Delaware is one of the smallest states in the union, but its real estate market has come back to life following the slowdown of the Great Recession. As a new homeowner in Delaware, you have made a significant investment into the value of your property. Thus, few things can be more infuriating than moving into your house and discovering unexpected problems: loose floor tiles in the kitchen, an unsafe staircase leading to the attic, or outbreaks of mold in the basement. These problems will be annoying, expensive, and lower the value of the home. Did the person who sold you the home have a legal duty to disclose such issues to you? If so, do you have any legal remedy by which to recover your money?
If you find unfortunate problems with your Delaware home after your move, you may wonder whether the seller had a legal obligation to warn you about them. In Delaware, the Buyer Property Protection Act requires that sellers of residential property make certain disclosures to prospective purchasers about known physical defects. This Act, codified as Chapter 25, Title 6 of the Delaware Code, requires the seller of residential real estate to complete the Seller’s Disclosure of Real Property Condition Report and “disclose, in writing, to the buyer, agent and subagent, as applicable, all material defects of that property that are known at the time the property is offered for sale.”
The law also requires that the seller give the buyer any information he or she has received on radon from tests or inspections, and notify the buyer of any known radon hazards.
The purpose of the statute is to push the seller to detail any facts about which he or she is aware that negatively affect the property. This could cover a wide variety of defects in the home and property, ranging from the condition of the roof to the condition of the gas tank or underground pipes. The legislature’s broader goal, of course, is to prevent buyers from having any unhappy surprises after moving into the home.
The Delaware Real Estate Commission provides a multi-page form that contains all of the necessary information. If you discover a defect in your home after the closing, you should begin by locating this form in your files. You will notice that it contains answers to over 200 detailed questions about 15 different areas of your home. The areas range from legal questions about the seller’s title to factual questions about the seller's knowledge of various repairs.
Now that you see the disclosure requirements in Delaware, your next question is whether or not you can sue a seller who failed to disclose to you certain problems with the home.
The first step to answering that question is to dig through your files and find the seller’s disclosure form. Delaware’s statute gives sellers an incentive to be honest in making disclosures. As the disclosure law says, “The buyer shall not have a cause of action against the seller, agent and/or subagent for…Material defects in condition of the residential real property disclosed to the buyer prior to the buyer making an offer to purchase.” The disclosure form insulates the seller from this sort of liability. Despite this statutory incentive to be honest, however, some sellers will not disclose a problem if they fear it may scare away buyers.
Check the form to see whether the seller actually identified the problem that you now face in the home. Was the problem ignored on the form? Or did you simply fail to review the form before the sale? If the former, you could sue the seller under the statute for failure to disclose material defects in the property.
Even beyond the statutory cause of action, you may have two additional common law causes of action under Delaware law: fraud and breach of contract. Fraud occurs when one party makes a knowingly false statement in order to induce another party to take an action. For example, imagine that the seller told you (verbally or in writing) that the kitchen appliances were brand new. However, soon after you moved into the home, the oven stopped working, and a repairperson told you that it was near the end of its life. Obviously, the seller's false statement was made to induce you to purchase the house. This might constitute fraud.
You may also have a breach of contract cause of action against the Delaware seller if the language of your contract made certain guarantees. For example, if your purchase contract specifically stated that the seller would deal with all asbestos in the ceiling tiles before closing, but in fact never did this abatement work, he or she would be in breach.
What should you do if you discover a serious defect in your newly purchased Delaware house? After you locate the disclosure documentation and gain a sense of whether the seller omitted material defects from the form, it might make sense to have a consultation with an attorney with the appropriate background in real estate litigation.
The attorney might begin by writing a strongly worded demand letter to the seller, stating the problem and making a request for payment. Often, this sort of a formal demand letter can at least provoke some settlement discussion. If the seller still refuses to respond or negotiate, it may be time for a lawsuit.