If a sellet does not disclose foundation problems, what recourse can be taken?

02/03/2009 - Category:Real Property - Residential Property Disclosure - State: DC #15143

Full Question:

In the District of Columbia, after buying a home, the buyer discovers the seller lied about foundation defects to the home as well a host of illegal gas/electric installations that caused immediate danger. Is there any recourse or time limits?


Disclosure of hazardous or defective conditions on real estate is regulated by state law. The law usually requires that potential buyers be told all material facts about the condition of a property for sale. That disclosure has included whether the property is within earthquake fault zones, seismic hazard zones or wildland fire areas, in which fire protection falls under the jurisdiction of the state, a flood hazard area as designated by the Federal Emergency Management Agency, or a dam inundation area. Defects listed on a disclosure form may also include appliances, electrical system, water and sewer system, roofing, structural and foundation problems, moisture, and others. Latent defects are problems with the property that the buyer or buyer’s agent is not able to discover through a normal inspection. It is a hidden or dormant defect in a premise that cannot be discovered by observation or a reasonably careful inspection. Some states interpret latent defects to mean structural items (including foundational problems) and safety items. The disclosure laws typically require material or important defects to be disclosed. Disclosure of environmental risks, particularly the ones that pose health hazards, may also be information that must be disclosed. A leaking underground oil tank or the presence of a nearby nuclear power plant for example must be disclosed to the buyer.

When one party to a contract knows of a fact that has a bearing on the transaction, the failure to disclose this information to the other party is called nondisclosure. Generally, the law does not attach any significance to nondisclosure. The theory is that it is preferable that the party lacking the knowledge ask questions of the party with the knowledge rather than imposing some sort of duty on the party with the knowledge to volunteer the information. Thus, generally, an agreement of the parties is not affected by the fact that one party did not disclose information to the other party. This is the general rule. Ordinarily there is no duty on a party to a contract to volunteer information to the other party. The nondisclosure of information that is not asked for by a party does not hurt the validity of the contract. For example, generally, a seller would be under no duty to disclose foundation problems to a buyer who purchases a home and later discovers severe foundation problems, if the buyer, prior to signing the contract, made an inspection of the house and assumed several visible cracks in the roof and walls were the result of the house settling, and the seller did not originally make a disclosure one way or another.

The relationship between a buyer and seller of real estate is created by contract, and the terms of the contract generally determine the rights of the buyer and seller. You should carefully review the terms of your real estate contract to determine your rights and obligations regarding defects in the property. The answer to your question may depend on whether the seller provided a disclosure from to you and if so, whether it contained required information. If the seller failed to disclose any known material defects in the house, you may have recourse against him or her. Also important is whether you elected to have a home inspection performed and whether that inspection revealed any problems.

The following are District of Columbia statutes:

§ 42-1301. Applicability and exceptions.

(1) The provisions of this chapter shall apply only to the transfer or sale of real estate located in the District of Columbia consisting of not less than one nor more than 4 residential dwelling units, whether by sale, exchange, installment land contract, lease with an option to purchase, or any other option to purchase.
(2) This chapter shall apply only where the purchaser expresses, in writing, an intent to reside in the property to be transferred.
(b) The provisions of this chapter shall not apply to any of the following:
(1) Transfers pursuant to court order, including, but not limited to, transfers ordered by a probate court in administration of an estate, transfers pursuant to a writ of execution, transfers by any foreclosure sale, transfers by a trustee in bankruptcy, transfers by eminent domain, and transfers resulting from a decree for specific performance;
(2) Transfers to a mortgagee by a mortgagor or successor in interest who is in default, or transfers to a beneficiary of a deed of trust by a trustor or successor in interest who is in default;
(3) Transfers by a sale under a power of sale or any foreclosure sale under a decree of foreclosure after default in an obligation secured by a mortgage or deed of trust or secured by any other instrument containing a power of sale, or transfers by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a power of sale under a mortgage or deed of trust or a sale pursuant to a decree of foreclosure or has acquired the real property by a deed in lieu of foreclosure;
(4) Transfers by a nonoccupant fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust;
(5) Transfers from one cotenant to one or more other co-tenants;
(6) Transfers made to the transferor's spouse, domestic partner, parent, grandparent, child, grandchild or sibling or any combination of the foregoing;
(7) Transfers between spouses or domestic partners resulting from a judgment of divorce or a judgment of separate maintenance or from a property settlement agreement incidental to such a judgment;
(8) Transfers or exchanges to or from any governmental entity; and
(9) Transfers made by a person of newly constructed residential property that has not been inhabited.

§ 42-1302. Written statement; written indication of compliance.

(a) The transferor of any real property described in § 42-1301 (a) shall deliver to the prospective transferee a real property disclosure statement on a form to be approved by the Mayor. The written statement shall be signed by the transferor and shall be delivered to the prospective transferee within the following time limits:
(1) In the case of a sale, before or at the time the prospective transferee executes a purchase agreement with the transferor; or
(2) In the case of a sale by an installment sales contract where a binding purchase agreement has not been executed, or in the case of a lease together with an option to purchase, before or at the time the prospective transferee executes the installment sales contract, or lease, as the case may be, with the transferor.
(b) With respect to any transfer subject to subsection (a) of this section, the transferor shall indicate compliance with this chapter either on the purchase agreement, the installment sales contract, the lease with an option to purchase, or any addendum attached to the purchase agreement, contract, or lease with an option to purchase, or on a separate document.
(c) Except as provided in subsection (d) of this section, if any disclosure required to be made by this chapter is delivered after the prospective transferee executes a purchase agreement, installment sales contract, or lease with an option to purchase, the prospective transferee may terminate any of the foregoing by delivering written notice of termination to the transferor not later than 5 calendar days after receipt of the disclosure statement by the prospective transferee, and any deposits made by the transferee to the transferor shall be promptly returned to the transferee.
(d) Notwithstanding the provisions of subsection (c) of this section, the right of a transferee to terminate is waived if not exercised before the earliest of:
(1) The making of a written application to a lender for a mortgage loan or financing, provided that the lender discloses in writing at or before the time application is made that the right to rescind terminates on submission of the application;
(2) Settlement or the date of occupancy by the purchaser in the event of a sale; or
(3) Occupancy in the event of a lease with option to purchase.

§ 42-1303. Scope of liability; information prepared by third party.

(a) The transferor is not liable for any error, inaccuracy, or omission in any information delivered pursuant to this chapter if the error, inaccuracy, or omission was not within the actual personal knowledge of the transferor, or was based entirely on information provided by public agencies or provided by other persons specified in subsection (c) of this section and ordinary care was exercised in transmitting the information. It is not a violation of this chapter if the transferor fails to disclose information that could be obtained only through inspection or observation of inaccessible portions of real estate or could be discovered only by a person with expertise in a science or trade beyond the knowledge of the transferor.
(b) The delivery to a prospective transferee of any information required by this chapter to be disclosed to a prospective transferee by a public agency or other person specified in subsection (c) of this section shall be considered to comply with the requirements of this chapter and relieves the transferor of any further duty or liability under this chapter with respect to that item of information, unless the transferor has actual personal knowledge of a known defect or condition that contradicts the information provided by the public agency or the person specified in subsection (c) of this section and knowingly fails to disclose such known defect or condition.
(c) The delivery to a prospective transferee of a report or opinion prepared by a licensed professional engineer, professional surveyor, home inspector, geologist, structural pest control operator, contractor, or other expert, dealing with matters within the scope of the professional's license or expertise, is sufficient compliance for application of the exemption provided in subsection (a) of this section if the information is provided upon the request of the prospective transferee (provided that nothing in this chapter shall be construed 5 as imposing on the transferor any obligation to comply with the request), unless the transferor has actual personal knowledge of a known defect or condition that contradicts the information contained in the report or opinion and knowingly fails to disclose the known defect or condition. In responding to a request by a prospective transferee, an expert may indicate, in writing, an understanding that the information provided will be used in fulfilling the requirements of § 42-1305 and, if so, shall indicate the required disclosures, or parts of disclosures, to which the information being furnished applies. In furnishing the statement, the expert is not responsible for any items of information other than those expressly set forth in the statement.

§ 42-1304. Change in conditions after delivery.

If information disclosed in accordance with this chapter becomes inaccurate as a result of any action, occurrence, or agreement after the delivery of the required disclosures, the resulting inaccuracy does not constitute a violation of this chapter. If at the time the disclosures are required to be made, an item of information required to be disclosed under this chapter is unknown or unavailable to the transferor, the transferor may comply with this chapter by advising a prospective purchaser of the fact that the information is unknown. The information provided to a prospective purchaser pursuant to this chapter shall be based upon the information available and actually known to the transferor.

§ 42-1305. Residential disclosure requirements.

The residential real property disclosure statement approved by the Mayor shall contain the following:

(1) A list of actually known defects or information concerning the following:
(A) Water and sewer systems; (B)
(C) Structural systems, including roof, walls, floors, foundation, and basement;
(D) Plumbing, electrical, heating, and air conditioning systems;
(E) History of infestation by rodents or wood-boring insects, if any;
(F) Appliances;
(G) Alarm system and intercom system; and
(H) Garage door opener and remote control; and
(I) Fixtures; and
(2) Any other information required by the Mayor to be published by rulemaking, provided that nothing in this chapter or in any rules shall be deemed to modify or amend § 42-1755 (f).

§ 42-1306. Good faith disclosure.

Each disclosure required by this chapter shall be made in good faith. For the purposes of this chapter, "good faith" means honesty in fact in the making of the disclosure.

§ 42-1307. Scope of disclosure.

The specification of items for disclosure in this chapter does not limit or abridge any obligation for disclosure created by any other provision of statutory law regarding fraud, misrepresentation, or deceit in transfer transactions. If the transferor provides to the prospective transferee the residential real property disclosure statement required by this chapter (or the other information described § 42-1303 (b) or (c)), any licensed agent of the transferor shall be deemed to have complied with the licensee's obligations under § 42-1703 to disclose to a customer material adverse facts concerning the physical condition of the property.

§ 42-1308. Amendment of disclosure.

Any disclosure made pursuant to this chapter may be amended in writing by the transferor, but the amendment is subject to the requirements of § 42-1302.

§ 42-1309. Method of delivery.

Delivery of a disclosure statement required by this chapter shall be by personal delivery, facsimile delivery, or by registered mail to the prospective transferee. Execution by the transferor of a facsimile counterpart of the disclosure statement shall be considered to be execution of the original.

§ 42-1310. Failure to comply.

A transfer subject to this chapter shall not be invalidated solely because of the failure of any person to comply with any provisions of this chapter.

§ 42-1311. Duty imposed on transferor only.

The duty to comply with this chapter is imposed on a transferor, and not on any real estate agent or real estate broker of a transferor. A real estate agent or real estate broker of a transferor shall not be liable for any error, inaccuracy or omission in any information delivered to any prospective transferee, or for any failure of a transferor to deliver any information or a real property disclosure statement to the prospective transferee, or for any violation of this chapter by a transferor, unless such real estate agent or real estate broker knowingly acts in concert with such transferor to commit fraud.

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02/03/2009 - Category: Residential Property Disclosure - State: DC #15143

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