What Home Buyers Should Know About Disclosure

Trust Your Real Estate Agent But Verify the Documents

Buying a new home looks easy on HGTV shows – even fun! Except when it’s not. Some buyers believe they have finally bought their dream home, only to wake up in a nightmare of major, unforeseen problems with a house they were assured was “move-in ready.” By solely relying on their real estate agents to guide them through the fine print, buyers may inadvertently purchase major troubles down the road with their new home.

A very competitive real estate market can result in relatively fast transactions and details can be lost along the way. Buyers are asked to sign and initial huge stacks of papers during closing without much time to read, and understand, what they are signing.  If you are currently buying (or selling) pause and understand the smallest details to assure transparency and confidence in your sales agreement. If you do not understand what you are signing, consult a real estate attorney.  You could avoid buying a big headache.

Uneven Floors, Cracking Walls and Doors That Would not Close

Soon after a first-time buyer moved in to his one-story ranch home, he realized the floors sloped noticeably toward the north end of the house.  There were more cracks in the walls than he recalled, even though he had been assured the house had no earthquake damage. Doors and windows were not square and didn’t open and close properly. He reached out to his real estate agent who attributed the issues to the drought and to the home’s location on a cul-de-sac.

The homeowner hired an attorney who had the foundation inspected.  The homeowner then learned the truth: the house was structurally unstable and needed major repairs involving removing the floors to gain access to the crawlspace. The repair was going to be expensive and involve the owner moving out of the home during the repair process.  How did his real estate agent miss this glaring problem during the purchase process?

Failure to Disclose: Real Estate Agents Must Perform Reasonable Due Diligence

California Law requires sellers (and their real estate agents) “to disclose any fact materially affecting the value and desirability of the property.” The intention of any party to conceal or omit flaws of a property is a definite concern.  However, inexperienced real estate agents can be equally at fault due to lack of knowledge or negligence.

As our buyer of the crooked house worked back through his paperwork, he learned the sellers HAD disclosed major issues with the home’s foundation in earlier years.  The sellers had documented the issues in an insurance claim shared with the real estate agent. Yet, the real estate agent and the home inspector (who was not a licensed contractor) failed to raise an alarm about the prior foundation reports and to notify the future home buyer.  Without knowing the importance of these issues, the buyer went ahead with the purchase.

What Must be Disclosed to Potential Homebuyers?

In California a Transfer Disclosure Statement (TSD) is a 3-page document the seller (and real estate agent) must provide to all buyers that discloses all the information known by the seller about the home. This includes a standard list of amenities and features, as well as a list of issues that could be considered “red flags.” These might include reports of asbestos or lead-based paint, flood damage, earthquakes or fire, property line disputes, major un-permitted remodeling, and much more.

An entire section of the TSD form addresses structural integrity – any significant defects must be noted. The seller is not required to fix things on this list, simply to disclose them.  Areas of concern include walls, ceilings, floors, insulation, windows, doors, slab, driveways, sidewalks, electrical and plumbing, drainage, settling and foundations.  The first-time home buyer was not advised by his real estate agent that the seller’s disclosed report contained a major red flag about the previous settlement issues with the home.

Solving Your Lemon House Issues, Recouping Your Losses

Dealing with a “fixer upper” house that you did not want to purchase is irritating, expensive and time consuming. Do buyers have any rights when this happens – even several years after the purchase?

A competent real estate attorney can help you pursue both compensatory and punitive damages for your lemon experience. Sometimes negligent real estate agents are not solely to blame – cases can involve home inspectors, and the employers of the real estate companies.

You may have recourse for your “did not want a fixer upper” house woes. Contact an experienced real estate attorney and explore legal solutions that could make you whole.


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Mary Catherine Wiederhold

Real Estate Attorney
1458 Sutter Street
San Francisco, CA 94109

Mary Catherine Wiederhold
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