Legal Remedies If a Home Seller Lies or Conceals a Defect in Texas

You may be able to claim damages from a Texas seller who failed to disclose a home defect -- or even rescind the sale altogether.

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Yes, you can sue a home seller for undisclosed defects in a single-family residence in Texas. In other words, if you have bought a home, and you find problems with its physical condition or other issues that the seller should, by law, have told you about before the sale but didn’t, you may be able to hold the seller responsible. This article will discuss the details of what Texas law says on this matter, and your likely next steps.

What Texas Home Sellers Must Disclose to Buyers

Unless your Texas home purchase falls under an exception, your seller should most likely have provided you with a notice of the property’s condition before the sale closed (as required by Section 5.008 of the Texas Property Code).

The statute was written to protect you from buying a home from a seller who knew of hidden defects in the property. However, some sellers do not have to provide disclosures, such as:

  • sellers of newly constructed homes
  • sellers under “as-is” agreements (in which the buyer affirmatively agrees that he or she is not buying based on representations made by the seller), and
  • sellers who would not have known of the property’s condition, such as banks who own the property by virtue of foreclosure.

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 a purchaser’s decision to buy the residence.

What to Do When You Discover a Defect in Your Texas Home

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 may have arisen after your purchase. Or, the defect may 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 may 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.

It May Not Be Too Late to Rescind the Purchase

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, may 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 may 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 may 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 may have the right to rescind the contract.

If you purchased a home without receiving a disclosure notice and have now become aware of defects, consider consulting 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.

Should You Sue for Undisclosed Home Defect?

Now, let’s assume you plan to stay in the house, but want compensation for the defects. It may 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.

by: Kent Canada

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