Legal Question in Real Estate Law in Michigan

Assuming that you used the services of a Realtor in this transaction:

In Michigan, property owners who occupy the property before selling are obligated to fill out a seller's disclosure form. While this is not a warranty, the seller must disclose known defects that would affect the value of the property. A fire that causes substantial damage to the property is one of the specifically enumerated questions on the seller's disclosure form.

The answer to your question is fact specific. Ie. did the seller occupy? did the seller provide you with a seller's disclosure? do you have fire department or city records that show a fire happened? do you have a structural engineer's report stating damage due to a fire? what documents do you have that can prove your position? what does your "inspector" say about this situation?

There is a statute of limitations on contracts in Michigan, but your claim against the seller may not be barred if the defect was latent, and would not have been discovered upon a reasonable inspection, or if the seller's misrepresentation was fraudulent, and you act within the Statute of Limitations time frame after you knew or should have known about the defect.

You will have to prove that

1. The seller or his agent knew of the defect.

2. That the seller or his agent's failure to disclose the defect was intentional on the part of the seller, or the seller's agent, (did either of these parties misrepresent this either affirmatively or by their silence?).

3. That the seller or his agent intended for you to rely on this information.

4. That you reasonably relied upon the information,

5. That you have suffered damages as a direct result of your reasonable reliance upon the seller's misrepresentation of the condition of the property.

The seller will no doubt argue affirmative defenses, such statute of limitation, and doctrine of laches that bars your action, as being too remote in time for him to have records or recall exactly what was said or done. Your agent may be able to testify as to what was said by either the seller or the seller's agent. This assumes that you hired a buyer-broker to represent you in the purchase. Otherwise, if the agent you looked at the house with, was a seller's agent (sub agent of the listing broker), then this is unlikely, as that agent may be liable together with the listing agent for any misrepresentation they made. They may claim any statements by them were made in good faith in reliance on the seller's representations made to them.

If you purchased the house for-sale-by-owner, you will have a harder time to find qualified witnesses or persons who actually looked at the house, or made any representations to you.

If your damages are extensive and the expense to repair is more than 1% of the purchase price of the home, and the seller is "collectable" (has significant assets) you should consult with an attorney who can review the facts of your case, and apply the law to the facts more closely.