california real-estate
Real estate - Transfer Disclosure Statement and Disclosure of Repairs
<p>This question pertains to real estate law in the state of California. I recently purchased a house and moved in this past weekend. Yesterday, the first rain event of the season occurred, and several water leaks became readily apparent. The leaks occurred in spots where there was no existing evidence of past leakage. One leak is around a window sill and one is from the roof. During the inspection, we found no indication of any areas that might have had any existing water leaks, and this is something that I paid particular attention to.</p>

<p>When the seller signed the Transfer Disclosure Statement, they did not indicate any leaks or water damage. Before escrow closed, I was made aware that the seller had completed a variety of repairs including: pavement, new windows and roof repairs. It was my understanding, and the impression conveyed to me by both my and the seller's agents that the repairs were all related to marketability of the house.</p>

<p>My first thought is that I did not ask enough questions as to why the repairs were made. This brings me to my question. Is the seller required to have disclosed any existing known issues if repairs were made to correct those issues? Also, if it turns out that the repairs made did not correct the original issue, does that change what the seller should have disclosed?</p>

<p><strong>TL;DNR:</strong> Maybe, maybe not. To find out for sure, talk to a California lawyer who does real estate law. </p>

<p>Dang! That can't be fun. </p>

<p>As you know, under California law, sellers are required to disclose a lot of information. They have to disclose so much that at some point, most buyers stop listening/reading and start nodding and grunting "Uh, huh, ok" and blindly checking boxes. Whether the buyer was <em>supposed to</em> tell you about these particular problems depends on CA real estate law, including how California courts have interpreted the CA statutes.  </p>

<p>To find out whether CA law is on your side, I would start by looking at sites that focus on CA real estate law. Searching using disclose + leaks + California + "real estate" shows there are a lot of them. Nolo.com, a generally reliable outfit, even has a page discussing <a href="https://www.nolo.com/legal-encyclopedia/legal-remedies-if-california-home-seller-conceals-defect.html" rel="nofollow noreferrer">Legal Remedies If a California Home Seller Conceals a Defect</a>. I'd look at some of these to see if there's any chance you have a case. If you do, I'd then talk to a California lawyer who does real estate law. (As a first step, you might talk to your broker.)</p>

<p>Good luck! </p>

<p>The   <a href="http://www.dre.ca.gov/files/pdf/re6.pdf" rel="nofollow noreferrer">Real   Estate   Transfer   Disclosure   Statement</a> asks numerous question, and these are the things that a seller is obligated to disclose. The most obviously-applicable question is</p>

<blockquote>
  <p>Are you (Seller) aware of any of the following...8. Flooding, drainage
  or grading problems</p>
</blockquote>

<p>Leaks are not covered under the ordinary meaning of flooding, drainage or grading problems. There is no general requirement to disclose repairs. </p>

<p>When you buy a pre-owned house, the general rule is <em>caveat emptor</em> (buyer beware), which means that you take the property as you find it, unless agreed otherwise, subject to the duty to disclose known latent defects.</p>
<p>The general duty at common law was to disclose known latent defects not discoverable through physical inspection of the property. The disclosure form adds specificity and broadens this obligation somewhat, but not in a way that is really material to this case. Most importantly, neither the common law, nor the standard real estate disclosures form in California, requires disclosure of defects that the seller believes sincerely and good faith, were resolved prior to sale.</p>
<p>If the seller sincerely and to the best of his knowledge (and the knowledge of his realtor) believed that the repairs he did had fully solved any leakage problems with the house, then there would be no duty to disclose them.</p>
<p>But, if the seller actually was aware of past leakage problems but knew that they weren't resolved or didn't have any genuine knowledge regarding whether the past problems had been resolved or not, there is probably no liability.</p>
<p>Also, you probably can't successfully sue the inspector for any meaningful amount of money for failing to discovery the problem, because home inspects routinely contractually limit damages for their defective work to a return of up to 100% of the fee which is almost surely trivial relative to the cost of fixing the problem.</p>
<p>So, your entitlement to relief would depend upon the knowledge of the seller and the seller's agents, and you could do research to see if it is plausible that the seller knew that this was still a problem.</p>
<p>On the other hand, even if you couldn't get the seller to actually pay to fix things, the seller might be convinced to transfer and assign any rights the seller had against the people who did defective repair work to you, if the real estate contract didn't already do so. The seller could have sued them for negligent work, or for breach of a warranty, if any, of their work. You may have the right to sue the contractors who did the defective repair work for negligence anyway, but it would be easier with the seller's cooperation.</p>
<p>Depending upon the costs of repair, pursuing the contractors who did the repair work legally or simply by legal demands, might be more cost effective than pursuing the seller, since the litigation costs of proving what the seller knew or didn't know might be very high relative to the amount in controversy, and depending upon the terms of the real estate contract, you may not necessarily have a right to attorney fees if you prevail against the seller. You wouldn't in a common law fraudulent concealment lawsuit, and the contract may or may not modify the common law rule.</p>
<p>Realistically, it is very hard to make a lawsuit like this cost effective unless the cost of repairs is in the many tens of thousands of dollars or more. It isn't clear how much it will take to fix the problem and your first step would be to hire someone to diagnose the problem and give you an estimate. A diagnosis of the problem by a construction professional, and a review of the permits for repairs done prior to sale, should also help you evaluate how hard or easy it will be to prove that the seller was aware of the latent defect, if indeed, the seller was aware of it.</p>
