The U.S. Consumer Product Safety Commission (CPSC) estimates that over 100,000 emergency room visits were trampoline-related in 2014. And from 2000 to 2009, the CPSC is aware of 22 deaths associated with trampoline use. The American Academy of Pediatrics discourages home use of trampolines, but jumping on trampolines continues to be a popular activity for kids.
What happens when someone gets hurt on a trampoline? Who, if anyone, is on the legal hook for the injured person’s medical bills, pain and suffering, and other losses? Depending on how the injury happened, an injured trampoline user may have a personal injury claim against one or more of the following:
People can get hurt while jumping on trampolines in many different ways. Most often, two or more jumpers collide or a jumper might fall or land improperly while doing a stunt.
Common types of trampoline injuries include:
More injuries happen on backyard trampolines than at trampoline parks (66% versus 34%), but trampoline park injuries tend to be more serious.
When someone gets hurt, the first thing most people want to know is, "Who was at fault?" When it comes to trampoline injuries, the answer to that all-important question often depends on two things:
A lot of trampoline accidents are the trampoline user’s fault, but others are the responsibility of:
Figuring out who's to blame for the accident is important because if you file an injury-related claim or lawsuit against the wrong party, you could end up with nothing.
For example, if a child suffers a concussion after a trampoline leg breaks, you might assume the injury is the manufacturer’s fault. But if the trampoline leg broke because of years of accumulated rust, and not because it was built with low-quality steel, you would get nothing if you only sued the manufacturer and not the owner who failed to properly take care of the equipment.
It's crucial to understand exactly how the injury happened. Most trampoline accidents fit into one of three scenarios:
Once you figure out what happened and who is to blame, figuring out the type of claim you have becomes much easier. Here are the possibilities:
Manufacturers must design, manufacture, and distribute safe products. If a trampoline manufacturer fails to make a trampoline that is safe for its intended use, you can file a product liability claim. For example, if a trampoline claims to support a 200-pound person, the bolts should not give way when an average-sized child jumps on the trampoline.
A property owner or tenant is responsible for keeping visitors reasonably safe from harm, including trampoline users. In most situations, trampoline owners must take reasonable steps to:
Proper Maintenance. Trampoline owners must make sure the trampoline is in good condition. Like everything else, trampolines deteriorate over time—especially when left outside in the elements—and an owner who lets people jump on an old, rickety trampoline might be responsible for injuries. Trampolines also shouldn’t be located in an unsafe area, like on concrete patios or near low-hanging power lines.
Proper Supervision. Owners must properly supervise people using the trampoline, especially those who may not understand the risks, such as young children and teens. People often get hurt on trampolines when they attempt dangerous tricks or jump with too many people on the trampoline at the same time. Proper supervision can help prevent trampoline injuries.
Attractive Nuisance. Children are naturally attracted to things such as pools and trampolines, and an owner is responsible for making sure that children cannot freely access these “attractive nuisances.” Keeping the trampoline within a fenced area or storing the access ladder away from the trampoline can help limit both injuries and potential liability.
Everyone has a duty to act reasonably under a given set of circumstances, including while jumping on a trampoline. Jumpers who unexpectedly launch fellow jumpers in the air causing them to land improperly may be liable for injuries caused by their negligent (careless) behavior.
Whether homeowner’s insurance covers a trampoline depends on the specific language of the policy. Chances are the terms fall into one of these categories:
If it's like most policies, your homeowner's coverage likely excludes trampolines, bounce houses, and similar play structures, and your insurance carrier has the right to cancel your policy if it discovers you have this kind of play structure in use on your property. This kind of discovery can happen after a property inspection, or when your vindictive neighbor, tired of hearing joyous peals of laughter coming from your yard, reports you. In either case, getting a new policy can be hard, so it’s a good idea to understand the insurance picture before you install a trampoline out back.
An injured person can rack up bills fast—and if you're the one that caused the injury, you’re probably going to be the one footing those bills. That’s what makes homeowners’ liability insurance so crucial. It covers things like medical bills, lost wages, and even pain and suffering when someone gets hurt. If the injury leads to a personal injury lawsuit, not only does your liability insurance provide you with a lawyer, it will also pay any settlement or judgment.
Since trampoline accidents are common and have the potential to not only drain your assets, but force you into bankruptcy as well, protecting yourself with liability insurance makes sense. But that doesn’t make coverage easy to get. Insurance companies aren’t keen to provide insurance coverage for incidents related to trampolines because, simply put, these kinds of accidents cost insurance companies too much money.
There are two typical ways you can expect insurance companies to handle trampolines:
No trampolines allowed. Many insurance companies “exclude” trampolines from their policies. This means if you go ahead and get one anyway, the insurance company will not pay for any injuries connected with use of the trampoline.
Trampolines allowed as long as you follow safety requirements. Some insurance companies will cover your trampoline, and resulting injuries, as long as you abide by the safety precautions required by the policy. This might include sinking the trampoline so that the jumping surface is at ground level, or installing safety nets and pads around the perimeter.
Certain activities—such as skydiving, football, and skiing—are inherently dangerous under the law. People who choose to participate in these activities should know that they could get hurt, and if they get hurt, they may not be able to hold anyone else liable for their injuries.
This defense to a personal injury lawsuit, called the "assumption of risk defense," may work against an adult injured on a trampoline, but it’s less likely to work against a child.
As with all injury-related legal claims, the value of a particular trampoline injury case depends on many factors, including:
Learn more about personal injury damages and compensation.
Most personal injury cases are dismissed or resolved well before trial. The plaintiff (the person suing) and the defendant (the person or entity being sued) are often motivated to settle a trampoline injury claim or lawsuit to:
Learn more about how settlement negotiations work in an injury case and what to do when settlement talks fail.
You might be able to handle your own trampoline injury case if your injuries were minor and you’ve fully recovered. For example, if a homeowner negligently allowed you to jump on an old trampoline with a rusty metal frame and you cut yourself while jumping, you might be able to file a homeowners’ insurance claim to cover the cost of your stitches and tetanus shot and go to small claims court if necessary.
But if you suffered serious injuries that require ongoing medical care and limit your ability to work, go to school, and enjoy your life, you need the help of a personal injury lawyer.
You likely also need the help of a lawyer if you’re planning to sue the trampoline manufacturer. An attorney can help you figure out how to prove your product liability case.
Lawyers who file product liability and personal injury lawsuits typically handle cases on a "contingency fee" basis, which means you almost certainly won’t have to pay lawyers’ fees up front. In a contingency fee arrangement, you pay your lawyer a percentage (often one-third) of your compensation if you win your case. If you lose, you don't have to pay your lawyer a fee. (But beware: Win or lose, you'll probably be on the hook for costs and expenses like court filing and expert witness fees.)
If you or your child has been injured on a trampoline, talk to a lawyer. A lawyer can answer your questions and help you sort out who might be legally responsible for the injury. A trampoline injury case can go in many different directions. A lawyer can help you get the best possible outcome in your case. Learn more about working with a personal injury lawyer.
]]>However, the Tax Cuts and Jobs Act (TCJA), a massive tax reform law that took effect in 2018, made a huge change in the law. Starting in 2018 and continuing through 2025, theft and casualty losses to personal property are deductible only if they occur due to a federally declared disaster. That means major disasters so serious and widespread that state and local governments need federal help. It can include hurricanes, tornados, major storms, tidal waves, earthquakes, snowstorms, droughts, or floods.
You can find a list of federally declared disasters at www.disasterassistance.gov.
All other theft and casualty losses are no longer deductible during these years.
Under the TCJA rules, if your property is stolen in a simple home burglary, you may not take a theft loss deduction. But if your home is in a federally declared disaster area and your personal property is stolen or damaged by looters, you could take a theft loss deduction for your uninsured losses. To take the deduction, you would need to be able to prove your property was stolen. File a police report or get other proof that looters were present.
Again, losses due to a theft outside the context of a natural disaster are not deductible theft losses from 2018 through 2025.
What about other theft losses arising from disasters? For example, what if your home is damaged or destroyed in a federal disaster and you are criminally defrauded by a contractor when you attempt to rebuild? Under prior law, criminal contractor fraud loss claims were deductible as theft losses. Under the new law, however, it's not entirely clear whether you could claim a theft loss deduction for this type of contractor fraud. It all depends on whether the IRS would consider such a theft loss as attributable to a federally declared disaster. Ordinarily, contractors are hired some time after a disaster has occurred. Would this mean any fraud they commit is not attributable to such a disaster? It's unclear. But it's probably worth attempting to claim the deduction anyway.
It's common for a property owner to have a theft or casualty gain instead of a loss. This occurs when the insurance proceeds received exceed the adjusted basis in the property. A theft or casualty gain is taxable income. However, you may claim theft or casualty losses not due to federally declared disasters to offset such theft or casualty gains during 2018 through 2025.
If a theft loss of personal property is attributable to a federally declared disaster, it is deductible as a personal itemized deduction on IRS Schedule A. Such losses are deductible only if and to the extent that they exceed 10% of the taxpayer's adjusted gross income (AGI). Moreover, the first $100 of such losses are not deductible.
]]>Fortunately, you might be able to recover what you're owed more cheaply and with less stress using other methods. These are worth considering even if you have a good legal claim against your home seller, selling agent, or inspector. For example, you might:
Assuming the agent who represented you isn't the one you believe to be at fault, going back to that person should likely be your first step. Your agent should be in regular professional contact with the seller's agent, and both of them want to make sure the deals they supervise don't go sour. If yours is not a terribly complex situation, the agents might help arrange, for instance, reimbursement from the seller.
By simply asking, in writing, that the responsible party pay the costs of repairing the defect, you might get what you want. A demand letter offers an opportunity to:
You don't need a lawyer to write such a letter. Give it some close attention, though, and perhaps have others read over it. The goal is to make sure it is clear, polite, and professional. This is not the time to fire off an angry email.
Another option is to ask for cooperation in arranging a mediation.
Mediation is a form of alternative dispute resolution in which the interested parties work cooperatively toward a settlement or fair resolution with the help of a neutral mediator. It's far less expensive than hiring an attorney (though you could certainly consult with an attorney separately). Many communities have low-cost mediation services, in some cases associated with the small claims court.
The mediator is nothing like a courtroom judge, but is there to guide the discussion in a productive direction. That said, you should prepare for this event in some of the same ways as you would for a court proceeding. Gather the evidence that you want the other party to be aware of, write out a timeline of events if relevant, print out photos if possible, prepare a summary of your concerns and wishes, and bring written notes or a bullet-point list to work from.
For example, if you discovered a hole in the floor upon moving a potted plant that the seller left behind, and the damage required hiring a contractor to perform repairs, you'd want to bring photos of the plant as it was originally placed (ideally including the home listing photos), photos of the hole that you discovered, the contractor's bills, and a statement from the contractor or other professional stating that the damage appears to have been there for some time. Then you'd also want to write notes on how this was an apparent effort to hide serious damage, and you'd like full compensation for the repairs.
Be ready to compromise, but not too fast. The idea is to give the other party a chance to be heard, and to craft a solution that everyone feels is fair.
For more information, see Mediation: The Six Stages. And if you find you need professional legal help, check out Nolo's Lawyer Directory.
]]>You call the property sellers, who claim they had no idea about any plumbing problems. Yet the contractor finds evidence of recent repairs. What do you do now?
Before you think about who is responsible for the problems with the home, make whatever repairs are necessary to prevent further damage. You can’t just sit back and wait for things to get worse. If this matter comes before an insurance company or a Virginia court, you will be held legally responsible for any damage occurring after you discovered the problem.
Be sure to keep accurate records of the repair expenses, however, as you will need these in any claim for reimbursement.
A straightforward solution to the problem is to check whether it's covered by your homeowner’s insurance policy or a home warranty, if you have one. Whether your issue with the home is covered or not depends on what the problem is, and the terms of the insurance or warranty.
In the case of the faulty plumbing, although it is unlikely you’d be entitled to the cost of new plumbing (because the leaking pipes would probably be excluded from warranty coverage as a pre-existing condition and excluded as a construction defect under homeowner’s insurance), you might be entitled to receive the cost to fix the damage the leaky pipes caused.
A home warranty is basically a service contract that might cover repairs to your plumbing, but it won't cover the damage caused by the leakage.
Be sure to notify the warranty provider or your insurance agent as soon as you find the problem. For advice on how to work with your insurance company, see After the Fire or Disaster: Dealing with Your Insurance Company.
If you have a problem that is covered fully by your insurance policy or home warranty, this might be the end of your concerns. If not, you will likely wonder whether you can hold the seller responsible for the failure to inform you of the problem with the home.
In many states, the law requires a home seller to disclose to a potential buyer any problems or defects known about the home. In Virginia, however, the seller is obligated only to provide the buyer with a “Residential Property Disclosure Statement,” (Code of Virginia § 55.1), which contains little information beyond statements by the seller about what is NOT being disclosed.
The first item on this disclosure form states that the seller “makes no representations or warranties about the condition of the property or any improvements thereon.” Essentially this means the seller is not responsible for informing the buyer about anything wrong with the property, and it is up to the buyer to find any problems prior to closing.
Due to the limited disclosures required of home sellers in Virginia, it is unlikely that a court would find the seller liable for any failure to disclose a problem with the home prior to the sale (except in the rare case where the seller actually included specific warranties or disclosures in the contract).
However, depending on your earlier communications with the seller, you might have a valid claim for misrepresentation. A home seller who knows about a problem cannot take active steps to cover it up. Neither can the seller lie about something when asked.
In the leaky pipe scenario, you might have a claim against the home seller if, prior to the purchase, the seller made any statements to you about the great condition of the plumbing, or denied having any trouble with leaks or plumbing issues when directly asked.
Undertaking a lawsuit for misrepresentation tends to be difficult and expensive. You must have strong evidence of the seller’s knowledge of the defect and evidence of the seller’s outright lying. The seller will most likely have a convenient memory lapse and deny having had any discussion with you about the plumbing. Unfortunately, unless you got the information in writing or carried a recording device during your conversations, you could have difficulty getting the evidence you need to succeed in a lawsuit.
Although a legal claim against the seller might be possible, the expense, hassle, and time involved might not be worth it—unless the cost to repair the problem is high enough. Despite your possibly having a strong case, however, collecting any damages the court awards to you could be a challenge. The seller might simply not have such a large sum on hand, and you might have to undertake multiple follow-up steps.
Even if going to court is not a step you'd like to take, it’s a good idea to send (or have an attorney send) a notification or demand letter to the seller explaining the problem and the reasons you believe the seller is liable for misrepresentation. Attach a written estimate from a professional contractor setting forth the cost of repairs. Request reimbursement from the seller for these costs. Depending on the strength of your case, you might have luck getting the seller to pay the repair costs, or a portion of those costs, in exchange for dropping your claim.
As you can see, it can be difficult to hold the home seller responsible for problems with the property after closing. Your best bet as a homebuyer is to find any problems with the home before actually closing on the purchase, most likely by hiring a professional home inspector.
But what if you had a home inspection done and it didn’t turn up the problem? In certain circumstances, a legal claim can be made against the home inspector for failure to detect a defect. However, these types of claims are rarely successful. A home inspector’s obligations are narrow, and inspection reports typically contain a variety of limitations on liability and detailed descriptions limiting the scope of the inspection.
As a Virginia home buyer, you are generally assuming responsibility for any problems you find with the condition of the home later on. Except in the uncommon case where you have strong evidence of blatant lying on the part of the seller about a defect in the home, it will be a challenge to hold the seller accountable for any issues with the home. Speak with an experienced real estate attorney for a full analysis of the circumstances surrounding your purchase.
]]>Florida courts, like those in many other states, have decided that buyers of newly constructed homes are entitled to a promise from the builder that the home is habitable and fit for its intended purpose (an implied warranty of fitness, in legal language). Particularly in large developments, the developers and builders are in the best position to know what's going on and make sure it gets done right.
A new Florida house needs to be constructed and everything needs to work in the way that someone would reasonably expect. For example, the roof needs to be leak-free, the air conditioning and heating need to work, water needs to come out when you turn on the faucet, and so on.
Home construction is a huge business in Florida. Take a look, for example, at the numerous builder-investors who construct luxury condominium high-rises overlooking the beach. Given the posh environment, you might think that every new home had been crafted to meet the highest standards, but all too often this is not the case. Time is money, and many builders have been known to skimp on materials and choose lower quality in order to boost their profit margin.
It took until fairly recently for Florida courts to declare that implied warranties apply not only to the specific components that make up a home, but also, in a condo or similar complex, to any surrounding features and improvements, if they provide “essential services” for the habitability of the homes. (See Maronda Homes, Inc. of Florida v. Lakeview Reserve Homeowners Association, Inc., No. SC10-2292 (Fla. 2013).)
The Florida legislature pushed back at the court's holding in Florida Statutes § 553.835, saying that offsite improvements do not come under the implied warranty of habitability. But the Florida Supreme Court upheld Maronda nonetheless.
Florida’s required builder warranties apply whether or not they are included in your purchase contract. They are afforded to you by Florida case law; in other words, law created by judges and their written court decisions.
However, for clarity on the specific rights provided by the builder’s warranties, such as how long they apply to the construction and what the builder will be required to fix, if anything, you're best off if you asked the builder or your attorney to provide express, written warranties within your purchase contract.
A standard warranty to look for in your contract documents is a promise that the contractors' work will be defect-free and comply with all contract requirements. Ideally, the builder should not be permitted to use materials of a lesser quality than you want, which might later compromise the overall quality of the home.
Your warranties should also establish that you have a legal relationship with all contractors providing services on your property, because you need that in order to enforce warranties against them. The law refers to this relationship as “privity;” in other words, being a person who is entitled to the rights and protections of a contract.
Hopefully, you or your attorney made sure that your warranties were drafted carefully to ensure that you will be able to enforce them, as complex disputes can arise even with express warranties. You might think that you have coverage, but courts have created a number of exceptions that excuse builders from providing services under a warranty.
For example, one court excused a subcontractor from fulfilling an express warranty that only materials “of good quality” would be used, because other language in the contract documents required the contractor to use only one kind of brick, which turned out to be defective (See Wood Hopkins Contracting Co. v. Masonry Contractors, Inc., 235 So.2d 548 (Fla. 1st DCA 1970).)
In the absence of a written warranty, your rights will need to be determined on an individual basis, likely by a mediator or judge. For example, if there are no passable roads to let you get to and from your residence, and if there is always standing water that attracts mosquitoes and creates a drowning hazard, then these hazards negatively impact the habitability of your home in the eyes of the law, and a court is likely to rule in your favor in a lawsuit against the builder.
Upon noticing any defects in your new home, there are certain procedures you must follow, and a time limit within which to follow them to either resolve the dispute or preserve your ability to ultimately take the matter to court.
For starters, Florida law says that the builders or contractors involved in the construction of your home are entitled to notice of the defects and an opportunity to fix them before you can sue them (See Florida Statutes, Chapter 558).
The notice requirements are too extensive to list here, but they state, among other things, that property owners must provide the responsible contractors with written notice of the defects at least 60 days prior to filing suit. If the complaint involves an association representing more than 20 units, 120 days’ notice must be given. Additionally, homeowners must try to give such notice within 15 days after discovering the defects, if possible.
After receiving such notice from a homeowner, the contractor has the right to perform inspections to determine whether the defects exist and whether the homeowners’ complaints are correct. The contractor must, within a specific timeframe, respond in writing to the homeowner. The contractor’s response may include reports and results of any inspections performed, state whether the contractor is willing to make repairs, and indicate whether the contractor disputes the homeowners’ complaints. The laws go on to give further details about the inspection and response process, and what happens after the contractors provide the homeowners with their response.
If you follow these procedures and are still not able to get your issues resolved, you can consider filing a lawsuit. If you have not already consulted with an attorney, now is a good time to do so. Together, you should consider whether there are any alternatives to suing, how serious the defects are, what you might potentially gain in light of the risks and costs involved, and so on.
Florida law also provides deadlines by which you are required to bring certain kinds of lawsuits, or forever lose the rights to sue (known as statutes of limitation, in legalese). In the case of new home defects, you are normally required to file a complaint within four years from the time that you discovered, or should have discovered the defect. (See Florida Statutes § 95.11(3)(c).) Also, you must file within seven years after the project was issued a temporary certificate of occupancy, a certificate of occupancy, or a certificate of completion, or the date of abandonment of construction if it wasn't completed (whichever comes first).
Construction defect law is a busy practice area in Florida, given the abundance of new homes, apartment buildings, and condominiums being built. There are quite a few procedures and deadlines that you need to comply with and meet. If you don’t, you could risk losing your rights against the builder. It's best to consult with an experienced construction defects or condominium attorney early on in the process.
]]>Is this accident covered by your neighbor’s homeowners' insurance? If your neighbor is insured, the answer is probably yes, at least in part. But, in order to receive compensation from the insurance company, you’ll need to know how to make a slip-and-fall claim.
The first question you must ask is whether the homeowner has homeowners' insurance. Most do. If the home is mortgaged then it is almost certainly insured, because mortgage companies require it. But if the property is mortgage-free, it’s possible that the homeowner doesn’t have insurance.
Unfortunately, there’s no such thing as a “homeowners' insurance registry” that you can check. The only way to find out if the homeowner has coverage is to ask, or to make a claim for your injuries and see if the homeowner turns the claim over to an insurance company.
If the homeowner doesn’t have insurance, then you’ll need to make your claim directly to the homeowner. You’ll also need to make a claim to the homeowner if there is insurance, but the policy limit is too low to cover all your damages.
The typical homeowners' insurance policy has two kinds of coverage that may apply to a slip and fall claim: medical payments coverage (sometimes called “med pay”) and liability coverage. Let’s explore each in a bit more detail.
As the name suggests, medical payments coverage is available to pay the medical bills of a person who is injured on the property. Most insurers include some limited med pay coverage as part of a homeowners' policy, but the amount of coverage is typically quite small—$2,000 to $5,000 per individual. Homeowners can purchase additional coverage, but many don’t.
The good news is that med pay coverage is a kind of “no fault” insurance, meaning that you don’t have to prove that the homeowner was negligent in order to collect. If you can prove that you were hurt on the property, med pay coverage will reimburse you for your medical bills up to the coverage limit.
Collecting medical payments coverage is simple. Just send your medical bills to the insurance adjuster assigned to your claim, and the insurer will reimburse you—again, up to the limit of coverage.
If your medical bills are more than the limit of med pay coverage, or if you want to recover for other damages like lost wages or pain and suffering, then you must bring a claim against the homeowner’s liability coverage. A homeowner is only liable for your slip and fall—meaning that their insurance policy will cover you—if the homeowner was negligent and that negligence was partially or totally responsible for your injuries.
The fact that you fell on someone’s property doesn’t mean that the property owner was negligent. You must prove that you fell because of some unsafe condition on the property, and that the owner knew or reasonably should have known of the unsafe condition.
To return to our hypothetical facts above, if you slipped because there was a patch of ice on your neighbor’s walkway that was difficult or impossible to see in the dark, your neighbor might have been negligent by failing to remove the ice or failing to warn you of the icy condition.
Be aware that your state could have different or additional rules that provide your hypothetical neighbor with defenses to liability. For instance, in many states, if the homeowner can prove that the unsafe condition was “open and obvious” to anyone paying attention, your negligence claim might fail.
If you have questions about your state law, you should contact an attorney who handles premises liability cases. (As covered below, you might want a lawyer for other reasons, too.)
The steps we describe below are specific to cases where the homeowner has an insurance policy and is willing to give you the insurer’s name. But the homeowner might be reluctant to give you this information. Why?
Some insurers will cancel a homeowners' policy, or significantly raise premiums, if even one claim is made under the policy. For this reason, some homeowners refuse to report claims to their insurer, and will try to handle claims themselves.
If you’re injured in a slip and fall, then your first priority should be getting the medical care you need. But once you’re able, you should do what you can to document what happened, and how it happened. Try to follow these steps:
Report your claim to the homeowners' insurer as soon as possible. You should make this report in writing, via certified mail with a return receipt requested to prove delivery. Keep it short and factual: identify the homeowner, the address, and the date you were injured, and provide a brief description of your injuries. Don’t offer any more detail than necessary.
You might not have finished all medical treatment if you’re reporting your claim soon after the incident. If you have, say that you will follow with a settlement demand as soon as possible.
If you’re still receiving treatment, tell the insurer that you will follow up once your treating doctor tells you that you’ve reached MMI. Tell the insurer that you will seek recovery under “all available coverages.” Finally, let the insurer know that at this point, you are not willing to give any kind of additional written or recorded statement.
Once you report your claim to the insurer, the company will assign an insurance adjuster to the case. The adjuster will contact you and the homeowner to get the facts surrounding your fall.
The adjuster’s overarching goal is to take control of the case and dictate the terms on which you move forward. You don’t want that to happen. Remember that you retain control over your claim, at least until the point when you file a lawsuit (if the case doesn’t settle before that point).
The adjuster will ask you to give a recorded statement about what happened. If you don’t have a lawyer, you should not give a recorded statement. Be prepared: The adjuster won’t want to take “no” for an answer, and will try all sorts of tactics to get you to give in. Despite what the adjuster might say in order to convince you, almost nothing good ever happens to unrepresented personal injury claimants who give recorded statements to insurance adjusters.
At this point, your goal is to settle the case without filing a lawsuit. If the case doesn’t settle and you decide to go to court, the insurer will have a chance to get your recorded statement—called a “deposition”—as part of the suit.
The adjuster will want to get your medical records and bills as your medical treatment progresses, and will also want documentation supporting any lost earnings you might claim. You’ll be asked to sign releases to allow the insurance company to get this information.
At this point, you should not sign any records releases. Tell the adjuster that you will provide all the relevant records, bills, and other documentation with your settlement demand (discussed in the next section).
This answer will make the adjuster unhappy. The adjuster will tell you that the insurer needs your records and bills now to begin evaluating your case for settlement. Again, the adjuster wants to take control of your case. Don’t let that happen.
Once you’ve reached MMI (or if you’re not at MMI but you’re concerned about the statute of limitations on your claim), you’ll need to prepare a settlement demand letter. As the name suggests, this is a letter that describes your fall, how you were injured, and your damages.
You’ll want to attach copies of your medical records and bills, letters from employers documenting lost wages, and any other proof of your injuries and damages. In the letter you should demand payment for your “economic” damages (medical bills, lost wages, and other items that are easy to quantify in dollars) and your “noneconomic” damages (things like pain and suffering that can be trickier to reduce to dollars).
Ideally, your demand letter will start a negotiation between you and the insurer. Your initial demand should be for something more than the lowest figure you’re willing to accept in settlement, so you can negotiate a resolution.
If the case doesn’t settle at this point, then you’ll need to decide whether you want to file a lawsuit. Be wary of the statute of limitations on your claim. If you fail to file your lawsuit before the statute runs out, your claim is probably lost forever.
If the case gets to this point, you should give serious thought to hiring an attorney who is experienced in handling premises liability—or slip and fall—claims. Especially if you have serious injuries, it’s often a good idea to bring on a lawyer even before this point. But once you file suit, you’re playing by the court’s rules. Those are rules that are very familiar to the insurer and its attorneys; if you’re unrepresented, you’re at a huge disadvantage.
Unless your Texas home purchase falls under an exception, the property seller should most likely have provided you with a written notice describing the property’s various features (such as an oven, plumbing, pool, and roof) and their physical condition before the sale closed (as required by Section 5.008 of the Texas Property Code).
The Texas disclosure notice is designed to provide the home buyer with information about whether the property has been affected by termites, plumbing problems, electrical problems, water leaks, roof damage, structural problems or damage, litigation, boundary disputes, and other important circumstances that would affect the decision to buy the residence.
First off, realize that not every problem that crops up in your home is grounds for a claim against the seller. Homes naturally age, and the defect could have arisen after your purchase. Or, the defect might be too minor to have affected your decision whether to purchase. Or perhaps the seller generally described the defect, but you didn’t realize its full import when you read the disclosure notice.
If, therefore, you come across what you believe to be a potentially undisclosed defect in your Texas home—perhaps you uncover faulty wiring after seeing sparks from an electrical outlet, or you lift up a carpet to find a foundation crack—the first thing to do is review the disclosure statement to see what it said about the matter.
If it said nothing, you’ll need to start investigating whether the defect truly existed before the purchase, and ideally turn up evidence that the seller knew about it. This could require consulting with contractors and tracking down records of repairs; or even talking with neighbors. Consult an attorney for further advice on what sort of evidence you’ll need in order to make a claim against the seller.
Most of the types of claims discussed in this article are appropriate if you want to remain living in the home. But there’s another possibility to consider. You, as the buyer, might have the legal right to rescind (cancel) the purchase if you did not receive a disclosure notice from the seller, or if you receive a late notice that contains misrepresentations.
The right to rescind exists, in many cases, until seven days after the seller finally provides the notice. You might actually be able to rescind the sale post-closing, even when you are living in the house.
Let’s say, for example, you have moved in, and finally receive a disclosure notice from the seller. If that notice contains any material misrepresentations, you might have the right to rescind the purchase. For example, if the notice fails to mention the fact that, prior to selling the house, the foundation had developed cracks and the seller had extensive remedial work done—which you discover after noticing foundation cracks and detecting the prior remedial work—you might have the right to rescind the contract.
If you purchased a home without receiving a disclosure notice and have now become aware of defects, consult with an attorney as soon as possible. You might only have seven days to exercise your statutory right to rescind, and other rights are subject to statutes of limitation.
Even if you want to stay in the house, the right to rescind can be useful. Armed with this right, you may also be able to negotiate a resolution in which the seller pays for necessary repairs or remedial work.
Now let’s assume you plan to stay in the house, but want compensation for the defects. It might be possible to make a claim against the seller without going to court. Sometimes sending a demand letter is enough to get the seller to send you a check for repairs. (You might, nevertheless, want an attorney’s help in drafting this.)
Or, with the right evidence in hand, you may choose to sue the seller of your Texas home for nondisclosure of a defect. If you do go to court, what kind of compensation might you claim?
The seller's failure to provide the required disclosures entitles you to make claims for monetary damages for undisclosed defects under either the Texas Deceptive Trade - Consumer Protection Act or the Statutory Fraud Act. And even without relying on a statute, you may be able to add a common law claim for misrepresentation or fraud.
If the defects your seller failed to disclose concern environmental hazards – for example, the seller didn’t mention an improperly installed septic system -- you will definitely want to look into your remedies under the Statutory Fraud Act. The Statutory Fraud Act does not always require you to prove the seller’s knowledge of a condition, so in many cases it is easier to recover under the Statutory Fraud Act than it would be to recover based on common law fraud.
Your potential statutory remedies and your remedies under claims for common law fraud or misrepresentation all potentially include monetary damages, rescission of the agreement, or punitive damages, depending on the wrongful acts of the seller. However, your claims may be more easily pursued under one or more of the statutes we have discussed.
Your legal rights are important. Consult a Texas attorney if you are concerned about a possible undisclosed defect.
]]>Most home builders give new owners a warranty of their work, though time limits are an issue here, too. You'll need to read your sales contract or dig up whatever separate document the builder gave you.
Expect to see a combination of maximum terms for different types of issues. It will likely be broken up, for example, two years' protection for plumbing and electrical defects, ten years for structural defects, and so on.
In many construction defect cases, the most likely remedy is to sue the developer for breach of contract. Let's say, for example, that the issue is a rotted deck. The developer had promised you a house with a deck, thus implying that the deck would be constructed with proper materials in a workmanlike manner.
Your lawsuit would allege, through expert witnesses with a specialty in engineering, that the developer used shoddy materials and/or constructed the deck improperly.
As a potential plaintiff, you need to worry about two types of laws that might exist in your state:
A statute of limitations limits the amount of time during which someone may file suit, based on the basis of the legal claim and when the problem occurred or was discovered. The statute of limitations for a breach of contract tends to range from three years to ten years. (States' laws differ on this.) You would need to assert that the breach (the construction of the faulty deck) occurred within that time period.
In construction law, however, there is a concept known as a latent defect. This is a construction defect that you could not have reasonably known about within the statutory period.
Using the deck example, you might argue that the deck did not noticeably sink into the ground until a year after the breach of contract limitation period had already expired. This is sometimes known as the “discovery rule,” and courts can use it to allow a plaintiff to extend a statute of limitations period.
Whether your state’s law contains a statute of repose is the second legal issue to check into. Not all states have a statute of repose. But a statute of repose acts as an absolute block on claims for construction defects beyond a certain number of years. These periods cannot be elongated by the discovery rule, if you find a latent defect. The purpose of these laws is to give legal certainty to contractors and developers.
Another important concern is whether your builder's company is still operating, and in a financial condition to make good if you successfully bring a claim. Remember, successful litigation can only result in a financial judgment from a court; essentially, a piece of paper that says the contractor owes you money.
Established businesses will typically pay their judgments, because they have assets and need to be able to continue to do business in the community. If the contractor has no money, however, or has its assets protected in bankruptcy, then your judgment might not be worth the paper it’s printed on.
Enforcing a judgment isn’t easy, and it costs money. This is true even if the entity has money in its bank account, but is unwilling to pay; it is far more difficult if the entity is going through bankruptcy.
For more information, check out Can You Collect Your Judgment? Consider the size of your claim. If you are suing your contractor for only a few thousand dollars' worth of faulty work, it might not make economic sense to proceed with an expensive lawsuit, not to mention the judgment enforcement process.
If the business really is going into bankruptcy, your goal should probably be to get a settlement as quickly as possible. Bankruptcy litigation can take years to unfold, and unless your claim is large, you'd likely be better off with a smaller, but faster, cash payment.
Trying to sue an individual business owner is one way to bring them to the negotiating table. It isn’t uncommon for small contracting company to be owned and operated by a single individual; the same person who negotiated with you on the original contract and handled most of the work. Even if the builder is part of a larger company, you can often discover the name(s) of the individual officer(s) or owner(s).
If solely the company, and not the individual, plans to file for bankruptcy, it might be smart to sue both the company and an individual officer of that company. While LLCs and corporations are common legal constructs meant to protect the individual business owners from liability, courts will sometimes ignore this corporate shell. This is known as “piercing the corporate veil.”
Though this remedy is rare, courts will consider it, particularly in cases where the LLC or shell company was undercapitalized, or where the individual business owner perpetrated a fraud. (An undercapitalized LLC might be a construction company with only $100 in its accounts, which suggests that it’s a shell corporation; a business owner perpetrating a fraud might include a builder that promised to fix your structural foundation with steel support beams, but installed cheap wooden beams, instead).
By naming the individual in your lawsuit, and/or asking the court to pierce the corporate veil, you are attacking not just the company but that person’s own bank accounts and property. This alone can sometimes scare a person into a settlement. Remember, for your purposes, it doesn't matter whether the money comes from the defunct company’s account or the owner’s personal account; you just want to get paid a settlement before the bankruptcy proceedings begin.
One of the primary reasons that businesses file for bankruptcy is to avoid creditors. In this situation, you are a creditor of your contractor; you are claiming that the contractor owes you money for defective work.
Most commonly, Chapter 7 bankruptcy filings can save both individuals, and the businesses they run, from certain types of liability. It involves liquidating all business assets; that is, selling the contractor’s equipment, vehicles, and office furniture. That provides cash to pay debtors and wind up the affairs of the business.
However, don’t get too excited. Chances are, you are not the only creditor. There will be a long line of others looking to pick at the company’s remaining flesh.
In such cases, you might actually be able to ask the responsible person to pitch in, and take the matter to court if they don't. Ideally, you'll be able to resolve matters without filing a lawsuit suit. To give you a picture of what might be ahead, however, this article will analyze:
You probably knew when you bought the house that it wasn't in perfect condition. Some problems, such as a crack in the front walk, might have been obvious. Others, such as aging plumbing, the seller might have told you about in the course of the sale. (In most states, laws require home sellers to disclose all "material" defects to prospective buyers.)
Your home inspector, assuming you hired one, probably also told you about a few problems.
Then after the sale, your home probably continued its normal process of aging and decaying, leaving you to deal with the consequences. None of these sorts of issues provide any grounds upon which to run back to the seller to complain.
Will your insurance company cover the damage? If so, there might be no need to take action on your own. For how to gain coverage, see After the Fire or Disaster: Dealing with Your Insurance Company.
Even if you think you've been wronged, you can't sue everyone involved in the sale of your home. The home seller is the first one to consider, of course.
As mentioned, nearly every U.S. state has laws requiring sellers to advise buyers of certain defects in the property, typically by filling out a standard disclosure form before the sale is completed. (This responsibility remains even if you bought the house "as is.")
The form usually asks the seller to state whether the property has certain features (like appliances, a roof, a foundation, systems for electricity, water, and heating, and more) and then to rate or describe their condition. Some states' disclosure laws are more comprehensive than others, and if a feature isn't on the list, the seller might not be required to speak up. Also, the seller isn't usually required to scout out problems.
If there's clearly a place on the form where the seller should have stated a problem but denied it, your job is to try to figure out whether the seller in fact knew about it. For example, if the seller patched over or hid problem areas, or if the neighbors have told you about the seller's efforts to deal with a problem, the evidence is on your side.
And even if you're in one of the few states with no mandated seller disclosures, it might be possible, particularly in an egregious situation, to sue the seller for:
Some states' laws make sellers' real estate agents liable for failing to disclose problems they observed or were told of by the sellers, though often their duties are fairly limited. Check your state's disclosure laws and try to figure out whether the problem would have been apparent to the broker (who never lived in the home, so might know much less than the owner), but not to you, before the sale.
Hopefully, you got a home inspection report done before buying. In theory, the inspector should have spotted problems that the seller wasn't aware of or was turning a blind eye to. If the inspector missed problems that an expert (a professional peer) should have noticed, the inspector might be on the hook; that is, legally liable.
Read over your inspection report to see what it said about the area in question. Some buyers are embarrassed to find that the problem is spelled out right in the report, or falls within an area that the inspector rightfully excluded from the report (such as a blocked off or inaccessible area). But in other cases, the inspector failed to meet basic standards of professional competence.
Once you've figured out the possible responsible parties, you'll want to know whether their action—or inaction—might entitle you to compensation. If your situation meets the criteria below, you might have a good case. We've collapsed a few legal principles into this list, but it will apply to most situations in most U.S. states.
Even if you think you meet the above criteria, remember that in an actual lawsuit, it will be your job to convince a judge. Hence the more evidence you can start gathering, the better.
In legalese, you could potentially sue someone based on any of the following principles, or some combination of them:
Again, the law in your state will govern which theory might best fit your case, and you'll want to consult a lawyer.
Your main options for actually filing a lawsuit include:
Filing in small claims court allows you to proceed with your case without a lot of the expensive administrative hassles of a "regular" lawsuit. You can represent yourself (in some states, attorneys are actually forbidden), the rules are typically not as rigid, and your case should be resolved relatively quickly.
However, every state places a dollar limit on the amount of damages you can sue for—usually somewhere between $1,500 and $15,000. To find your state's exact limit, see 50-State Chart of Small Claims Court Limits. Even if your damages are over the limit—for example, if the repairs cost $8,000 and the limit is $5,000—bringing a suit for $5,000 and forgetting about the rest might make economic sense because you will save time and attorney's fees.
If the amount of monetary damages you're asking for exceeds the small claims court limit by enough that you're not willing to forego the difference, your next option is filing suit in state court, most likely with the help of an attorney.
Some attorneys will take this type of case on a contingency basis, meaning you don't pay a fee upfront but pay a large percentage (30-40%) of the damage award. You might still be responsible for paying court costs and other fees, plus expenses such as the attorney's phone calls and postage. Or, the court might award reimbursement of attorney's fees as part of your damages.
]]>You might therefore need to assert your rights against the builder, most likely based on the builder's warranty. This might be as simple a process as communicating with the builder, or it might involve making a formal claim and eventually going to court.
At least a year's worth of seasonal changes is often needed to put a newly constructed house to the test. For example, only in winter might you discover that water seeps into the basement or around window frames, that the landscaping was badly graded and leads to mudslides, or that your home has a mold problem. And guess what: Your homeowners' insurance policy probably doesn't cover construction defects.
Most home builders issue new owners a warranty (often called a "limited warranty") on their work, either within the sales contract or as a separate document. Interestingly, such warranties aren't necessarily required by state law, though you'll certainly want to check on the law in your state, and perhaps hire a lawyer for a consultation.
The builder's warranty's maximum term is typically actually a combination of time periods, based on the type of needed work. It might be broken up, for example, into one-, two-, and ten-year terms. Homeowners commonly receive:
The result is that some of the best parts of the builder's warranty expire quickly, such as for carpeting, tiles, paint, and roofing.
If you received a warranty from your home's builder, read it over to determine its length, who is supposed to handle problems (the builder might have bought third-party insurance), and what's covered and excluded.
Pay special attention to your own responsibilities under the builder's warranty: you might have been given a detailed list of maintenance obligations. Ignoring these gives the builder a perfect excuse to deny you protections under the warranty.
Typical exclusions from a builder's warranty include:
Some home defects are hard to detect, so it's worth keeping track of upcoming expiration dates, then worth paying a professional to point out what the builder needs to fix.
In fact, many builders' warranties or contracts say they'll send a quality-control inspector within the first year to check on your house. Keep track of that date yourself, and make sure the builder's inspectors truly seem to be scouting for trouble. If not, hire your own. In preparation for any inspection, make a list of every problem you've observed. Something as apparently minor as a cracked tile could indicate a major problem, like a shifting foundation.
If the defective or damaged item is covered by the builder's warranty, read what it says about procedures for filing a claim. Many warranties require you to send written notification to the builder, while others give you a hotline to call.
In fact, sending a letter to the builder is a good idea regardless of what the warranty says. This shows that you're serious about asserting your rights, and creates evidence that you might later want to use in court. Send the letter by certified mail with a return receipt, so the builder can't later claim not to have received it.
Also keep notes on your every conversation with the builder, including the dates. You can use this information to confirm, in your letters to the builder, what you agreed to. And they might also be good to show to a judge someday.
Be prepared to act quickly. Sometimes you can protect your rights just by notifying the builder of problems within the warranty period. However, some warranties are cleverly written to let the builder string you along without making the repairs until the warranty period has run out and you've lost your rights. (Don't bring in any outside contractors to do repairs yet, as this could allow the builder to cancel the benefits of the warranty.)
If your builder isn't accepting responsibility, figure out whether a manufacturer's warranty might apply; for example, to an appliance, windows, roof shingles, or other product. You might be able to argue that the product itself failed, in which case a manufacturer that stands behind its product will provide replacements and repairs.
The catch, however, is that the product needs to have been installed properly, and improper installation in new construction is often the very core of the problem.
If items in your new house simply remain uncompleted, what happens next depends on what you agreed to at the closing. Your contract might have allowed you to do a closing inspection of the home, at which time you and the builder should have created a punch list of items yet to be done. The seller has a contractual obligation to fix the items on that list, and you should keep insisting on follow-through. Don't assume that the home warranty covers uncompleted items: some warranties specifically exclude them.
Has your builder gone missing? A few builders are fly-by-night operations that close up shop, leave town, and change their name as soon as the work is done (or near to done). For cases like these, go straight to a lawyer for help.
]]>However, that succession of events comes with risks. Imagine that you contracted to purchase a two-story house with three bedrooms and a jacuzzi, but when you moved in, there were only two real bedrooms plus a bonus room with no closet, and no jacuzzi. Or perhaps the bedrooms were all smaller than promised. Or perhaps the heat throughout the home is faulty, costing you thousands of dollars in repairs.
Construction defects are not uncommon in new home construction. Whether the defect represents a major material misrepresentation by the builder (like a missing jacuzzi) or a fixable but important problem (like faulty electric work), construction defects lower the value of your home. How does South Carolina law help you recover against the builder or developer for such defects?
Once you discover a construction defect, don’t run off to court just immediately. In South Carolina, for residential construction, a builder has an automatic right to cure any defects that emerge before litigation can proceed. Basically, this means you need to tell the builder about the problem so the builder has a reasonable chance to fix it.
Under S.C. Code § 40-59-840(A), a homeowner must serve a written notice of claim on the builder at least 90 days before filing suit. Basically, this is a letter that details the defect and the problem(s) it's causing. You might include photographs, as well.
The builder then has 15 days in which to request any needed clarification, and 30 days from receiving the letter in which to inspect the problem and either deny the claim or offer either a monetary settlement or a remedy. You must allow the builder to inspect your home. You'll have 10 days in which to respond to an offer from the builder.
If the builder denies your claim or fails to respond within 30 days, then you can begin litigation.
When you arranged for the construction of your South Carolina home, the builder or developer likely gave you a stack of written materials describing the place. You probably signed a contract outlining your payment and the builder's promise to construct the home according to certain specifications.
Part of your lawsuit against the builder will likely be that it breached this agreement; it failed to construct the house as agreed upon. Here, all of the materials the builder gave you, including photos, floor plans and descriptions of the home, and lists of materials, finishes, or appliances, will be useful in demonstrating your rightful expectations. If, for example, the various documents show that you thought you were getting a home with a two-sink master bathroom but the room contains only one sink, this demonstrates the builder’s breach.
Don't delay: South Carolina has a three-year statute of limitations for breach of contract claims, under S.C. Code § 15-3-530. This means that claims based on a contract with the builder must be brought within this period, or they are barred.
An exception to this would be when a homeowner could not have reasonably discovered the existence of the breach until after the period. For example, if the deck collapses after seven years because the builder used low-quality wood and the homeowner couldn’t have reasonably known, a lawsuit that commences at that point should be accepted.
Another legal theory upon which to sue a South Carolina builder is negligence. Ordinary negligence in the context of construction defects is said to be the builder’s failure to exercise the correct standard of care.
In order to establish a claim for negligence, a party must demonstrate that:
South Carolina courts hold that builders have an implied duty to perform services required by their contract with homeowners in a skillful, careful, diligent, and workmanlike manner, even without a written agreement.
South Carolina has an eight-year statute of limitations for property damage caused by basic negligence, found in S.C. Code § 15-3-640. Thus a homeowner who waits until the builder has been “off the job” for nine years is probably barred from filing suit for the alleged construction defect, regardless of when the defect was discovered.
This is different from the law in many other states, where the limitation period is tolled (delayed) based on when the homeowner discovers the existence of the defect. This statute is meant to give certainty to builders, so that they need not worry about potential claims after eight or more years have gone by.
However, it means that homeowners must be vigilant about the condition of their home to ensure they do not get blocked by the statute. If you see any signs of trouble with the construction of your new home, investigate further rather than waiting for it to fully manifest! A small leak or other problem could be a sign of something larger lurking beneath or within.
Before filing your lawsuit, check your contract to see whether other steps must be taken first. Many construction contracts contain a dispute resolution clause. That clause might provide that the homeowner is required to go to mediation with the builder or developer before filing suit. Mediation, in this situation, means a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have experience with construction law, engineering, or building development.
Your contract might also have an arbitration clause. This would require that you go to arbitration against the builder or developer instead of litigation in a court of law.
In arbitration, either one or three individuals (typically with experience in construction) will issue a final determination on your dispute. The advantage of arbitration is that it is usually quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions are ordinarily final, that is, not subject to appeal or further court proceedings.
Lastly, take note of any language within the contract that shortens your statute of limitations period or ability to make legal claims. It is not uncommon for construction contracts to shorten the amount of time that the homeowner has in which to file a claim against the builder.
An attorney with experience in construction defect litigation in South Carolina will be able to discuss with you whether these limitations can be enforced against you and help you further explore your likely remedies.
]]>California law requires sellers of single-family properties to disclose to potential buyers, in writing, any details about the home or land that could affect the potential buyer’s desire to purchase it or the amount the potential buyer is willing to pay. This applies to nearly all types of property sales, whether of a regular home, a high-rise condominium unit, or a manufactured or mobile home. It doesn't apply to all types of sellers, however; for example, if the owners who had actually lived in the home died, and it's going through probate, the estate administrator would have no disclosure obligations.
The facts concerning the property’s condition that must be disclosed are frequently called “material” facts, and a real estate seller can face severe penalties after failing to disclose one. (See California Civil Code § 1102.)
Material facts frequently involve information concerning the property’s walls, ceiling, floors, insulation, roof, windows, doors, foundation, driveways, sidewalks, fences, electrical systems, plumbing systems, or other structural components. This is not a complete list, as any fact concerning any part of the property can be a material fact if it affects the property’s value, desirability, or ability to be used as intended.
In California, material facts are most often disclosed by completing a form called a “Transfer Disclosure Statement,” which your real estate agent might also refer to as a “TDS.” The point of the Transfer Disclosure Statement is to accurately describe the condition of the property. You should check your TDS to see if the seller did, in fact, fail to disclose the defect now troubling you.
So, in our mold and moisture example above, the relevant section would be part “B” which asks, “Are you (Seller) aware of any significant defects/malfunctions in any of the following?” If the seller failed to check the box next to “Roof,” the seller has failed to disclose that defect.
If the property sellers concealed a known defect, you can potentially sue for fraudulent misrepresentation. You will have to prove that the seller actually took steps to hide the problem, as opposed to having perhaps been unaware of it.
You might be able to prove the sellers' intent to conceal from conduct, such as their having painted over the evidence of the roof leak. You might also prove the sellers' intent to conceal a defect based on any instructions given to a real estate agent not to tell you, or other prospective purchasers, about the concealed defect. Speak to your neighbors, your agent, and perhaps even the sellers' agent, to gather all relevant facts.
If you end up filing a lawsuit, your lawyer will take depositions (interviews of relevant parties) and gather evidence to establish whether or not the seller was aware of the defect and concealed it from you.
If you can prove that the seller of your California home was aware of the defect and concealed it instead of disclosing it, odds are you have a case for fraudulent misrepresentation. You might also have a case against the sellers' real estate agent, your agent, as well as any inspectors who knew, or should have known, about the defect but didn't tell you.
If you go to court, you may be awarded one or more of the following:
1. Compensatory Damages: The sellers could be forced to pay compensatory damages, to compensate you for any out-of-pocket costs associated with the concealed defect. These could include the cost of repair and any diminution in property value resulting from the defect.
2. Punitive Damages: If you can prove that the property seller acted with malice in concealing the defect, you might be able to recover punitive damages. Punitive damages can be awarded by the court in addition to compensatory damages, as they are intended to punish the wrongful conduct and deter the sellers and others from committing future fraudulent acts.
3. Rescission: In rare, serious cases, the purchase agreement can be rescinded, or cancelled by the judge, such that you would get your money back and the sellers would get the house back.
Going to court is not your only option. It can be faster and less expensive to try to resolve your issue less formally. A good first step is to contact the:
Accidentally injuring someone or damaging property can end up costing you a lot of money—especially if the injured person gets an attorney and sues you. Attorneys look for money, and the equity in your home is an attractive option. To help protect against this, homeowner’s policies usually provide coverage both for accidents that happen on your property (like slip and fall claims) and those that occur away from your home.
Your homeowner’s insurance does not cover accidents that happen in your car. That's where your automobile insurance comes in. Not all accidents happen on the roadway, however. For example, if you accidentally dump your piping hot casserole on your pastor while at the church social, or you sideswipe someone’s head with your skis in the ski lodge, your homeowners’ policy may protect you—as long as you did not do it on purpose, that is.
The law expects everyone to act reasonably at all times. If you don't do what a reasonable person would do in the same situation, and someone ends up getting injured as a result, the law says you are “negligent.”
For example, a reasonable person looks ahead when walking down the street. If you accidentally knock someone down while you're looking at your phone, you may be negligent because you weren't watching where you were going.
The good thing is your homeowner’s policy usually covers you and your family’s negligent behavior no matter where it happens. For example, if your son accidentally hits a baseball through your neighbor’s window and you have liability insurance, it's probably covered. If your toddler son darts in front of an elderly woman walking in the mall and causes her to fall, your policy should take care of her injuries too.
Learn more about fault for an accident.
Your homeowner's policy will not cover intentional acts in which you purposefully try to hurt someone or damage property. Examples include assault and battery, vandalism, and workplace or sexual harassment. Standard homeowner’s policies do not cover these types of actions. (Learn more about intentional torts.)
Getting documents with the words "Summons" and "Complaint" at the top is a sure sign someone is suing you. When this happens:
Learn more about what happens when you get sued in small claims court.
If your homeowner’s insurance covers the action, you may be in luck, because there are a number of potential benefits.
The insurance company assigns an experienced attorney to your case. The attorney responds to the complaint and decides the best course of action for the lawsuit. You still need to help the attorney defend your case, however. This includes:
Having said all of that, keep in mind that in most instances, the insurance claim will reach a settlement with minimal participation from you.
Liability insurance pays for the things that the people suing you are asking for—such as the cost of accident-related medical care, property damage, and the physical and mental "pain and suffering" caused by the injury.
Your insurance coverage also pays for your litigation costs, such as expert witness and jury fees, as well as the other side’s attorneys’ fees (if payment of those becomes an issue).
While liability insurance is standard in most homeowners’ insurance policies, there is no law that requires you to have this kind of coverage. So, it makes sense to check with your insurance company and make sure that liability insurance is included in your policy. It could be invaluable if you find yourself in any of the situations we've discussed here.
Any time you cause an injury or damage to someone else's property, and you think you might face a lawsuit, it's important to act quickly to protect yourself.
As we mentioned earlier, your best first step is to figure out if any insurance policy you hold might come into play:
If the incident is covered, a representative of the insurance company will walk you through what you need to do next.
If the incident isn't covered by your auto or homeowners' insurance, and there are no other potential sources of insurance coverage (like an umbrella policy), you'll likely be personally on the financial hook if someone sues you. At this point, it might be worth it to discuss your situation with an experienced legal professional. Get tips on hiring and working with a lawyer.
]]>Before you look into whether the builder is responsible to fix the home defect you’ve found, you must first prevent the problem from causing any further damage. The builder is not responsible for any damage that occurs to the home after you’ve discovered the problem.
This means that once you discover the leak in the roof, if it is causing damage to the home, you must repair it as soon as possible. Even if the builder must ultimately repair the leak (or reimburse you for the repair), the builder will not be responsible for replacing the carpeting that got wet and ruined during the three storms that occurred after you discovered the leak.
If you make any repairs to prevent further damage, keep receipts and detailed records of their costs. Also keep any estimates or bids you receive from professional contractors to completely fix the problem. These documents are necessary to show the amount owed you if you are later successful with a claim against the builder for the home defect. If you can, take photos or a video of the defect and any damage it has caused. These can also provide useful documentation in any later claim against the builder.
After you complete any necessary repairs, the first place to look to determine whether the builder is responsible to fix the defect is to the terms of the written warranty given by the builder.
Under Georgia law, home builders must provide a written warranty to the buyer before starting work on any job valued at over $2,500. (Georgia Code §43-41-7.) The warranty provided by the builder for the new home must, by law:
(The warranty requirements are found in the Georgia State Licensing Board’s rule 553-07).
Carefully review the terms of the builder warranty and follow all the procedures it calls for to make a claim. Usually a builder’s warranty covers only defects in materials and workmanship (and specifically does not include normal wear and tear) for a specified period of time (typically one year).
Normally, if the defect is something covered under the warranty, and you make a claim within the warranty period, the builder will be responsible for fixing the problem or reimbursing you for the cost of fixing the problem (this is where that documentation relating to the defect and the repairs is useful).
If that doesn’t happen, of course, it’s time to see a lawyer. The first thing the lawyer will ask to see is your copies of any written claims or requests that you sent to the builder and the builder’s responses, and your dated notes of any telephone conversations, so start keeping a file now.
If you find that the defect you’ve discovered with the home is not covered under the builder’s warranty (maybe it’s specifically excluded, or the problem appeared after the warranty period expired), you might not be out of luck.
Under Georgia law, an owner’s alternative legal claims against the builder include breach of contract, negligent construction, or fraud. Whether you have a legitimate basis for such a lawsuit depends on the facts of your particular situation.
For example, if the home was not constructed according to the terms of the plans and specifications that you as, a buyer, signed off on as a part of the agreement for the purchase and sale of the home, you might have a claim against the builder for breach of contract.
If the problem is due to the home’s poor construction (for example if you can show that the roof leak is due to the fact that the builder constructed the roof in a shoddy manner that no other builder would use), you might be able to bring an action against the builder for negligent construction.
If the builder outright lied about the quality or type of materials used, or deliberately concealed facts about the home (for example if the driveway cracks are due to the builder knowingly using a defective concrete that the builder told you was top of the line stuff), you might have a claim against the builder for fraud.
Although there is a limit to how long you can wait to file a lawsuit after discovering a problem with the condition of the home, this time limit (known in legalese as the “statute of limitations”) could be longer than the warranty period. In Georgia, any claim for breach of contract must be brought within six years of the discovery of the defect (Georgia Code §9-3-24).
Also, any claim for negligent construction or fraud must be brought within four years from the time the claim arises (Georgia Code §9-3-30).
If you believe you have a valid legal claim against the builder for a defect in your newly constructed home, and you are within the time period allowed for starting a lawsuit, you still cannot jump right in and file a complaint with the courts. Under Georgia law, you must first provide the builder with certain notifications. Georgia’s Right to Repair Act (Georgia Code § § 8-2A-35 through 8-2A-43) sets out certain steps that an owner of a newly constructed home must follow prior to filing a lawsuit, and allows the builder to resolve the problem before a lawsuit is initiated.
You should be able to find the relevant provisions of the Right to Repair act in your purchase and sale agreement for the home (a Georgia builder must provide buyers with notice of the provisions of the Right to Repair Act in any sales contract for a newly constructed home).
You'll see that the law says that before you (the homeowner) can initiate a lawsuit against the builder for a new-home defect, you must first send written notice to the builder regarding your claim. The notice must:
After receiving the notice, the builder has 30 days to give you a written reply, choosing either to settle the claim without an inspection (by paying the cost of the repair, making the repair, or both), or to inspect the defect and determine the need for any repairs. If the builder chooses to inspect the defect, after the inspection the builder must provide you with a statement either refusing to fix the defects (including the reasons) or offering to pay for or repair the defect (or both). If you reject the builder’s offer, if the builder refuses to fix the defect, or if the builder fails to respond to your notification, then you may file a lawsuit.
Ideally, by following the steps of the Right to Repair Act, you can reach a resolution with the builder without needing to resort to a lawsuit. Since bringing a legal action involves a lot of time and expense and an unpredictable outcome, both the homeowner and the builder benefit if they can resolve problem without bringing it to court.
Hopefully, as the owner of a newly constructed Georgia home, you will find it’s well constructed, in great condition, and you will settle in and enjoy living there with no problems. If you do discover a defect with the home after moving in, however, and are unsure the best way to proceed, contact a construction law or real estate attorney in your area. A professional can help you determine the best course of action, and ensure you are following the correct procedures to get a speedy resolution to the problem.
]]>You might discover the problem when you take possession, or you might discover it weeks, months or years later. Do you have to pay for the repairs, or is it possible that someone else is at fault, and should pay? If someone else is responsible, how do you get that party to pay their fair share? Do you have to file a lawsuit or are there other ways of obtaining compensation for your losses?
This article will examine which parties may be liable to you, as the home buyer, for defects in your previously constructed home that stemmed from before the purchase date, the remedies to which you may be entitled, and suggested actions to consider when you find a home defect.
Recognize, however, that no home comes with a guarantee that it will remain in the same condition it was when you bought it. If your home develops new problems, or suffers the effects of aging, these are not issues you can take up with anyone who was involved in selling it to you except in the unusual case where the seller specifically provided a warranty to cover that issue. New problems are the reasons that you buy homeowner’s insurance and perhaps a home warranty (covering repairs of major appliances and home systems) for the property.
When determining who may be responsible to pay you for home defects, you can start by identifying the parties who were involved in your home purchase. These potentially responsible parties include:
There’s no need to choose among these. You can file suit or pursue other appropriate remedies against any of all of them, if they’re at fault.
Once you have identified potentially responsible parties, you’ll want to determine whether any of them did, or failed to do, anything that could make them liable to you. Let’s take a closer look at the situations that may make each possible party liable to you.
The seller may be liable to you for:
In Illinois, sellers may be responsible to buyers for home defects under the Illinois Residential Real Property Disclosure Act (the Disclosure Act). (765 ILCS 77/1.) The Act requires Sellers to check off defects from a list of potential defects set forth in the law, and to explain them in detail.
If a known defect on the list the seller gave you was not checked and explained, and you have evidence that the seller knew about the defect (or in some cases, should have known about it) at the time of sale, the seller may be liable to you. The seller may also be liable to you for failing to disclose property defects under Illinois common fraud and negligence laws. For more information about the seller’s disclosure responsibilities, see Nolo’s article: "Illinois Home Sellers: Disclosures Required Under State Law."
Whether or not the seller is liable to you under your purchase contract depends on what it says. In some form contracts frequently used in the Chicago Area, the seller gives a warranty guaranteeing that certain fixtures, appliances, components, and systems sold along with the property will be in operating condition at the time of the closing, or when possession is transferred if before or after the closing.
Read your contract carefully, because the seller’s liability varies depending upon the specific language of the contract form used. Be ready to act quickly in such a case. The longer you wait after the closing to raise such a seller-warranty issue, the more it may appear that you’re raising a newly developed, not latent problem.
The property's listing broker may be liable to you for failure to disclose a known defect, or for failing to investigate and confirm information about the property included in any listing sheet or advertisements for the sale of the property, under the Real Estate License Act of 2000 (RELA) (225 ILCS 454/1). Any broker who was involved in your purchase may be liable for false or misleading statements under the Illinois Consumer Fraud and Deceptive Business Practices Act (the Illinois Consumer Fraud Act) (815 ILCS 505/1). Similar to the seller, a broker may also be liable to you under case law for fraud or negligent misrepresentation. For more information about brokers’ responsibilities and potential liability to a buyer, see Nolo’s Article: "Home Sales in Illinois: What the Listing Real Estate Broker Must Disclose."
Your home inspector may be liable to you for failing to list the defect in the in the inspection report you received prior to closing. In Illinois, the Department Of Financial And Professional Regulation has set minimum standards for home inspections. (68 Ill. Admin. Code §1410.200.)
These standards require the inspector to list the systems and components to be inspected in a written contract with you, and provide you with a report that describes the inspection results. In the inspection report, the inspector should specify those systems found to be unsafe or not functioning, and state whether each reported deficiency should be corrected or monitored. Again, you will want to look for evidence that the inspector actually saw, or should have seen the defect in question.
The inspector may have limited his or her liability to you in the inspection contract. Common liability limitations include: time limits for making claims, written claims-notification requirements, or a cap on the damages the inspector may owe you, set at the price of the inspection. For example with respect to the cap, if you paid $250 for the inspection, but the overlooked defect cost several thousand dollars to repair, the inspector would owe you only the $250. (See Zerjal v. Daech & Bauer Constr. Inc., 405 Ill.App.3d 907 (Ill. App., 2010).)
It is important to act quickly after discovering a home defect, because liability is limited by time. Take steps to protect your rights immediately, in particular by:
You may wish to contact the attorney who closed your purchase, or another experienced real estate attorney to help you with these steps.
A strong demand letter that describes the defect, and the reasons you believe the party is responsible, may persuade that party to compensate you without a lawsuit. If you are unable to reach a settlement, you may file a lawsuit or seek some alternative dispute resolution such as mediation.
Lately, more people are relying upon mediation to solve property defect disputes. The mediator acts as a disinterested third party who helps reach a voluntary agreement. Some Illinois courts provide voluntary mediation at no charge, and some even require court-provided mediation before the judge will hear the case. However, most often, the parties choose a private mediator, and split the mediator’s fee.
If mediation is not required by the court and you feel that it is not appropriate for your situation, or your attempt at mediation is simply unsuccessful, you may file a lawsuit. The filing procedure depends upon the particular law under which you claim damages and the amount of damages sought. You may file a claim in Illinois small claims court if you seek damages of $10,000 or less.
The type of compensation you may win depends on the law that makes the other party responsible. Under the Disclosure Act and the Illinois Consumer Fraud Act, you may win actual damages, usually calculated as the cost of the necessary repairs, court costs, and attorney’s fees. Under the Illinois Consumer Fraud Act, you may also win punitive damages –damages not simply to compensate you for a loss, but to punish the deceiving party.
Under general fraud laws, damages are calculated to give you the benefit of your original bargain -- the difference between the value of the property without the defect and the actual value of the property.
]]>Here's how to get flood insurance, and what it will and won't cover. (For general information about homeowners' insurance, read Homeowners' Insurance: What You Need to Know to Be Fully Covered After Damage or Loss.)
You can purchase flood insurance from your broker or agent through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA). Flood insurance is available to any homeowner who lives in one of the many NFIP-participating communities (which have agreed to pass and enforce certain storm water and flood plain management laws).
If you need an agent, call the NFIP at 888-379-9531 or visit its website at www.floodsmart.gov.
A flood insurance policy through the NFIP can provide maximum coverage of $250,000 for property and $100,000 for contents. (Property and contents coverage must be purchased separately, even though they may form part of the same policy.) How much you'll pay for premiums depends on numerous factors, such as location and the deductible you choose.
If you want additional coverage, you can purchase excess flood insurance from private insurers.
If you buy a home in a designated high-risk flood zone and get a mortgage loan from a federally regulated or insured lender, your lender must require that you purchase flood insurance.
If you live in a zone that's been designated moderate- or low-risk, you don't need to buy flood insurance for your lender's sake—but might want to do so anyway, especially if your own observations indicate that the official designation on your area are out-of-date (a common problem). According to FEMA, over 25% of all flood insurance claims come from areas with low-to-moderate flood risk. The good news is that you'll qualify for a preferred-risk policy, the premiums which are on the low side (for both property and contents).
Here's what flood insurance pays out for each type of property covered:
A good flood insurance policy can be a financial lifeboat following a destructive event such as a hurricane. But flood insurance doesn't cover everything. Before buying, you should know about the following key restrictions and limitations, which are specific to flood insurance.
If something breaks or malfunctions inside your home—for instance, pipes freeze and burst or a toilet overflows—and this leads to flooding, your flood insurance policy won't apply. However, your homeowners' policy should cover these types of losses. Ask your agent or broker to give you the lowdown.
If something goes wrong with a swimming pool on your property and this causes your home to sustain flood damage, your flood insurance policy won't apply. Also, don't expect reimbursement for flood damage to flower beds, vegetable gardens, trees, or other landscaping on your property.
To be considered a flood, the water that causes damage must have covered at least two acres or have affected at least one other property. Also, if your home sustains any mold or mildew damage that you could have prevented from occurring, your policy won't cover dealing with the resulting damage.
Your flood insurance policy won't pay you for any living expenses you might incur (such as renting a hotel room until your property is fixed). Also, you won't be able to recover any financial losses caused by business interruption (if you operated a business out of your home) or any other loss of your home's use.
Your policy won't pay for the value of any currency, precious metals, stock certificates, and other valuable papers that get destroyed in a flood.
Your flood insurance policy won't cover any improvements you've made to your basement, such as finished walls or floors. Also, almost all personal property (including clothing, computers and electronic equipment, kitchen and office supplies, and furniture) located in basements or other areas of your home below the lowest elevated floor aren't covered.
Unlike other types of insurance, flood insurance coverage doesn't kick in on day one. With few exceptions, you must wait 30 days after first purchasing a flood insurance policy before it will take effect. So, the longer you delay looking for coverage for your home, the greater your risk of suffering a loss before the policy is actually in place.
Even if the next hurricane season is months away, you could still benefit from getting a flood insurance policy sooner. In addition to damage from hurricanes, a flood insurance policy will also protect you from losses from other causes, such as heavy or prolonged rainstorms, coastal storm surges, snow melt, clogged storm drainage systems, levee dam failures, and mudslides.
]]>New Mexico statutes do not actually require sellers to tell prospective buyers about defects with their home before the sale. By custom, however, home sellers in New Mexico fill out a "Seller's Property Disclosure - Residential" form, prepared by the state's Realtor association. You should have received one from the property seller before making an offer on the home (most likely via the seller’s real estate agent).
Review this form now to see what the seller did or say about the property defects in question. Even without a statute concerning disclosure, New Mexico courts are clear that property sellers can be held liable for fraud or misrepresentation.
So, if you do get an unpleasant surprise after moving into your New Mexico home, what can you do? First, take note that the bottom of the standard disclosure form contains important language. It states in big, bold letters that: “This is not a contract.”
In other words, the seller has not guaranteed anything, but merely disclosed defects with the property within his or her “actual knowledge.” A seller who doesn't know about a particular problem has no duty to hire an inspector before checking the “no” box on the disclosure form. There could be many issues with the house that the seller was unaware of, and therefore had no duty to tell you about.
On the other hand, the bottom of the disclosure form reminds sellers that: “The law does not protect a Seller who makes an intentional misrepresentation.”
If, for instance, the seller knew that the air conditioner does not work, but checked the “no” box on the form anyway, without mentioning the air conditioner, this might constitute fraud. In legal terms, fraud results from one party making a statement that is knowingly false in order to induce another party to take an action, in this case to buy a defective piece of property.
Moreover, you might have a breach of contract cause of action against the seller if the language of your purchase contract made specific promises or representation (beyond whatever is stated in the disclosure form). For example, if the purchase contract promised that the air conditioning would be in good working order, but it was not, this would constitute a breach.
If you discover a defect of this sort in your New Mexico property, you should immediately write to the seller, broker, or both, stating the problem and outlining your damages. Demand letters can sometimes make a potential defendant willing to settle a dispute early on.
Litigation can be costly, and you should weigh the value of a potential recovery against the costs of a lawsuit. For example, if the refrigerator does not work, this might cost a few hundred dollars to repair. But a lawsuit against the seller for fraud or breach of contract might cost far more.
]]>But what if, weeks or months later, you've started to notice problems no one warned you about? Let's say, for example, there's a strange smell in the basement, which turns out to indicate an extensive water leak, which causes mold. You hire an engineer (at great expense), who surveys the home and notifies you that the the leak is one of several major structural deficiencies. The original home inspector missed all of these.
As a homeowner, do you have any chance of a financial recovery from your home inspector to cover the cost of such repairs? That's what we'll consider here, including:
Before reaching the issue of claims against the home inspector, consider making a claim against the home seller. Different states have different rules and regulations governing suits against sellers for undisclosed, known defects. Or, if you purchased a newly constructed home, you might have legal claims for defects against the home builder.
In most states, sellers can face liability if they fail to disclose a material defect with the home that they knew about at the time of sale. A material defect is not something minor, like chipped paint in the garage; rather, it's something like a termite problem or a collapsing roof. The key, however, is that the seller must have known about these material defects at the time of sale, and failed to disclose them to you. It's also important that you didn't see the defect for yourself or couldn't have easily done so.
Read more about suing the responsible party.
There are multiple legal theories upon which you could sue the home inspector.
For example, you might have a claim for "negligence" or "professional malpractice," if the inspector deviated from the professional standard of care in the course of the inspection. Negligence is ordinarily defined as the failure to act as a reasonable person in the same shoes would have acted, where damages result from the behavior. The best way to prove that your inspector was negligent is to show that a reasonable inspector, looking at the same place, would have discovered the defects.
How can you prove this negligence? Consider finding a second (or even third) inspector to examine the property, in order to get multiple opinions. If you have two experts who view your home and write reports stating that the original expert should have discovered a particular defect, this would be compelling evidence against the original expert.
Also take photos of the area before starting any clean-up efforts, both to show the extent of the damage and to provide any clues about whether old problems might have been visible during the inspection itself.
You might also have a cause of action for "breach of contract," particularly if you had a written contract with the inspector in which he or she agreed to perform certain specific types of review that were, in fact, never actually performed. For example, the contract might have required the inspector to perform certain specific tests on the pipes. In this case, the breach of the contract could lead to consequential damages; that is, damages that were reasonably foreseeable from the breach. That might, for example, be the cost of repairing the damage from the burst pipe.
An important note of caution before you run to court: Many home inspectors limit their legal liability within the contract homebuyers sign with them, using what's called an "exculpatory clause." For example, the contract might explicitly limit any liability resulting from the report to simply the price of the contract (the amount of money paid to the inspection firm).
This amount of money is likely insignificant compared to what you will have to pay to cure various structural or mechanical defects found in your home. Nevertheless, that sort of limitation on liability could severely reduce your chances of recovery in a court of law.
More broadly, the contract might disclaim liability for areas the inspector couldn't see or access. So, if the home seller had built flooring in the basement which made seeing underneath it impossible, the inspector might have simply noted on the report that it was impossible to see further, leaving you to follow up and bear responsibility.
If you believe you might have legal claims against your inspector, it could be worth sitting down with an attorney and reviewing the contract you signed with your inspector. Your attorney will be able to help you analyze any limitations on liability within the contract document under your state’s law.
Even if your contract contains an exculpatory clause that would limit liability, the inspector probably does not want to deal with an expensive lawsuit; particularly since lawsuits are publicly filed. Public litigation and an unhappy customer can be worse for business over the long run than a quick settlement.
The inspector's firm might have insurance to cover minor settlements. A confidential negotiation or mediation might be the best mechanism to achieve a settlement of your claims against your inspector.
]]>If you discover a significant defect with your home following the closing, you might be able to seek recovery from the seller in court.
Ohio law requires sellers to make certain explicit disclosures of home defects to potential buyers under Ohio Revised Code Section 5302.30. The seller of residential real estate is legally required to complete a form—known as the Residential Property Disclosure Form (“RPDF”)—disclosing conditions and defects with the property, and provide it to a potential buyer.
As a buyer, you should make sure that your seller actually gave you a completed RPDF before you closed on the sale.
Note the bold text on the front page of the form, encouraging potential purchasers to hire their own home inspectors regardless of any disclosures made or not made by the owner. This is a reminder that you're on your own (have nothing to sue over) when it comes to matters that the seller didn't know about or that weren't covered on the form.
Reading the RPDF, you will see that the seller should have disclosed—and possibly did disclose—to you any and all known material defects with respect to many critical aspects of the home, such as water and sewer systems, electrical systems, structural support, code violations, and so forth. Minor issues, such as loose doorknobs or paint scratches, do not warrant disclosure.
Read more about an Ohio seller’s disclosure obligations.
You might have heard the phrase “caveat emptor,” which is Latin for “buyer beware.” This legal doctrine holds that if there are defects in the home, it is the buyer's responsibility to conduct an inspection and find them before paying the purchase price.
Ohio observes this doctrine to a limited degree, alongside the statute requiring disclosure. The warning to buyers to conduct an inspection is an obvious example of that, as is the lack of seller liability for problems the buyer could have readily observed. If, for example, the house had a huge hole in its side, and the buyer still purchased it, the buyer could not later claim that the defect was not disclosed and the seller is liable.
Some sellers try to include the “caveat emptor” concept as a clause in the purchase agreement for the home, sometimes in the form of an “as is” clause. This essentially states that the buyer takes the home as it currently exists, without any expectations or promises by the seller about its quality.
Unfortunately for sellers, Ohio courts frown upon the use of “as is” clauses to avoid liability for the fraudulent concealment of a known defect. If, for example, the seller knew that the HVAC system was shoddy, failed to disclose the condition, and included an “as is” clause, a court might allow the buyer to go ahead and seek damages against the seller.
Ohio sellers can be held liable for failing to disclose a material defect. For example, if a seller knew that whenever it rains, the basement quickly floods, but failed to disclose this information, the buyer who discovers this can potentially sue.
For the buyer, the legal challenge will be showing that the seller in fact knew about the existence of the defect. A major defect like a flooding basement might be relatively easy to show the seller's knowledge of, based on evidence of past flooding, records from repair people who visited the house at the request of the previous owner, and so on.
A more minor or hidden defect, like a crack in the foundation that was hidden behind some structure, clogged sewer pipes, or termites borrowing deep into a wall or attic space, might be more difficult to prove the seller's knowledge of. Still, it is not necessarily impossible, if you can dig up evidence that the seller brought out repair people who noticed the problem, for example.
Also, if the seller took steps to hide a problem (such as plastering over a spot where termites punched through), that could provide damning evidence; enough to add a claim of fraud to your lawsuit.
]]>Unfortunately, just because a Texas builder promises you a state-of-the-art home does not mean that the final product will be perfect. For a variety of reasons, you may be dissatisfied with the home after you move in. Perhaps the air-conditioning is weak; perhaps the tiles in the kitchen are improperly installed; or perhaps the builder actually misrepresented the size or scope of the home, promising you four full bathrooms when the home contains only three and a half.
These problems are commonly known as “construction defects.” They make living in the home less satisfying than you'd hoped for, and in some cases require expensive repairs and remodeling. And such defects lower the value of your home, should you want to resell. How can you use Texas laws to recover against your developer?
Home development contracts can be complex. Not only are the laws involved complex, but many builders are parts of statewide or nationwide corporations with teams of attorneys to defend them. You cannot be expected to win this fight on your own.
If you believe that significant defects exist in your newly built Texas home, you should consult a local attorney – preferably one with experience in Texas real estate or construction – about your situation.
Suing a developer is different from filing a small lawsuit against a home contractor, for example, which can often behandled without an attorney in Texas’s Small Claims Court. This type of action is ideal for a small dispute with a painter who, for example, fails to complete a specific task. A lawsuit against a developer is a larger project, one that generally requires an attorney’s assistance.
Some construction defects are obvious. Your builder charged you a fixed price for a house with two floors and a swimming pool, but built you a one-story house with no pool.
Other construction defects will not be quite as obvious to the naked eye. For example, what if the builder used a low-quality wood to construct the stairs? Or did not use proper methods to support the deck? These sorts of problems are serious, and lower the value of your home. But to detect them, you may need to invest in an engineering inspection. If you are considering filing a lawsuit against your Texas builder, your attorney may recommend a so-called “expert report,” which will lend objective credibility to your allegations.
Ultimately, your lawsuit against your developer is about its breach of a promise: to deliver you a home as it was described it to you. Buying a newly constructed house is a process that generates lots of paperwork, particularly if the house is within a new planned community. Your builder or developer in all likelihood gave you extensive materials describing your new property. You (and the builder) would have needed to sign a written contract outlining your payment and the builder’s promise to construct the home.
If you end up having to file a lawsuit against your Texas builder, part of your claim will be that it breached this agreement – did not give you what it promised it would. Here, all of the materials the builder gave you, including photos, descriptions of the home inside and out, plans and drawings, and emails describing the work, will be useful to establishing your expectations at the time you entered into the contract.
For example, if the various documents clearly show that you thought you were getting a home with a stucco exterior, and the finished exterior is cheap vinyl siding, this demonstrates the builder’s breach.
One law you'll need to watch out for, however, is Texas's a four-year statute of limitations for breach of contract, under Tex. Civ. Prac. & Rem. Code § 16.004(a)(3). This means that claims based on a contract with the builder must be brought within this period, or they are barred.
However, discovery of the defect can toll (delay) the limitation period in some situations. When a homeowner could not have reasonably discovered the existence of the breach until after the three-year period – for example, if the lights go out after four years because the builder used low-quality wiring and the homeowner couldn’t have reasonably known about it (especially likely, with wires being hidden behind walls) – a court might allow the action to proceed.
Breach of contract isn’t the only basis upon which you might sue your homebuilder. Another useful legal theory is that of ordinary negligence. In this context, the relevant negligence would be the builder’s failure to exercise the correct standard of care in building your home.
To establish a claim for home-construction negligence in Texas, the person filing suit must establish that 1) a particular duty was imposed on the builder or developer by law; 2) the builder failed to conform to that legally imposed standard; 3) there was a causal link between the failure to meet the standard of care and the resulting construction defect; and 4) you suffered actual economic damages as a result of the injury to your Texas home.
Note that Texas has a two-year statute of limitations (a deadline on when you can file suit) for property damage caused by negligence under Tex. Civ. Prac. & Rem. Code § 16.003(a).
Under Tex. Civ. Prac. & Rem. Code § 16.008, a homeowner has a maximum of six years from written acceptance or actual occupancy for design or construction of improvement to real property.
This means that even if you can extend the three-year statutes of limitations on breach of contract or negligence through the doctrine of discovery – that is, when you reasonably could have discovered the problem with your home – six years is the “ultimate” limit. As a homeowner, therefore, you must be diligent in discovering any potential defects.
You and your attorney should carefully read the language of your sales contract. There are a few clauses to watch out for before filing your lawsuit. First, it is common in construction contracts in Texas and elsewhere to find a dispute resolution clause.
A dispute resolution clause may say that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have some relevant experience, most likely with construction law, engineering, or building development.
Your contract may also contain an arbitration clause. This clause would require that you go to arbitration against the builder or developer instead of litigation in a court of law. In arbitration, either one or three individuals – again, typically with experience in construction – will render a final determination on your dispute. The advantage of arbitration is that it is typically quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions generally cannot be appealed.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims. It is not uncommon that construction contracts will shorten the amount of time that you have in which to file a legal claim against your builder.
An attorney with experience in construction defect litigation in Texas will be able to carefully review the document for these sorts of limitations and help strategize how to best seek compensation from your builder or developer.
]]>Clearly, such issues relate to the quality of the materials, the design, and the installation. You probably feel frustrated, and like you deserve compensation. The question is, who are you permitted to sue? Only the developer, or also the architect, general contractor, and any relevant subcontractors?
Most home developers issue new owners a warranty (sometimes called a "limited warranty") on their work, either within the sales contract or as a separate document. See New-Home Defects: Holding Your Builder Responsible Under a Warranty for more information.
In many construction disputes, plaintiffs will try to sue everyone involved in a construction project: suppliers, subcontractors, architects, designers, and various developers. The strategy for doing this is usually the hope that some of these smaller entities (or their insurance companies) will offer settlement monies to escape involvement in the litigation.
Unfortunately, in the situation of a new-home construction project, the homeowner's sole contract is normally made with the developer. The homeowner likely never spoke with the architect, possibly doesn’t know the general contractor’s identity, and in all probability never met the representatives of the company that, for instance, supplied the cracked marble to the contractor.
In legal terms, the homeowner lacks “privity of contract” with these individuals and companies. This is a legal-jargony way of saying that the homeowner cannot sue them for breach of contract, having never had a contract with them to begin with.
A developer facing a lawsuit might, as a way of reassigning responsibility, implead the architect or third-party contractors. Impleading means that the developer could file its own, related lawsuit against these others.
Even if the developer breached its contract with the buyer, it could argue that the designers and contractors breached their contracts with it. That is, the developer had a contract with a general contractor to build a quality house that the developer could turn around and sell to buyers. The general contractor had an obligation to hire qualified subcontractors and suppliers, and supervise their work. If the general contractor failed to do this, resulting in legal claims against the developer, the developer is likely to sue the general contractor.
By the same token, the developer hired an architect to design a quality house. If the house as designed is unsafe or unlivable, the developer could also sue the architect.
In short, the fact that the dissatisfied homeowner cannot necessarily sue these other entities directly for breach of contract should not necessarily be of concern. It was the developer’s responsibility to create a home as expected under the terms of the contract. Should the developer want to file its own claims against other entities for breaching their duties to the developer, that will only aid in recovering what the homeowner-plaintiff is owed.
Actual financial recovery is a valid concern. Chances are you wouldn't be the owner disgruntled homeowner filing suit. Depending on what financial shape your developer is currently in, you might also need to learn about Suing a Bankrupt Home Builder for Construction Defects.
]]>This article will examine your remedies for defects in your newly constructed New York home and the actions you can take upon finding them. For information about remedies for defects in previously constructed homes, see Home Defects in New York: What Can a Buyer Do?
Ideally, you will have discovered any construction defects prior to your purchase. The building department of your municipality, which will do a final inspection before declaring the house habitable, might find unsafe conditions or noncompliance with its minimum standards. You might also find defects during your preclosing walk-through, but those will be limited to easily observable defects.
New York attorneys typically recommend you attempt to negotiate an inspection provision into your construction and purchase contract, hire a licensed inspector to inspect the property before closing on the purchase, and demand that the builder make the recommended repairs or replacements prior to your closing.
However, not all defects will manifest or be detected prior to the closing. It is therefore important to understand your rights against the builder if defects are found, whether days, weeks, or years after the closing.
New York statutory law creates a warranty for new construction, called the “Housing Merchant Implied Warranty.” (It replaced a warranty that had been implied into contracts by the New York courts in the years before the 1989 passage of the law.)
Today, it's the exclusive warranty for all sales of new construction homes. The statutory warranty is “implied,” in that it need not be written into the contract, but exists within every contract for the sale of a single family house or unit in a multi-unit residential building of five stories or less. (See N.Y. General Business Law §§ 777A- 777-B.) The statutory warranty will not be implied into your contract if your new home is built on land you owned prior to construction.
The law describes the construction, materials, appliances, systems, and building components covered by the implied warranty, as well as items excluded from coverage and the length of the warranty period for each item.
In general, the law says that construction defects are covered for one year after the warranty date—the date title passed to the first new home owner. Plumbing, electrical, heating, cooling, and ventilation systems are covered for two years after the warranty date. Material defects are covered for six years after the warranty date. Review the statute to see whether your defect is covered and if so, for how long.
The law also describes the time notice and limitations periods for filing a lawsuit. You must notify the builder of a warranty claim in writing before filing suit, and no later than 30 days after the warranty period expires, and give the builder a reasonable opportunity to inspect, test, and repair the defect.
While the notice to the builder is a precondition to filing a lawsuit, the opportunity to inspect, test, and repair is not. See Trificana v. Carrier, 916 N.Y.S.2d 399 (N.Y. App. Div., 2011). After notifying the builder, you may file suit any time before one year after the warranty period ends, or within four years after the warranty date. (N.Y. General Business Law § 777-A).
Whether or not a condition is a defect covered under the warranty is judged by the level of skillful workmanship standard in the community. This means that to prove your case against the builder, you should submit evidence of the defect itself and the local standard for skillful workmanship. This evidence may include expert witness testimony from local architects, engineers, contractors, or others in the building trades, and the standards in local building ordinances. The level of workmanship required for your new home may be changed by the terms of contract.
If you sue, the monetary damages you may win will typically be the cost of the repairs or replacements plus the cost to repair any damage to the home caused by the warranty work. The maximum amount that may be awarded is the value of the home itself, without the land. However, a court may calculate damages as the value of the home as it should have been built minus the value of the home as it is with the defect, if it finds that amount to be more equitable under the circumstances. (N.Y. General Business Law § 777-A).
Read the builder’s contract carefully. It might require you to waive the Housing Merchant Implied Warranty and accept a limited or modified warranty in its place, as is allowed under N.Y. General Business Law § 777-B(3).
But this won’t hold up in court if the waiver is buried in fine print: The contract terms replacing the statutory warranty must be conspicuous, mention the existence of the implied warranty, and state that the limited warranty excludes or modifies the implied warranty. However, the law gives an example of far less explicit language that will suffice: “There are no warranties which extend beyond the face hereof.” The builder must also supply you with a copy of the limited warranty prior to your signing the contract, and attach a copy of the limited warranty.
The limited warranty must state all of the information required in Section 777-B(4). Standards set in the limited warranty must meet or exceed standards in the local building code or the locally accepted building practice where code provisions do not apply. Building standards set in the limited warranty that fall below local building standards, or render the home unsafe, are considered void under New York law.
If your new home was built on land that you previously owned, it is a “custom home.” The Housing Merchant Implied Warranty, including the coverage requirements, notice requirements, and time limitations, does not apply to custom homes.
Your remedy for custom home defects is to sue the builder for breach of contract. To succeed, you will have to show either that the home was not built according to any plans and specifications or drawings made a part of the contract, or that it was not built up to the standards promised in the contract.
Your damages for defects in a custom home will typically be the amount required to fix the defect. However, the court can award you the difference between the value of the home with defects and its value without defects.
Courts usually award the difference in value when the builder substantially performed the contract in good faith and the cost of remedying defects would be unreasonable compared to the value of the home, or when repairs might render the home uninhabitable. (See Lyon v. Belosky Const. Inc., 669 N.Y.S.2d 400 N.Y.A.D. 3 Dept. (1998).)
The time and cost involved with a lawsuit often make other forms of dispute resolution attractive to both parties. You may be able to negotiate an acceptable settlement with the builder yourself or through your attorney. If the builder is amenable to negotiation, but you have not been able to reach a settlement consider jointly hiring a mediator to help. A mediator will review the contracts, inspection reports, and other evidence you provide, and work with both sides to resolve the matter.
Some construction contracts require that disputes be settled through binding arbitration. Arbitration differs from mediation in that it is more like a court proceeding. The arbitrator hears the facts and evidence at a hearing, and makes a decision much like a judge would do. However, in New York, the builder is not permitted to require binding arbitration in any limited warranties replacing or modifying the Housing Merchant Implied Warranty, and must pay for any voluntary arbitration. (N.Y. General Business Law § 777-B(4)(h).)
You cannot make any demand on, sue, or enforce a judgment against a builder who has filed for bankruptcy prior to your lawsuit. 11 U.S.C. § 362.
If your builder has already filed for bankruptcy, you might be able to sue the subcontractors—members of the various home building trades who helped build your home’s defective components, such as plumbers, electricians, and carpenters. You have two years from the date you found out or reasonably should have known of your right to sue the subcontractor to do so.
Act quickly to protect your rights immediately after discovering a defect in your newly constructed house. Your ability to demand repairs or damages under warranties and contract terms are limited by time. Here are some initial actions to take:
You may also bring in a licensed inspector to help you understand the defect and make your case against the builder. An experienced real estate attorney will be able to help you understand and protect your rights against the builder.
]]>Surely, you paid for the home on the assumption that it would be perfect, or at least reasonably close. Construction defects lower the value of a home. How can you recover against the builder or developer for such defects?
Some states' legislatures set out to give homeowners express warranties by statute, listing specific duties that the builder has with respect to the homeowner. In North Carolina, by contrast, the legal duties owned to the homeowner are implied by the courts.
North Carolina courts hold that builders of new homes give homeowners implied warranties (essentially legal guarantees) that the home will be habitable and constructed in a workmanlike manner. These implied warranties do not necessarily mean that the home will be perfect, merely that the home is free from major structural defects. Because the statutory authority is not explicit, courts have wide latitude to determine whether or not a builder met its obligations.
In accordance with this, however, South Carolina's standard forms for the sale of new construction include a limited warranty. These state that, for of one year after the sale, the builder/seller will make all repairs and corrections to the home that become necessary through faulty construction, labor, or materials. Alternatively, a North Carolina home builder can offer its own warranty.
Review your sale materials to see whether a warranty can be found within, and its terms. Pay particular attention to any responsibilities it might give you, such as regarding notifying the builder of your complaint. You might not need to proceed straight to a lawsuit.
If you didn't receive a warranty, or the builder is refusing to honor it, again look to the contract you signed. Part of your lawsuit against the builder will be that it breached this agreement; it did not give you the building that it promised to.
All of the materials the builder gave you, including photos, descriptions of the home, emails describing the work, will be useful to establishing your expectations at the time you entered into the contract. For example, if the various documents show that you thought you were getting a home with a two-car garage but the garage as built fits only one car, this demonstrates the builder’s breach.
North Carolina has a three-year statute of limitations period on actions for breach of contract and negligence. This means that claims based on a contract with the builder must be brought within this period, or they are barred. An exception to this is when a homeowner could not have reasonably discovered the existence of the breach until after the period; for example, if the roof caves in after four years because the builder used low-quality wood.
Ordinary negligence in the context of construction defects is a builder’s failure to exercise the correct standard of care. In North Carolina, in order to establish a claim for negligence, the homeowner must establish that:
To bring such a claim, you'd need to pay special attention to gathering evidence showing that the builder did something "wrong," for example installed windows facing the wrong way, thus causing a leak and resulting damage. Be sure to take photos and maintain all documents and receipts before you clean up or try to repair the problems yourself. (Basic repairs might be both practically and legally necessary so that the problem doesn't get worse while you wait for attention from the builder.)
A unique facet of construction defect litigation in North Carolina is the Statute of Repose for improvements to real property, N.C. Gen. Stat. §1-50(a)(5)(a). This law says homeowners have six years from the substantial completion (or the last specific act or omission of the builder) to file suit.
After the builder has been “off the job” for six years, a homeowner is generally barred from filing a lawsuit for an alleged construction defect, regardless of when the defect was or is discovered.
This is different from in many other states, where the limitation period is tolled (or delayed) based on when the homeowner discovers the existence of the defect. The North Carolina statute is meant to give certainty to builders, so that they need not worry about claims after six years. However, it means homeowners must be vigilant to ensure they do not get blocked by the statute.
There are a few clauses to watch out for in your contract before filing your lawsuit. First, it is common in construction contracts to find a dispute-resolution clause. That clause might provide that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that person will have some experience with construction law, engineering, or building development.
Your contract might also have an arbitration clause. This clause would require that you go to arbitration against the builder or developer, instead of litigation in a court of law. In arbitration, either one or three individuals (again, typically with experience in construction) will render a final determination on your dispute. The advantage of arbitration is that it is generally quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that these decisions are ordinarily non-appealable.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make legal claims. It is not uncommon that construction contracts will shorten the amount of time that you have to file a legal claim against your builder. An attorney with experience in construction defect litigation in North Carolina will be able to carefully review the document for these sorts of limitations.
]]>A construction defect is any physical condition that reduces the value of a home or property and that was caused by a flaw in design or workmanship.
Examples can include things like water seeping through the roof or windows of a new home, faulty drains, cracks in the foundation, or portions of the new home collapsing. In some circumstances, construction defects can also include earth settlement problems such as inadequate grading and drainage.
Cal. Civil Code § 896 and its following sections outline specific defects that home builders are responsible for fixing. The list is meant to be quite broad, as the statute says, "The standards set forth in this chapter are intended to address every function or component of a structure." (Cal. Civil Code § 897.)
In order for a defect to qualify as a construction defect, the law requires that it be discovered within a certain number of years from the date of construction completion or from the close of escrow (depending on the defect and your set of circumstances). This can be anywhere from one to ten years, again depending on the type of defect.
In some circumstances California law also sets deadlines (periods of years) by which you must file your lawsuit related to a new home construction defect. As a result, if you think you have noticed a defect, don’t delay. Your best course of action is to look into it immediately, to avoid missing any of the cutoff dates should you ultimately need to file a lawsuit. Ten years from the date the home was substantially completed tends to be the longest any homeowner can wait to file suit.
You can’t just sit back and watch the damage go from bad to worse and then expect to collect for repairs—for example, watch as a leak in the roof allows water to pour in, damaging your floors and leading to a household-wide mold problem. California law requires you to take reasonable steps to protect your property from additional damage once you notice there is a problem, such as covering up any holes where water is leaking in.
These “temporary fix” costs are normally recoverable as part of a lawsuit, if you ultimately have to file one. Be sure to enlist the help of an expert to ensure that what you’re doing is the best way to handle the situation, and to be sure that all your efforts are well documented.
Under California law, the builder must provide a limited warranty, in writing, as to “fit and finish” items (including the quality completion of cabinets, flooring, mirrors, walls, countertops, and paint finishes, both inside and out). This warranty must last at least one year from the close of escrow (see Cal. Civil Code § 900).
Even if you didn't receive a written warranty from the builder, the law says the builder owes you one for a one-year period. To make a claim under this warranty you would be required to give the builder a chance to fix the problem, and if that doesn't work, initiate a lawsuit for the defect within the one-year period. You will also need to have taken care of any reasonable maintenance obligations that you were informed of in writing by both the builder and any product manufacturers, as well as any commonly accepted maintenance practices.
California’s standard home warranties do not usually cover defects to any appliances in a new home. Most appliances come with manufacturer’s coverage so, for instance, if you had a problem with your stove, you would want to refer to the stove manufacturer’s coverage rather than the homebuilder’s.
Most builder’s warranties also do not cover things like the windows and doors that go into your home, since there is commonly a manufacturer’s warranty for these items as well.
If you think you have found a defect in your new home, you’ll want to hire an independent contractor, inspector, engineer, or other expert with specific knowledge of that type of problem (for instance, you’d hire a roof or waterproofing expert if your roof were leaking) to confirm and document the defect.
As soon as you discover a problem, start documenting the issue. Make a note of the dates, the specific circumstances such as the weather, and any other details that might be relevant in discussing how the defect came to light, including whether you’ve experienced any similar issues in the home before.
Prior to filing a lawsuit, you must notify the homebuilder in writing, providing details of the alleged defect, and give the builder the opportunity to inspect the home to see it (see Cal. Civil Code §§910-938).
You might have opportunities or a requirement to mediate or arbitrate before filing a lawsuit. Mediation means meeting with trained mediators (who are often also lawyers) and the homebuilder in a setting outside the courtroom to attempt to discuss and resolve the issues. During arbitration, a neutral third party hears the evidence from both sides and then makes a binding decision. Your attorney can help you determine whether mediation or arbitration would be helpful or whether it might be required under the builder’s warranty.
Sometimes, upon notification, the developer will offer to make the necessary repairs to bring your home up to standard. If this occurs, you should no longer need to file a lawsuit as to that particular defect.
It can be a good idea to locate an independent expert (possibly the same one you used to inspect and document your home defect in the first place) to oversee these repairs and to make sure that things are done as agreed upon. You might need to sign a limited release relating to the repairs that are done; but make sure it still allows you to pursue a remedy from the developer if, say, you discover a wholly different defect while still within the one-to-two year allowable period, or ten years for major defects.
If the developer does not agree to make repairs to your home, or the repairs are inadequate, you might then have to pursue a lawsuit. In addition to possible claims for breach of warranty, others theories upon which you might be able to sue include strict liability or negligence. A qualified California real estate attorney will be a necessary and valuable resource if you go this route.
]]>The trouble is, you might not be able to easily spot every sort of home defect, particularly as your contractor or builder wraps up the job. Some could be located behind finished surfaces, as would be the case with improper or incomplete paper or metal flashing around window and doors, structural framing deficiencies, or poor roof installation. Even a home inspector is not responsible for opening up walls to look for such issues.
Your best bet, before and after moving in, might be to watch for red flags, then hire a professional contractor to investigate further. The contractor can advise you whether the issue is a true construction defect, or can be dealt with through simple repairs or maintenance. (For instance, slight cracks in stucco, siding, or wood trim might be addressed in the normal repainting cycle for your location.)
Below are tips for examining your almost-built or newly built home for signs that its construction was substandard and might contain major defects.
Ideally, you should monitor your home's construction all along the way. If your home is being built by a developer (as part of a planned community), then you should also arrange to conduct a final examination of the home before the closing date. At this time, you can also bring in a professional inspector to identify issues and write up a report. This allows you to raise issues with the builder while you still have maximum leverage.
If a general contractor is building you a custom home, you should ask questions as the work progresses, and make sure to schedule an end-of-construction walk-through. If you do not obtain satisfactory answers to your questions along the way, consider bringing an independently hired contractor to attend the walk-through with you.
If you have already closed on the home purchase, and didn't have a chance to inspect it pre-closing or at the end of construction, it's not too late to take action. In fact, some issues— particularly those to do with water intrusion—might not come to your attention until after you have lived in the house for a while (or at least been through a rainstorm or two).
Let’s assume that your home has been finished and that you’ve moved in. Here are ways to examine the quality of the finished product.
Take a walk around the outside of your newly built home, with camera and notepad in hand. Issues to do with exterior surfaces, sealing of windows and doors, a patio or deck, and concrete surfacing should be your main focus here.
If the your house is surfaced with stucco, look for cracks that are larger than “hairline”—particularly at the corners of windows and doors. Flaking or “spalling” could indicate that the stucco was not applied properly. Look for gaps between the stucco and windows, doors, hose bibs, pipes, ducts, and electrical fixtures. These gaps could be sources of water intrusion.
If the siding is a wood product, look for significant waviness of the boards and (especially if it has rained since the house was built) see whether the ends and edges of the boards appear swollen from moisture intrusion. Inspect wood trim around doors, windows, and other locations to see if joints have opened up or cracks in the wood have developed. These conditions can develop over time.
If you have exterior decks or patios, look for cracks in the walking surfaces and at the intersection between the deck and the wall of the house.
Problems with your roof are more difficult to observe and normally require the assistance of a trained professional. You should not walk on your roof. In fact, if the roof is made of tile, you could void the manufacturer’s warranty by doing so. But if you can see portions of your roof from inside, definitely look for loose or missing shingles, or areas that don't seem fully covered.
As you walk around outside, look for cracks in concrete sidewalks, driveways, garage floors, or retaining walls. These could indicate that the soils were not properly prepared or that the concrete structures were not properly installed.
Your next task is to walk around the interior of your home.
Look for water stains around windows and doors on the wood trim or drywall, particularly at the window sills or at the base of exterior doors. Inspect all interior wall and ceiling surfaces for cracks in the drywall, which could indicate soils movement or structural framing problems. (Lesser drywall problems, such as nail pops and tape cracks, can easily be addressed the next time you paint the interior of the home.)
If doors are sticking shut, they might have been installed incorrectly. In the case of bathroom or kitchen doors, if the tops and bottoms were not painted, moisture could be causing the wood to expand.
Check for flooring issues such as: tile cracks; uneven wood floor boards or widening cracks between boards; water stains in carpeting or other flooring at the base of windows, doors, or showers; and discolored or curling linoleum. Some of these problems could result from water infiltrating through cracks in the foundation.
Look for water stains under kitchen sinks.
Check the controls for heating and air conditioning. If they aren't producing the expected hot or cold air, it could indicate problems with your HVAC system. Also plug something small in, to check whether any electrical plugs or switches do not work.
As mentioned, you will probably want to hire a general contractor to give a professional opinion on red-flag type problems and look for others that you might not have noticed.
Your next step depends on whether you have agreed with the builder to notify them and provide an opportunity for repairs. See, for example, New-Home Defects: Holding Your Builder Responsible Under a Warranty.
If you have notified the builder and it hasn't worked, or if the problems seem more serious than mere repairs can address, you might need to pursue legal action. See, for example, Who Can I Sue for New-Home Defects: Architect, Contractors, or Only the Developer? and Is It Too Late to Sue My Home Builder for Construction Defects I Found Years Later?.
]]>The seller of your New Jersey home was not required to disclose every defect in the home. Cosmetic repairs like dirty carpets or missing floor tiles, for example, are not considered material defects. And again, only “material” defects are considered important enough to the transaction that you should have been advised of their existence.
But what does “material” mean? New Jersey law doesn’t (as of early 2015) contain any definitions of the term, but the International Association of Certified Home Inspectors offers a definition that’s in keeping with how materiality is understood nationwide, as “a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people.”
Home inspectors are, after all, often on the front lines of figuring out what defects are material, since many home buyers – hopefully, including you – commission a professional inspection before closing the sale. Put another way, the term “material” means anything that would make a reasonable buyer decide not to buy the home or, at the very least, address it as a major concern in the Contract of Sale.
Typically, prior to closing, a New Jersey home seller will provide the buyer with a form referred to as a Seller’s Property Condition Disclosure Statement (“Disclosure Statement”). Its purpose is to give the seller the opportunity to disclose, to the best of his or her knowledge, the condition of the property, thus allowing buyers to make an informed decision about whether to purchase and at what price. For more about the seller’s legal obligations, see Nolo’s article, “New Jersey Home Sellers: Disclosures Required Under State Law.”
Use of the Disclosure Statement form is not legally required, however. A New Jersey home seller may choose to disclose any known material defects in the property in some other way, either orally or in writing. Check the documentation from your sale to see whether you received the Disclosure Statement. If you didn't, look into whether you received anything else in writing from the seller discussing the condition you believe is a material defect.
Among the numerous types of things a seller in New Jersey is required to disclose are electrical system hazards; structural problems; roof leakage; termites; environmental hazards; and plumbing, water, and sewage issues.
New Jersey sellers can be held liable for failing to disclose a material defect. For example, if a seller knew that whenever it rains, water enters the house, but failed to disclose this information, the buyer who discovers this can potentially sue.
Part of the buyer’s challenge, however, will be showing that the seller knew about the defect in the first place. A seller is not required to actively look for defects, only to report on issues discovered in the course of homeownership. So if you find moisture in a corner of the basement after lifting up a wooden platform that the seller never looked under, you may have no cause to complain about nondisclosure. An issue like water entering the house whenever it rains, however, is a defect that the seller would have likely known about after having lived in the home for any period of time.
Start thinking about issues of proving the seller’s knowledge as soon as you spot a problem. Take photos of the troubled area, and ask any repairperson to note and write up findings regarding previous repairs and when the problem likely started.
As the buyer, you hopefully inspected the house beforehand, both through your own examinations and discussions with the seller and by retaining a home inspector to conduct an independent inspection. The home inspection is a structural and environmental analysis of the property, which should have yielded a report of material defects that were visible and accessible. Any defects noted during the inspection were open for negotiation before the closing, but not after.
When you find something wrong with your newly purchased New Jersey home, you have to determine who may be liable and whether it is worth the time and expense of pursuing a case against the responsible person. This is best determined by estimating the cost of repair versus the cost of retaining an attorney to litigate the matter.
Not every defect is the seller’s responsibility to disclose to the buyer -- but you may be able to find someone else who is responsible for having failed to advise you of a known defect, such as the seller’s broker and/or your home inspector. For example, a broker may be liable if he or she failed to disclose a material defect of which the broker was aware, such as condensation on the windows that occurs due to a defect in the windows but was not visible when you visited. Or the home inspector may have missed the defect during the inspection, and can be held liable if this oversight did not meet industry standards for professionalism.
Before suing, you might first try remedies such as contacting the seller’s broker (who may have a professional interest in seeing this matter resolved quietly) or writing a letter to the seller with evidence of the problem and requesting compensation.
If you have discovered an undisclosed material defect, consult with a real estate attorney to determine how best to proceed. It can often be difficult to prove that a seller knew of and failed to disclose a material defect. A real estate attorney will offer an evaluation of the situation and provide the best strategy on how to proceed.
]]>While you shouldn’t expect the house to be perfect (no house is, and they’re all deteriorating day by day), you likely expect it to be in the condition that the seller represented to you prior to closing (taking into account subsequent wear and tear). If there is a serious issue that was not disclosed, you may have a legal remedy against the seller, the seller’s broker, or possibly, the home inspector.
Before trying to determine whether another party is responsible for the problem, the first thing you should do is to take steps to fix it. This is important for two reasons. First, if you do not repair the problem, it may get worse. So, the repair should be made for your comfort and well-being. Second, in some situations, you actually have a duty to reduce or minimize the damage discovered. This is called a “duty to mitigate.” It means that you will not be able to sue for any damage that you could have avoided.
A good place to start when you discover a defect is with your homeowners’ insurance company. Is the problem covered by your policy? What is your deductible? If you file a claim, will your insurance rate increase? Does the insurance company require you to work with particular contractors to assess or repair the problem? A call to your insurance company will answer any questions that you have about coverage. Depending on the issue, and after considering your options, you may want to pursue an insurance claim.
Some buyers purchase a home warranty when they close on a house (or have one purchased for them by the seller). Generally, a home warranty will cover the repair or replacement of appliances and, in some cases, structural components and other home systems, such as plumbing and HVAC. So, if you do have a home warranty, it may cover (after a small service payment) the cost to repair or replace the defect at issue. Read the fine print on the home warranty carefully, as there may be limitations on claims, such as claims involving pre-existing conditions or ones where you failed to perform regular maintenance.
Depending on the issue, you should also review any product or service warranty that may have been transferred to you as part of the closing, for example on home appliances. It is possible that the defect is covered by such a warranty.
In all cases, you should keep written records concerning any expenses you incur to repair the issue. Keep receipts, copies of quotes, and copies of written correspondence concerning the issue. And, if possible, you should also take pictures of the property defect. This will assist you in any legal action you may bring.
The next thing to think about is who could or should have told you about the problem but failed to do so. The seller, broker, and inspector are all on the list of possibilities.
Prior to selling a house, a Michigan seller is required to inform the buyer of certain property conditions by way of a Seller Disclosure Statement. (See Mich. Comp. Laws Ann. § 565.951.) (Also see “Home Sellers in Michigan: Your Disclosure Obligations” for more information.) If the seller intentionally misrepresents or withholds information on the disclosure statement, you may pursue legal action against the seller for fraud or misrepresentation.
The most difficult part of asserting a fraud or misrepresentation claim against the seller is proving that the seller knew that there was a defect and intentionally made a false representation. The seller is not responsible for any errors, inaccuracies, or omissions unless the seller had personal knowledge of the issue. (Mich. Comp. Laws Ann. § 565.955(1).)
It would be unusual for a seller to admit having intentionally misrepresented information about the property. So, the buyer must investigate what the seller actually knew. You may start by reviewing records of prior repair work done on the property, looking for obvious signs of covering up the problem (such as fresh paint over water stains), and speaking with neighbors who might be aware of the issue. You may also review past seller disclosure statements that are public record to determine whether the issue existed and was disclosed to the seller by a previous seller.
To establish fraud or misrepresentation, you must also prove that you relied on the seller’s statements. (See the case of Roberts v. Saffell, 760 N.W.2d 715 (Mich. 2008).) This is sometimes difficult to prove if you have hired a home inspector or other professionals to inspect the property. In that case, the seller might claim that you did not rely on the seller’s statement, but instead obtained your own assessment of the property.
Although a seller’s broker in Michigan has no legal obligation to disclose property defect information to the buyer, and is not liable for the seller’s misrepresentations about the property, there is still a possibility that the broker may have some legal liability. (Alfiero v. Bertorelli, 295 N.W.2d 772 (2012)). If you can prove that the broker acted together with the seller to conceal or misrepresent information, the broker may be legally liable for fraud or misrepresentation. (Mich. Comp. Laws Ann. § 565.965).
As discussed above concerning seller liability, the difficulty will be in proving that the broker intentionally misrepresented or worked together with the seller to intentionally misrepresent information (see “What Real Estate Brokers in Michigan Must Disclose About a Property” for more information about broker liability).
You may also have a claim against your home inspector if the inspector missed a problem that he or she, as a professional, should have noticed. The home inspection report is often lengthy, and contains pages of property issues noted. Importantly, it also will contain a list of areas that the inspector did not inspect and excluded from the report.
For example, some home inspectors will only inspect “accessible places.” In those cases, an inspector may not look at the attic, crawl space, or any area that is obstructed by furniture, boxes, or other items. If the property defect is not located in a clearly visible area, the inspector may not be responsible. To determine whether you have a claim, review your home inspection report carefully.
If you suspect that the seller concealed a property defect, or find yourself in situation where you need help, please consult an experienced local real estate lawyer. The laws can be complicated, and are best interpreted by professionals who handle such matters every day.
]]>If you were forced to evacuate your home, you might not have grabbed basic necessities—from a toothbrush to a work uniform. Your homeowners' policy will cover the cost to replace these items, but you don't have to file a claim and have it approved before heading to the store.
Instead, ask your insurer for an advance against your eventual claim. If necessary, you can request that a representative bring a check to you wherever you're staying, be it a hotel or a friend's house. Save the receipts for everything you buy, and be reasonable—if you lost khakis and a blazer, don't head for the Armani suits (you'll end up paying the difference).
Check your policy—even if you have "replacement" coverage for the house itself (see Tip Six, below), you might have only "actual cash value" for the personal items that were in your home. A good agent will alert you to this.
Every policy requires you to take reasonable steps to minimize the possibility of ongoing harm to your property. In legalese, this is known as your duty to "mitigate damages." It includes such commonsense steps as covering a section of your leaky roof with a plastic tarp until you can get it repaired or turning off the water when you discover a burst pipe.
Your insurance company will pay the repair costs when you make your claim. But to help justify that claim, take photos of things at their worst, before you mitigate the damage.
Other steps you might need to take to mitigate damages include:
All policies require homeowners to report their loss as soon as is reasonably possible. You can comply by calling your agent or sending an email.
After that, you'll be asked to submit a "proof of loss claim," in which you itemize your losses and list their value. If you delay notifying your insurance company, you might find yourself far down on the list when it comes time for the company to send an adjustor to inspect your property and deal with your claim. Before that time comes, however, don't be surprised to see a drone flying over your property; this is an increasingly common way for insurers to inspect damage, particularly when it's widespread and they want to map a large area.
Fortunately, insurance companies are required to handle claims in a timely manner. In California, for example, they must send you a "notice of intentions" within 30 days of receiving your claim. If there's no dispute over coverage, you're entitled to payment within that time, too.
If your company seems to be acting slowly, write to it (and consider sending a copy to your state's Department of Insurance). Insurance companies are less likely to string you along when they're in the midst of a disaster and know that all eyes are on them. Of course, they might also be backlogged with claims.
Your policy will include a "loss of use" clause, which entitles you to reimbursement for living expenses while you're out of your home. However, you're entitled only to additional living expenses—that is, the difference between what it costs you to live on a daily basis at home and what it costs now. For example, if you ate most meals at home before the fire and regularly spent $300 a week on groceries, but are now spending $450 per week at restaurants, you can claim only $150.
When it comes to the motel bill, however, you can probably claim the whole thing. Even though you can't live at home, you still have to pay your mortgage, taxes, and insurance, so any other arrangement would be unfair.
What if you're living with friends or family? Many evacuees do so, often on an extended basis. Even though you probably aren't paying your hosts, you might be able to convince your insurance company to reimburse them for the cost of putting you up. Ask your hosts to itemize the value of the room and services they're providing. Be reasonable and specific, and be prepared to negotiate with your insurance company over this one. It might help to point out how much more the company would have had to shell out had you chosen to stay in a hotel and eat in a restaurant.
Your homeowner's policy will enable you to rebuild or repair your home. If you have an "actual cash value" policy, you're entitled to the amount of money it will take to return your home or its contents to its market value before the fire, which if it was run down and needed a new roof, could be significantly less than what you'll need for a quality rebuild.
If you have "replacement cost" coverage, you're entitled to the amount it would take to replace the home or contents, up to a limit that was fixed in your policy in advance. (Only a rare type of policy, called "guaranteed replacement" coverage, actually lets you claim all actual rebuilding costs.)
You don't have to rebuild. If you have replacement coverage, that doesn't mean you have to actually rebuild your home on the same site. You can rebuild at a different location (if it costs more to build in Hawaii, for instance, you pay the difference). If you decide to use the money for something else, such as starting your own business or creating a retirement fund, your "replacement" policy will change to an "actual cash value" policy (in broad terms, you'll get about 15% less).
For either type of coverage, you'll need an estimate of the prior market value or the cost to replace the damaged items or parts. Your insurance company will offer its own estimates, supplied by its own adjustors. Because these adjustors work for the insurance company, it's in their best interests to get you to quickly accept a modest settlement. You're under no obligation to accept these numbers.
It might seem ridiculous to continue paying homeowners' insurance premiums to protect property that's severely damaged or gone, but stopping your payments can be a huge mistake. Remember, your homeowners' policy includes liability protection for you and your household, including your pets. This could come in handy if, for example, your stressed-out dog chews up an expensive Oriental rug while you're camped out at your brother-in-law's house.
If you'll be staying somewhere for a while, call your agent and ask for that address to be added as a second location for purposes of liability coverage. If your home has been destroyed, ask your insurance company to cut back on the part of the policy that covers the structure, and ask for a corresponding reduction in premiums.
Your insurance company will want to close your claim ASAP. The longer it's open, the greater the chance you'll discover and file a claim for an additional loss. Homeowners often come upon losses that they initially overlooked, perhaps because they were under such stress early on. Protect against this possibility by waiting at least a few months before allowing your claim to be closed.
Don't be surprised if you receive a check from the insurance company before you're ready, saying that you're accepting the payment "in full release of" your claim. Cross-out that language (and initial it), then send a letter to the company, politely thanking them for the check and telling them that you do not consider the matter to be closed.
Despite hiring your own estimator or contractor, you might not be able to reach an acceptable settlement of your claim. In that event, consider hiring a "public adjustor:" an independent, licensed adjustor whom you pay to negotiate with the insurance company on your behalf. You'll typically pay the adjustor between 9-15% of what you recover from the insurance company, but that can be well worth it if the adjustor succeeds in significantly increasing the settlement. To find a public adjustor, start with the National Association of Public Insurance Adjusters, a national regulatory organization, at www.napia.com.
You probably know that drivers who've had an accident or two commonly face higher car insurance premiums or even lose their coverage. Fortunately, this isn't a realistic fear for homeowners who file legitimate damage claims following a disaster such as a fire. As long as you're not what the industry calls a "habitual claimant" and there's no proof of fraud in connection with your claim, you won't see an increase in your premiums or lose your coverage.
Check out these websites for information that disaster victims can use immediately:
For detailed information about all aspects of homeowners' insurance, see Nolo's Essential Guide to Buying Your First Home, by Ilona Bray and Ann O'Connell (Nolo).
]]>This article will examine the remedies available to you—the home buyer—for defects in your newly purchased, previously constructed home. It will also suggest actions to consider when you find a home defect.
New York has a long tradition of applying the rule “caveat emptor,” or “let the buyer beware,” to disputes between home buyers and sellers. That means New York courts traditionally refused to compensate buyers for home defects found after the purchase, unless the seller did something to actively thwart the buyer’s efforts to inspect the property and find all of its defects.
However, more recent New York law on home defects has softened. Now, the courts recognize some remedies for disappointed home buyers in limited situations. Let’s take a look at some of those remedies.
New York law requires the seller to give you, the buyer, a disclosure statement before you sign the purchase contract. (This comes from the Property Condition Disclosure Act (the PCDA) (N.Y. Real Prop. Law § § 460-467.) The law also requires that the parties attach the disclosure statement to the purchase contract.
However, the seller of your home might have followed the common practice in New York of giving you a $500 credit against the agreed-upon purchase price at the closing instead of a disclosure statement.
For more information on the seller’s duties under the PCDA, and the disclosure statement itself, see Selling a New York Home: What Are My Disclosure Obligations?.
If the seller gave you a disclosure statement, but it didn’t mention a known defect, the seller might be liable to you for your actual damages under the PCDA. However, your ability to obtain damages under the PCDA depends on your ability to prove that the seller had actual knowledge of the defect and did something to prevent you from finding out.
Notwithstanding your remedy under the PDCA, you still have all of the other remedies available under New York law. So, let’s review the buyer’s remedies under other New York laws.
In addition to the remedies available to you under the PCDA, you might be able to obtain damages under New York case law ("common law"), created by the state's appellate courts. When a judge in one of these courts writes an opinion in a case, the rulings within become law.
Here are some of the remedies created by the New York appellate courts.
The home seller might be liable to you for fraud or fraudulent misrepresentation if you can prove that:
Notice that you would need to show not only that the seller made some sort of false statement or omission, but that you were justified in relying on it. If, for example, you hired an engineer to make an inspection, but the inspection was inconclusive, a New York court could deny your claim for failure to make a further inspection.
However, if the home seller actively concealed a defect, or if the defect was something only the seller knew about, and you could not have discovered it on your own, even through a reasonable and diligent inspection, the seller might be found liable. Some New York courts consider false statements in the PCDA disclosure statement to be evidence of active concealment of the defect by the seller.
Depending on the terms of your purchase contract, the New York home seller might be liable to you for breach of that contract. You would have to show a court that the seller gave you a warranty against the defect in the contract, and that the warranty did not merge into the deed (the document that the seller gave you at the closing passing title to you).
Proving that the seller gave you a warranty in the contract could be difficult because the standard New York purchase contract contains an “As Is” provision stating that you—the buyer—have agreed to purchase the property in the condition it is in at the time of the contract, without any warranties from the seller. The PCDA disclosure statement is supposed to be attached to the contract, but the disclosure statement specifically states that it is not a warranty, so you cannot use the representations in the statement to help you prove breach of contract.
Even if your purchase contract does not contain the “As Is” language, or includes specific warranties of the condition of the property, these warranties often expire after the closing by their own terms, or under the “Doctrine of Merger,” a general New York law of contracts basically meaning that all warranties in the contract merge into the deed of the property given to you by the seller at the closing. You can avoid the merger if your purchase contract specifically states that all or some of the provisions will survive delivery of the deed.
New York courts have also softened the general rule of “caveat emptor” that applies to the seller’s broker or agent, sometimes known as the listing broker. The listing broker, as well as your buyer’s broker, could be liable to you for having known of a significant defect and failed to tell you about it.
The broker could have told you orally or in writing and was not required to provide you with a formal disclosure statement. You'd also have to prove that you did not know about the defect and had no ability to discover it through your inspection or other research, such as by making inquiries with neighbors or the local governing body. The “As Is” language in the purchase contract will not protect your broker from liability to you.
The listing broker also has some limited disclosure obligations under the PCDA, and potential liability to you. If you are not represented by a buyer’s broker in the negotiation of the purchase, the listing broker was supposed to explain the disclosure requirements of the PCDA to you, and could be liable to you for having failed to do that before you signed the contract.
For more information about brokers’ responsibilities and potential liability to a buyer, see New York Home Sales: What the Listing Real Estate Broker Must Disclose.
In New York state, regulations (Title 19 NYCRR Section 197.4 -197-5) require that home inspectors provide all their customers a written contract describing the cost and the scope of the inspection, and inspect at least those home systems and components listed in the regulations.
The Licensing Department allows home inspectors to limit their liability to you in the contract. They may do so by limiting the scope of the work to certain systems or components of the home, or limiting potential damages to an amount specified in the contract or to the cost of the inspection.
While New York courts have ruled that a customer may not sue the inspector directly under these licensing regulations, you may point to a violation of the regulations as evidence of negligence in a lawsuit against your home inspector (see below for a description of possible negligence claims).
You could also report your inspector to the Licensing Department for failure to follow the regulations. Filing such a report will not result in reimbursement of your losses, but could prevent the inspector from committing further regulation violations or negligence.
You might be able to sue your inspector for negligence if:
However, an inspector may not be liable if the report raised a red flag about the defect and gave you an opportunity to purchase a more detailed inspection of the item for an additional cost.
New York courts will typically enforce liability limitations contained in the inspection contract. They may refuse to grant you damages if the contract excludes the defective item from the scope of the inspection or limits damages to an amount specified in the inspection contract. However, the courts may ignore liability limitations in the contract if the inspector is grossly negligent. Gross negligence is usually described as intentional wrongdoing or conduct that shows reckless disregard for the rights of others.
It might be possible for you to sue a property seller or broker for damages under the New York state consumer protection law. (N. Y. Gen. Bus. Law §349). The law prohibits deceptive acts or practices in the conduct of business or in the furnishing of any service within the state. Consult an attorney for more information.
New York City has its own consumer protection laws that apply to homes located in the city. Consult an experienced real estate attorney in your community to find out whether a similar local law might apply to you.
It is important to act quickly after discovering a home defect, because liability is limited by time. Take the following steps immediately to protect your rights:
You might wish to contact the attorney who closed your purchase, or another experienced real estate attorney, to help you with these steps.
If a court finds that the seller is liable to you, you will be awarded an amount representing your actual damage—the amount of money it takes to compensate you for your loss and make you whole, but no compensation beyond your actual loss. This amount is usually determined by adding up all of your bills for repairs or replacement to correct the defect.
New York courts have recognized that there might be a few circumstances under which punitive damages (damage in addition to costs, to serve as punishment) may be awarded to a buyer. However, the courts typically limit punitive damages to situations where the evidence shows that the seller’s conduct was outrageous or deliberate, with spite, malice, or evil motive, or with such disregard for the interests of others that it could be called willful or wanton.
]]>The question then becomes, who is responsible? Are these just natural developments within a structure that is guaranteed to age, or do they indicate that the seller lied or concealed something? This article will examine your next steps and how the law may help you.
A first, crucial question in such a situation is: Do you have any reason to believe that the sellers knew about the problem before they sold the house to you? For example, is there anything around the house to suggest a cover-up of damage, such as new paint, beams, or drywall only in a specific area? A good way to investigate is to get the names of any contractors who worked on the house within the past year or so, and find out what services they provided. This could also yield evidence of ongoing problems that the seller might have tried to (perhaps literally) sweep under the carpet.
If you find evidence of concealment or problems that the seller couldn’t have failed to notice, the seller may be legally liable to pay you for the costs of repair, or damages you have suffered as a result of the defects.
Legally speaking, the term “damages” can have a broad meaning, but they could be calculated at the difference in value between the house you should have gotten and the lemon you actually got. Damages could also extend to compensating you for what you might have lost or suffered as a result of defects in the home (for example, medical bills if you got sick from undisclosed mold).
In rare cases, especially where you can prove to a court that the sellers knew about serious property defects but never disclosed them to you, the court may order the seller to not only pay damages to you, but also reverse the sale of the house.
You should try to resolve the situation outside of court first, if you can. Lawsuits can be long, costly, and emotionally draining, and the outcome is never guaranteed. First, look over all of your home purchase documents, including the disclosures the seller made to you, and any warranties or insurance policies that could cover the defects. Since these documents are usually complicated, you may want the assistance of an attorney in doing this.
Under Florida law, home sellers are required to disclose any problems that they actually know about, even if the buyer later thinks they should have known about the problem. (This comes from the court case of Jensen v. Bailey, 76 So.3d 980 (Fla. 2nd DCA 2011)).
Proving what the sellers knew and when they knew it can be difficult. You should have professional inspections conducted, including ample photo and video evidence, to help answer this question.
If, for example, an inspection reveals that just behind a freshly painted or wall-papered section in the wall lies a hotbed of mold, this might well be evidence of a cover-up attempt on the part of the sellers. But if you’re talking about mold in a dark corner of the basement that the sellers never visited, it might be a different matter.
“But what if I purchased my house ‘as-is’?” you might ask. Fortunately, the obligation of the sellers to disclose all known defects still remains, even in this scenario. The “as-is” clause just means that if the sellers made all disclosures as they should have, and you wanted to buy the house anyway, the sellers are not responsible for the repairs.
If the sellers of your Florida home did, in fact, lie about or fail to disclose known defects, you should weigh your options. Instead of hiring an attorney and filing a lawsuit, possibly for nondisclosure, fraud, and other causes of action, which could take years, would it be better to use that money to just make the repairs and chalk the whole thing up to experience?
Some homeowners opt for the latter course of action, particularly in light of the fact that proving what someone knew and when they knew it can often be difficult. But the choice is one that only you can make, preferably after consulting with an experienced real estate attorney.
]]>The common law rule in Pennsylvania was “caveat emptor,” or “buyer beware” for any purchases of real property — in other words, if the back step is broken, or the ceiling in the living room caves in right after closing the buyer takes care of the cost of repair. However, the Pennsylvania Legislature has placed limits on this rule, and required sellers to give buyers written notice of material defects with the property, as described in “Pennsylvania Home Sellers: Disclosures Required Under State Law.”
Pennsylvania’s statute does not make seller’s liable for undisclosed defects in cases where the seller actually knew nothing about them. The statute extends this protection to sellers who reasonably believed a problem had been corrected. So, if the sellers in the example above hadn’t known that their basement was leak-prone — hard to imagine, but perhaps possible if the sellers spent winters in Florida and the water dried up by spring — they wouldn’t have been required to disclose the problem to the Joneses during the sale transaction.
A seller can, however, be held responsible for actively hiding any problems in the house. Thus, a seller who knows that the toilet in the upstairs bath is leaking should mark this on the seller’s disclosure form. Similarly, if the seller is well aware that there is an open well pit in the far corner of the back yard, the seller needs to tell the buyer about it – or potentially face a lawsuit later.
Home buyers in Pennsylvania routinely make property defects claims against sellers on two grounds that aren’t covered in the statute: fraud and negligent misrepresentation.
In a fraud action, the buyer must claim that the seller intentionally failed to tell the buyer about a problem. This failure can include taking active steps to hide the problem, such as installing new carpet in a musty, leaky basement, or simply painting a ceiling bright white to cover the evidence of water damage. The courts have allowed buyers, when they can show that this happened, to receive the costs of the repair from the sellers – and in some cases even reverse the sale of the house.
In a negligent misrepresentation action, the buyer needs to show that the seller should have known the defect existed or had not been repaired. For example, if the seller experienced a water back up several years ago and had it repaired, but failed to disclose that the problem had happened again, the buyer could potentially argue that the seller should have known the repair was not successful. The buyer could also accuse the seller of intentionally failing to tell the buyer about the problem.
The buyer may also have a remedy against the selling broker if the broker knew or should have known about the concealed defect. The broker is responsible for sharing only information within his or her actual knowledge, so you would need to have evidence that the broker knew about it to pursue a claim. (See “Home Sales in Pennsylvania: What the Listing Real Estate Broker Must Disclose About the House” for details.)
However, in one case where the seller started to tell the selling broker something, and she responded “the less I know the better,” the broker was held partly responsible for the misrepresentation. (See Schwartz v. Rockey et al, 932 A.2d 885 (Pa. 2007).)
Home inspectors are not legally responsible for discovering latent or concealed defects. However, if a home inspector failed to find an obvious defect within the realm of his or her professional knowledge, the inspector may be held responsible for the resulting damages.
The Uniform Trade Practices and Consumer Protection Law protects people who purchase goods or property for personal or household use, including homes. If the person making the sale uses unlawful means to complete the sale, the buyer has a remedy under the UTPCPL. The Act itself describes the monetary remedy as the actual amount of damages and up to three times the amount of the damages – also known as treble damages.
If a Pennsylvania homebuyer can prove an intentional or fraudulent misrepresentation on the part of the seller or the selling broker, the buyer can ask for anything from the actual amount of the damage all the way up to three times the amount.
The first thing to do when something goes wrong with your house is to document it — that is, start gathering evidence in case you have to present it in court. Take a picture of the damage and write down the date and a description of the problem. You should also immediately take reasonable self-help steps, such as turning off the water if a pipe breaks or mopping up water if a sump pump fails.
After the immediate issue has been addressed, you should notify the buyer’s broker. If you did not utilize a broker, contact the seller’s broker. If no brokers were involved, you should notify the seller about the damage and ask whether the seller knew of the problem.
Depending on the seller’s response, you will likely have an idea of whether or not the seller intentionally disclosed a defect. However, you probably will need to do some investigations on your own as to what the seller knew of and when. For example, you might hire an inspector to examine the problem and see when it likely arose and whether it shows evidence of previous repairs. You can also ask neighbors about whether, for example, they saw frequent plumbers’ trucks at the property or were told about problems by the sellers.
If there was an intentional failure to disclose, the buyer should contact legal counsel regarding the next steps.
]]>Many things can happen to a home throughout its lifetime, and not all of these will be anyone’s “fault.” If, however, a situation like the one above occurs, with a serious issue that you did not notice before buying the home, and which you also didn’t learn about from either the seller disclosures, the home inspector, or the listing broker, you might have a legal remedy or solution, based on the liability of the seller or other parties for not disclosing the issue to you.
No matter what issue you discover, the first thing to do is take steps to minimize damage that has already occurred and reduce or eliminate future damage where you can. The exact steps to take will depend on what the problem is. Nevertheless, decreasing the damage caused is not only the best step for your home, but will also be a positive factor if you need to pursue legal action.
In some circumstances, particularly in making an insurance claim, you have a “duty to mitigate.” That means that once you discover a problem, you are supposed to do what you reasonably can to minimize the effects of damage that has already occurred, and to keep more damage from happening.
The second thing you should do before even thinking about who might be legally responsible is to contact your insurance company to report the damage.
Next, contact the appropriate professional (contractor, plumber, roofer, and so forth), who can let you know how the problem can be fixed.
Some buyers mistakenly think that in order to maintain the option of pursuing legal action, they must leave the problem alone and let the damage keep occurring in order to “prove their point.” Luckily, this is not the case. You should, however, keep records of any expenses related to the problem, immediately take photographs of the damage, and maintain records and photographs from any experts who come to inspect or fix the affected areas.
Though the facts in every scenario are unique, if a seller had actual knowledge of the problem and did not disclose it to you on the seller disclosure statement, you might be able to pursue a misrepresentation claim or other legal action. (See Residential Home Sellers in Washington: What the Law Requires You to Disclose for details on what the seller's duties include.)
You will, however, probably need to do some detective work or get some expert opinions in order to find out what the seller actually knew. A seller who claimed no knowledge of a problem on the disclosure statement is likely to stick to that story later. To overcome this, you might have to come up with evidence that, for example, the seller called in a repairperson, patched or otherwise tried to fix the problem, or simply could not have failed to overlook the problem during its most serious phase.
You might also be able to sue a real estate broker who had actual knowledge of a material (“important”) defect that you did not know about and was not otherwise disclosed to you. Washington brokers must disclose "material" physical defects of a property, although only those that the broker actually knows about and that would not be apparent or readily ascertainable to the property buyer. (See RCW § § 18.86.010, 18.86.030.)
As to the home inspector, any potential liability is more limited. There are, however, circumstances in which the home inspector could be liable for failing to meet professional standards. Review the details of your situation with a local real estate attorney to determine this.
In typical home defect disputes in Washington, there is a time limit for bringing a legal claim, referred to as a Statute of Limitations. These time limits are usually in yearly increments and depend on what type of claim you have against the other party. They are strictly enforced. As a result, if you do choose to pursue legal action, you should consult with an experienced real estate attorney as soon as possible to ensure your claims can be addressed.
If your legal action is successful, your possible compensation might include reimbursement for repairs you made to fix the problem (which is why keeping receipts is so important) as well as reimbursement for any additional home inspections that were necessary as a result of the issue. Further, depending on the circumstances, the court could award separate monetary amounts to pay for a portion of your attorney’s fees or for other types of expense.
Another (rarely used) option that you can request in a home defect case is to have the court order rescission. This means that the court will cancel your original purchase agreement with the seller and will try to put you both back in the positions you would have been before the sale.
In some Washington cases with special circumstances, remedies for undisclosed home defects have even included a monetary award for loss of income (for instance, when a buyer’s business tools and equipment were contaminated by the home defect and had to be abandoned, resulting in the buyer not being able to work; see Bloor v. Fritz, 180 P.3d 805 (2008)). The award in the Bloor case was accompanied by a further order to compensate for damage to the buyer’s credit rating when his inability to work left him unable to pay his mortgage payments on time.
]]>