Legal Question in Real Estate Law in California

Failure to disclose

I bought my house seven year-old stucco house in October 2005 for $839,000. It was NOT an ''as-is'' sale. Two months later, after heavy rains, water came in through the walls from a leaking upstairs patio and soaked half of the first floor. Yesterday an inspector found mold and a couple of key architctural defects. The original house inspector failed to see, or disclose thos defects. Three neighbors just informed me that the owner had long standing flooding problems, which he did not disclose during escrow. I want the house repaired and would rather not rescind the sale. What are my chances of recovering actual damages, which will be hefty. Do I need an attorney or should I first send a demand letter to the broker? There was dual agency by the realty company.

Asked on 12/28/05, 1:49 pm

5 Answers from Attorneys

Donald Holben Donald R. Holben & Associates, APC

Re: Failure to disclose

My recommendations are that you get an attorney involved. If California Assn of Realtors forms used in purchased by agents, there should be fees/costs provision that you may or should be able to recoup your fees/costs involved. May be required to mediate/arbitrate matter to get fees/costs. This is large bulk of work we do in Palm Springs office and large portion of work we do in our home office of San Diego. Call if you wish to discuss. Initial consult no charge. Don Holben.

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Answered on 12/28/05, 4:29 pm

Carl Starrett Law Offices of Carl H. Starrett II

Re: Failure to disclose

In addition to the disclosure forms mandated by state statute, the seller has a duty to disclose "material facts" relating to the purchase. The seller's agent has a duty to disclose facts that could be discovered with a "reasonable" visual inspection. Your home inspector's duty is defined by the contract. Your agent has a duty of due care.

You might have sufficient facts to bring a claim, but you should consult a local real estate attorney.

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Answered on 12/28/05, 1:56 pm

Re: Failure to disclose

Why would the broker be responsible? The broker is responsible to conduct a visual inspection only. The broker should not make affirmative representations about any condition of the property. If he/she did, he/she may have incurred liability.

Your seller is responsible for disclosing material items about the property of which he/she was aware at the time of disclosure.

Both seller and broker must fill out and sign the mandatory statutory disclosures, which appear on the "Transfer Disclosure Statement", submitted to you during escrow.

You need to consult a local real estate litigator to ascertain whether or not you have a claim against the seller, the agent, both, or neither.

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Answered on 12/28/05, 2:18 pm
H.M. Torrey The Law Offices of H.M. Torrey

Re: Failure to disclose

From the facts given, you definitely have rights that should be promptly asserted herein, and based upon the non-disclosures you mention in your question. You may start with a demand letter, as you astutely point out, however, it can only help matters to have attorney assistance throughout such an important, real property legal matter. If you would like a free consultation, contact us directly.

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Answered on 12/28/05, 2:18 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Failure to disclose

A broker who represents you, even in a dual representation capacity, is a fiduciary, and has a fairly high level of duty to determine your needs and wishes, to investigate on your behalf, and otherwise to act in a responsible and professional manner. The broker is not, however, a guarantor or insurer, nor is he/she necessarily an expert on home inspection. If a lawsuit becomes necessary, the broker should be named as a co-defendant, but based on the facts as presented, I would say that the seller is the primarily-responsible party.

Brokers often arrange and pay for inspections for buyers they represent; one of the reasons is fulfillment of the duty of diligence and avoidance of liability.

You could contact the seller directly, or address a demand to the broker worded in such a way that it's clear you'll hold both broker and seller responsible.

The broker presumably carries insurance for this sort of claim, which could make settlement and collection easier, especially if your case is strong. Those neighbor witnesses may be valuable.

If the probable amount of damages exceeds about $10,000, it's probably better to hire a real-estate lawyer to write the demand letter; it shouldn't cost much, it will command more attention, and if a suit is necessary, someone will already be acquainted with the facts.

Remember that in 2006 the small-claims limit will be $7,500 rather than $5,000.

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Answered on 12/28/05, 2:56 pm

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