Don’t fall victim to a lying house seller

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CHICAGO (MarketWatch) – Buyers, beware: In a tough real estate market, it’s tempting for sellers to stretch the truth or lie by omission on their disclosures, and cover up minor – but important – issues with a home in order to close the deal.

This makes it even more essential for buyers to do their due diligence before closing, including doing a professional home inspection and even chatting with neighbors to make sure they find out all the essential facts about a location beforehand. to buy it.

“When times get tough, people get tougher,” said Mike Crowley, Spokane Home Buyers broker in Spokane, Wash. “Check they are telling the truth.”

Seller’s disclosures vary state to state, but generally require documentation of home hardware issues such as roof leaks, past or present flood issues, pest issues, presence lead paint, mold issues, structural issues, electrical and water issues, or sewer issues.

“Each state has its own disclosure requirements, and state municipalities have specific requirements,” said Edward A. Mermelstein, real estate attorney at Edward A. Mermelstein & Associates in New York City.

“Then there is a plethora of disclosures that are not required by the state that a broker or experienced lawyer would know and ask questions,” he said. For example, in some areas, including Florida, there has recently been a high incidence of defective drywall used in home construction, he said. If it is possible that faulty materials were used in the home that a buyer is considering, they should demand that this be disclosed.

Sellers are required to honestly complete disclosure documents, answering questions about the property to the best of their knowledge. They are also not supposed to cover up the house’s flaws, said Neil B. Garfinkel, real estate attorney at Abrams Garfinkel Margolis Bergson in New York.

But as a buyer, don’t take sellers at their word. Because if they hold anything back, it could cost you dearly.

Burden of proof

Of course, if sellers lie – and it can be proven that they weren’t knowingly being honest about something – an aggrieved buyer could sue for damages.

“If a buyer with children buys a house and the seller knows there has been lead [paint] found out at home, God forbid a child gets sick, and you’re going to have a serious lawsuit on your hands, ”Mermelstein said.

The tricky part is proving that the seller was aware of the problem and chose to lie. Proving this type of fraud can be difficult, said Benjamin D. Clark, president of the National Association of Exclusive Buyer Agents. And sometimes the legal fees aren’t worth pursuing the case.

That’s why it’s best to spot gaps before closing, when a seller is still willing to negotiate in order to finalize the deal, he said.

Yet sometimes a buyer can successfully prove that a defect was omitted in disclosures or concealed, and receive compensation to fix the issue after closing – without having to go to court, Crowley said.

As an example, he cited a case in Colorado. At an open house that buyers attended – and during the pre-closing visit – candles and cookies perfumed the house. But when the buyers moved in, there was a strong smell of cat urine all over the house. They called their lawyer, a strong word letter was written and the vendors provided money to replace the upholstery and carpet, Crowley said.

Crowley suspects the buyer could easily have proven a cover-up in court. “People weren’t ready to play. They paid for it.”

Michelle McLean also discovered a problem after buying a home in Vernal, Utah. There was a septic tank, but she only found out after closing that she had to hook it up to the town’s sewer line. Clark said the fact could have been specified in standard Utah vendor disclosures.

McLean contacted his real estate agent and the seller ended up paying for the hookup.

Catch before you close

It will be much easier for you to resolve issues before the sale is closed. Get a professional home inspection to reveal any problems, but don’t stop there.

The more information you can ask for, the better off you are, Garfinkel said. “It puts you in a better position to avoid these kinds of issues,” he said.

Before closing, Clark and one of his clients discovered that there was a sewer problem in one particular house, which the seller did not disclose. The seller was confronted about this and he spent between $ 5,000 and $ 7,000 to get it fixed.

“We spoke to the neighbors,” said Clark, and one of them indicated that a tenant had left the house due to plumbing issues. “We hired a plumber because of this trick, to meander the sewer line with a camera. A lot of the connections were broken, parts had cracked and fell into them,” he said. The roots also interfered with the line.

Speaking with neighbors who surround the property will often help reveal big issues with a home or uncover property line disputes, Clark said.

All of this isn’t to say that most – or even many – sellers lie on their forms, or that disclosures aren’t helpful to buyers.

“In my mind, the two benefits of these forms are that a buyer gets information from sellers, but also that buyers are reminded of things that might be on a property,” said Ralph Holmen, legal counsel for the National Association of Realtors. “It’s like a checklist of things to investigate.”

Also remember that when buying an existing home, it’s important to have realistic expectations, Crowley said. Know what you are getting into, but understand that sellers may not be aware of a particular problem in the house. And nothing says things won’t show up right after closing.

“If you have unreasonable expectations, you will always find something to be disappointed about,” Crowley said. “There will always be a surprise with a used house. My water heater turned off the first week.

Welcome to home ownership.

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