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

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?
02/03/2009   |   Category: Real Property ยป Residential ...   |   State: District Of Columbia   |   #15143

Answer:

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.

(a)
(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)
Insulation;


(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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