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Is a seller or their agent liable for defect non-disclosure?

On Behalf of | Mar 25, 2024 | Firm News

Real estate litigation may be necessary in a variety of different circumstances. Boundary violations, title disputes and major issues with transactions can all lead to proceedings in the California civil courts. Sometimes, successful real estate transactions trigger litigation after the buyer takes possession of the property. It could be months after closing before buyers discover undisclosed, possibly latent defects at the property.

They may face major repair costs that could completely unbalance the budget for the household. Real estate litigation provides an opportunity to recover either the cost of repairing those defects or the difference in property value related to the property’s condition. Does a frustrated buyer take legal action against the seller or their real estate agent?

Every situation requires a different approach

The circumstances surrounding an undisclosed property defect are inherently unique. From the nature and financial impact of the defect to the party who may be legally liable for it, what is true for one buyer may not apply in another situation.

Sellers sometimes intentionally hide property defects from real estate agents in addition to prospective buyers. If an agent was truly unaware of the issue with the property, then the buyer may be the party ultimately responsible for the financial impact of their nondisclosure. Even an as-is property listing does not eliminate a seller’s obligation to inform buyers about property issues. A seller is also usually the party responsible when they list the property for sale by owner without representation.

An agent may be responsible when they knew about the defect and did not compel the seller to include it in their mandatory disclosure documents. In cases where the agent arranged to make temporary improvements to hide the defect or coached the buyer about how to present the property, the real estate professional may be the party ultimately to blame for the nondisclosure.

Real estate agents may have special insurance coverage that can cover expenses related to mistakes that they make as part of their professional practice. Other times, they may need to provide direct financial compensation to those harmed by their failings.

Holding the right party responsible can diminish the lasting financial impact of a real estate defect nondisclosure. Working with a skilled legal team to review closing paperwork and the details of how a buyer uncovered a defect can help someone determine the right party to seek compensation from via real estate litigation.