If you’re an Indiana home buyer and have only recently discovered defects in the property, which you suspect arose before the sale but that neither the seller nor others warned you about, you’re not the first to face this issue.
Let’s say, for example, that John and Kaylie bought a home in an established Indiana neighborhood. They knew going into the purchase that a home that's 30 years old will have a few problems. They read the sellers’ disclosure form, hired a home inspector, reviewed the report, and asked for the major defects to be corrected or for money to be provided at closing. They thought everything has been handled.
Two months following the closing, after a heavy rain, part of the ceiling in an upstairs room collapses. The contractor who comes out to survey the damage notes that there was significant rot around the wood above the ceiling, and that it appeared that the leak had sprung in a patched-over area of the roof.
John and Kaylie hadn’t learned about the patch or rot from the seller disclosures, the listing broker, nor the home inspector, and they themselves hadn’t noticed any signs of water damage in the ceiling when they bought the house. Do they have any remedies against the seller or other parties to the sale?
Home sellers in Indiana have a common law duty to disclose any known material defects that are not readily observable. And the Indiana Real Estate Sales Disclosure Act requires sellers to fill in an extensive checklist and advise prospective buyers about the condition of the house, particularly as to problems that are not readily observable by the average person. (See a further description of the seller’s obligation in the article, “Indiana Home Sellers: Disclosures Required Under State Law.”)
So the question becomes, for purposes of the example above, did the sellers fix the roof and think it was no longer a problem? Or did they intentionally paint over the water damage and not mention the issue on the disclosure paperwork?
When sellers are prepping their home for sale, they tend to spruce the place up. They clean, organize, touch up the paint, and generally make the place look good. Buyers need to be aware, though, that in the sprucing up, sellers may unintentionally – or in some cases, intentionally and contrary to their legal duties -- cover up a known defect in the house.
The first thing a buyer wants to do with any kind of damage is to take immediate, practical steps to prevent further damage. So if there is a leak in the roof, you likely want to put a plastic tarp out to stop further water from coming in. If the water heater is leaking, turn off the main water valve to the house.
Next, call your insurance agent and report the damage. Take pictures, and ask whether the insurance company has preferred vendors for correcting the damage. Then, contact an expert such as a contractor, plumber, or roofing expert to survey the damage and give an opinion on the cost.
Once you have addressed the immediate issues, turn to the question of liability.
An Indiana home buyer who can prove that the seller or other party to the sale failed in an obligation to make disclosures or fulfill a professional duty may sue on that basis.
If the seller concealed or failed to disclose a known problem, the buyer may sue the seller under a theory of misrepresentation or fraud. Under this theory, the buyer may be entitled to money for damages incurred as a result of the seller’s unlawful acts.
Indiana law also provides for legal action against a home inspector for damages that the buyer incurred as a result of an omission by a home inspector. The only notable requirement is that the action must be brought within two years of the completion of the inspection.
A buyer may also be able to sue the seller’s broker if the broker gave false information or failed to tell buyers about a problem that the buyers couldn’t reasonably have been expected to discover on their own. The key question is whether or not the seller’s broker knew about the seller’s failure to disclose. For more information see: Home Sales in Indiana: What the Listing Broker Must Disclose About the Property's Physical Condition.