Seller Disclosure Dispute
Every month over 2,000 homes are sold in the Kansas City Metro area. The vast majority of these sales go off without a hitch, but for a small percentage, the closing of the sale is just the beginning. Days, months, or sometimes years after the sale, the buyer discovers issues with the home and threats suit against the seller for failing to list the issue on the seller disclosure form. The issues might be small — like a small leak in the basement — or large — like a major foundation issue. The buyer is mad and feels like someone should be responsible for not telling him or her about this issue and maybe contacts a lawyer.
Many attorneys who practice real estate law have very limited experience with seller disclosure disputes and general litigation attorneys likely have no experience in the area. Seller Disclosure disputes are complicated and often involve many parties, such as the buyer, seller, real estate agent and inspector. The rules for liability are different than most consumer transactions, and therefore, having an attorney experienced in handling these types of matters can help buyers from making costly mistakes in bringing litigation where there is a limited chance of recovery. Moreover, for the defendants in these type actions, hiring an attorney who is experienced in handling seller disclosure disputes can help ensure that all available defenses are being explored and you have the greatest chance of success at trial.
When are sellers liable for undisclosed defects?
This is a difficult question to answer without the specific facts in a situation. The general rule in both Kansas and Missouri is “buyer beware” or that the burden is on the buyer to conduct inspections or identify problems prior to closing. With that being said, courts in both states recognize that the unique nature of a home renders some defects undiscoverable during the buying process (for example, mold inside walls cannot be discovered without cutting into the walls). For a seller to be liable, the seller must have known about the issue and not disclosed it. Moreover, the issue must not have been discoverable during a reasonable inspection. If a seller disclosed part of an issue, but not the entire extent of it, he or she may not be liable if the information that was disclosed was enough to “put the buyer on notice” of the potential issue.
What about the real estate agent or inspector?
Establishing liability for real estate agents and inspectors is even more difficult than against sellers because it is the seller that should have the most knowledge regarding the condition of the house. Real estate agents are generally not liable for undisclosed issues unless they had specific knowledge of an issue and make affirmative statements to the contrary. Inspectors are not liable for issues that are concealed, such as within walls, and otherwise not discoverable through a reasonable inspection. Even when an inspector misses an item that was easily discoverable, it is common for inspectors to include terms in their contracts to limit their liability for errors. These contractual terms do not 100% shield an inspector from liability, but it does make a case against an inspector more difficult. Finally, it should be noted that inspectors hired by the bank and/or the bank issuing you a mortgage are not liable for failing to discover issues with the property. The duty of a bank inspector or appraiser is to the bank and not the buyer. Therefore, only the bank would have a potential recourse against that inspector or appraiser.
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