How Do I Prove a Seller Failed to Disclose Flooding in the Basement?
Full Question:
Answer:
According to the New York Department of State, Division of Licensing Services, a property condition disclosure statement is to be provided to prospective purchasers of real estate. The contents of that statement are intended to provide the buyers with as much information as the Seller can provide about items that materially affect the property.
Whether your insurance company will cover the repairs will be determined by the terms of the insurance contract. We suggest you contact your insurance broker. 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. New York disclosure information requires the seller to tell the buyer of previous water damage problems with the property. The answer to your question will depend on proving the seller had knowledge of the moisture problem. This will be a matter of subjective determination for the court, based on all the facts and circumstances involved. If the seller failed to disclose any known material defects in the house, you may have recourse against him or her. To receive compensation for losses, a complaint may be filed in court. Please see the links to the forms below.
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. If the seller provided a warranty, there may be recourse through a breach of warranty claim. Also important is whether you elected to have a home inspection performed and whether that inspection revealed any problems.
Whether you can hold a home inspector responsible for missed defects depends upon whether the problems were visually discernible and within the scope of the inspection. The answer depends partly on the terms of the contract for the inspection and what was covered by such inspection. If not addressed in the contract, the court will judge whether such a defect should have been discovered based on the circumstances involved and inspection industry standards. Home inspectors routinely disclaim liability for property defects that are located below ground, under slab floors, beneath insulation, within walls, behind personal property, inside fixtures and appliances, or for any reason whatever, not fully exposed and readily accessible at the time of the inspection.
Whether the seller is liable will depend on all the facts involved, such as any warranties and disclosure statements that may have been provided by the seller. Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.
To constitute fraud, a misrepresentation or omission must also relate to an 'existing fact', not a promise to do something in the future, unless the person who made the promise did so without any present intent to perform it or with a positive intent not to perform it. Promises to do something in the future or a mere expression of opinion cannot be the basis of a claim of fraud unless the person stating the opinion has exclusive or superior knowledge of existing facts which are inconsistent with such opinion. The false statement or omission must be material, meaning that it was significant to the decision to be made.
Sometimes, it must be shown that the plaintiff's reliance was justifiable, and that upon reasonable inquiry would not have discovered the truth of the matter. For injury or damage to be the result of fraud, it must be shown that, except for the fraud, the injury or damage would not have occurred.
To constitute fraud the misrepresentation or omission must be made knowingly and intentionally, not as a result of mistake or accident, or in negligent disregard of its truth or falsity. Also, the plaintiff must prove that the defendant intended for the plaintiff to rely upon the misrepresentation and/or omission; that the plaintiff did in fact rely upon the misrepresentation and/or omission; and that the plaintiff suffered injury or damage as a result of the fraud.
Generally, a realtor isn't liable for house defects unless a warranty was provided or they knew of the defect. Cases from a few states hold that the broker is not liable for incorrect information provided by the seller if the broker has no basis to know or suspect the information is inaccurate. The prudent broker should ask the seller to provide written information and documentation if it exists. Information provided to the buyer may include the written qualification that the broker is not warranting the accuracy of such information. Often the real estate disclosure statement will insulate the broker from liability. However, not all property conditions or representations are covered by the standard disclosure statement.
