Seller Nondisclosure and Fraud
A frequent impediment to successfully closing the sale or purchase of a home in California is the discovery of defects with the home as a result of disclosures or inspections. Furthermore, a common cause of real estate lawsuits after escrow closes is the buyers’ discovery of defects with the home, which the buyers feel were concealed or should have been disclosed.
Sellers must give buyers a disclosure form, called a Real Estate Transfer Disclosure Statement (Civ. Code Sections 1102-1102.6.), as well as specific disclosures such as lead based paint, smoke alarms, and natural hazards. Sellers are expected to disclose anything they know that might affect the house’s value or the willingness of a buyer to purchase the property, including: defective conditions such as a leaky roof or problems with electrical or plumbing systems; whether the various features and appliances, such as a water heater or dishwasher, are in operating condition; neighborhood nuisances, including noise problems; environmental hazards such as asbestos or lead based paint; whether work done on the house was according to local building codes and done with permits; and any restrictions on the use of the property, such as zoning ordinances, planning restrictions, and "covenants, conditions, and restrictions" (CC&Rs).
Real estate brokers and agents must also conduct a "reasonably competent and diligent" visual inspection of property and disclose to buyers anything that would affect the value or desirability of the property. (Civ. Code Section 2079, 2079.3) Licensed real estate brokers and salespersons do not have to inspect inaccessible areas or review public documents affecting title to or use of the property.
Sellers are only responsible for disclosing information within their personal knowledge. Often a defense to non-disclosure is that the sellers were unaware of the defects. However, sellers must fill out the disclosure forms honestly and must take "ordinary care" in obtaining information about the property that, as a reasonable homeowner, they should know. The buyers must also reasonably rely on the sellers’ non-disclosure. If the defect is disclosed to the buyers either through the sellers' disclosures or visual inspections required to be made by the licensed real estate agents involved in the transaction, home inspection reports, or if the defects are obvious, the sellers may also have a defense to a nondisclosure claim.
Mehlman Law Group provides advice to sellers and buyers engaged in transactions about their disclosures obligations and their rights if defects are found before close of escrow. Where defects are found after the close of escrow, Mehlman Law Group provides effective representation of Buyers seeking compensation for damages related to the undisclosed defects, such as the cost of repair, or to sellers accused of concealing the defects, where valid defenses exist.
Call us at 925-935-3575 for a free consultation related to real estate non-disclosure issues.