If you’re looking for a home, you may have heard that you shouldn’t include any contingencies – including a home inspection – if you want a seller to choose your offer to purchase. But not inspecting a home before buying it is a recipe for disaster. You may be lucky and only have minor issues or not so lucky and feel like you bought a lemon.
Here, we’ll take a look at your options if you buy a house, move in, and realize there’s more damage than you might think.
The nightmare house
Let’s say you take out a mortgage on a house only to find out that the chimney needs to be rebuilt, the water heater is out of steam, and the central air conditioning only works every other day. These are all problems that a competent home inspector would have found. But if your inspector hasn’t found them, you have the option to prosecute them. According to FindLaw, most home inspectors are prosecuted at least once in their careers. And if problems were things a good home inspector is supposed to find, you might have a good record.
But what if you skip the home inspection? This is where the question of buying a lemon gets tricky.
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Most states require sellers to disclose known defects on a seller’s disclosure form. Suppose the salesperson knows that the foundation is leaking, the electrical system is faulty, or the fireplace is not working. In most cases, they are legally required to let you know before you buy the house.
Some states even require sellers to disclose things they “should have known”. Let’s say the basement leaks every time it rains. The seller should be aware of this issue – and is responsible for disclosing the issue.
Now let’s say someone has lived in a house for five years. The basement leaked every time it rained, but they paid a foundation to fix the problem. Typically, a seller does not have to disclose a problem until it has been fixed.
A giant hole in disclosures
New York home sellers can avoid filling out a seller’s disclosure form by crediting the buyer $ 500 at closing. They don’t have to tell potential buyers what they’re doing as long as they’re paying more than $ 500. New York law – called the Property Condition Disclosure Act – is popular with sellers. According to the legal site Nolo, many home sellers in the state choose not to complete a disclosure form, choosing to pay off the credit instead.
Even in states with strict disclosure laws, it’s easy for sellers to feign ignorance, claiming they have no idea there are problems.
Do you have legal recourse?
This is possible to sue the former owner of a financial pit. You can even sue the real estate agent who sold you the house. It is not easy, however. To have any chance of recovering, the following must be accurate and provable (but check with a lawyer for details):
- The problem was present before the purchase of the property.
- The problem was not easily detected. For example, a massive crack in the foundation is noticeable and you should have known this before buying.
- The seller either failed to disclose the problem or lied to cover it up.
- > You relied on the truthfulness and accuracy of the disclosures.
- You have been financially damaged by the problem.
You can be sure the previous owner knew about the dying sump pump or the master bedroom closet leak, but it’s extremely difficult to prove it. It can also be costly to hire a lawyer to handle your case.
If you find yourself with an expensive lemon on your hands, these might be your best options:
- Ask the former owner to mediate with a third party who can help you find a solution.
- Buy a home warranty from a reputable company (if you didn’t get one from the previous owner). Make sure it covers the issues you need to fix and doesn’t rule out pre-existing conditions.
- Talk to a real estate lawyer. Many provide the initial consultation at no cost. They can tell you if you have a case. Otherwise, there is no reason to waste money on this option.
- Take your complaint to Small Claims Court. State limits range from $ 2,500 to $ 25,000 according to Nolo. Find out what the limit is for your state, and if the expected cost of repairs falls below that number, consider suing the previous owner. You can’t take it away, but filing fees in many states cost less than $ 100.
If possible, the best thing you can do for yourself is to avoid problems in the first place. And the easiest way to do that is to have a home inspected before you buy. You can either do it in an emergency or have your own inspector come before you bid.
At the end of the day, it’s up to you to do your due diligence before buying a home. No matter how compelled you feel to make a decision or skip the inspection, when you buy a home you are buying its problems as well. Getting the previous owner to make repairs is more often than not a losing battle.
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