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Understanding Seller Disclosure Law

Ask the Real Estate Lawyer: Real Estate Law Q&A

REM #LAW 712

By Ilyce R. Glink and Samuel J. Tamkin

Summary: After buying a new home, a ThinkGlink reader discovers the seller lied about defects to the home. Ilyce and Sam explain seller diclosure law and how this buyer may still have some recourse.

Q: If you believe the seller lied on the home sale disclosure form, how long after you purchase a house do you have to pursue your legal options?
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And, if I turn around now and sell the home -- but disclosed the issue -- can I still go back after the original seller?

A: Most states have seller disclosure laws requiring the seller to disclose to buyers know material defects in the home. The language might vary from state to state and the forms may vary, but the intent is roughly the same – to give a buyer a fair chance at knowing what the seller knows about his or her home when it comes down to material defects in the home.

The key issue is to determine what the material defect is. For example, if the seller knows that the foundation of the home is crumbling and the house is ready to cave in, that certainly must be disclosed. However, if the home has a leaky faucet in the kitchen, that probably does not need to be disclosed.

Assuming that your question relates to a material defect you discovered in the home after closing on it, you would then look to your state laws regarding these kinds of disclosures.

Some states require a buyer to sue the seller for that failure to disclose within one year of the closing on the home. If you are willing to do some legwork and have access to the Internet, you should be able to look up the statute that talks about the seller disclosure requirements. That law should also state the time period a buyer has to bring suit against a seller.

Obviously, you can hire an attorney, walk through the issues with her and she can tell you the time limit you have to bring suit against the seller. She can also give you some advice whether it’s worthwhile to sue the seller. In some states, seller disclosure laws allow a buyer to recover attorneys’ fees when pursuing a seller for a faulty disclosure.

If you find that you have the right to sue the seller, you may be able to sue the seller in small claims court, but you won’t be able to recover “attorneys’ fees” in that case for your own time. You generally can only get those fees reimbursed when you actually hire an attorney and that attorney actively participates in the case.

If you have resold the home and took a loss because of the disclosure issue, you may still be entitled to compensation from the original seller. Seller disclosure laws were not drafted to force a buyer to have to choose between suing the seller and holding on to the home or selling the home.

The idea behind seller disclosure laws is to provide buyers with an opportunity to learn from the seller about material defects in the home before buying the home. Furthermore, if the seller failed to disclose something and the buyer found out about the failure before closing, the buyer could walk from the deal. Once the deal has closed, the laws give the buyers the right to sue the seller and recover from the seller the cost of fixing the problem.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com