEWS
For Ted and Sally the situation is one of bad news and good news. The bad news is that the seller of their home lied to them on his Disclosure Form about ever having water in the basement. It will cost them thousands of dollars to remedy the problem. The good news is that the law gives Ted and Sally recourse against the seller in the way a lawsuit for misrepresentation. Not only did the seller tell them there never was any water in the basement, he concealed cracks in the walls through which it got in by patching and painting over them. With the law on their side, at least Ted and Sally can rest assured they will come out of the situation whole.
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Kathryn Eyster contributed to this article.