Nevada residents know all about evaluating risk. When you bought your home, you probably thought it was a fairly safe investment: You knew its present value, and expected that value to rise over time. But what if you eventually discover that the home had various hidden defects that made it worth much less than you thought? Imagine, for example, that after the closing, you move into the home and find that there's no electricity on the second or third floors of the house. You further discover a significant outbreak of mold in the master bathroom, and a series of leaky pipes in the basement. These problems will cost you tens of thousands of dollars and much aggravation to repair.
It occurs to you that none of the information you received from the seller contained a word about these issues. Did Nevada law require that the seller inform you? And did this failure to disclose open the seler up to a potential lawsuit whereby you could recover your expenses?
Nevada, like many states, requires sellers of residential property to make certain disclosures in writing to buyers prior to the closing. N.R.S. 113.130 broadly covers such disclosure requirements in Nevada. The statute provides that, at least ten days before conveyance, the seller “shall complete a disclosure form regarding the residential property.”
The disclosure statement should have covered all known material defects—that is, significant problems with the property that the seller was aware of. Importantly, the law specifically states that the seller need not "disclose a defect in residential property of which the seller is not aware.” In other words, the seller has no obligation to go poking around in the attic, or to hire an inspector to tell you whether your plumbing works or not. If the seller did not know about a problem, he or she had no obligation to research or disclose it.
Unlike in some states, Nevada’s legislation does not specifically state what areas or aspects of the property require some sort of disclosure. However, the Nevada Real Estate Division (a state agency that monitors the real estate industry) offers a widely used four-page disclosure form containing all of the necessary information that the seller should have disclosed to you. You likely received this form, or a similar form, prior to the closing.
The form required the seller to answer a series of questions about various elements of the home by checking a box for “Yes,” “No,” or “N/A” (not applicable). The disclosure form asks about the condition of various aspects of the property, including: Systems/Appliances (such as plumbing, garbage disposal), Property Conditions (roof, renovations, flooding, and so on), and Environmental Conditions (such as radon, asbestos, and fungi).
With this background in mind, how do you know whether you might have a cause of action against (grounds to sue) your seller?
The first step to answering that question is to dig through your files and find the seller’s disclosure form. Did the seller disclose any information about the adverse condition that you are suddenly facing?
Perhaps the seller did alert you to the mold or the electrical problems, and you simply overlooked this or consciously ignored it. If so, then you are unlikely to be successful against the seller in court. Nevada’s statute 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.” Under the statute, you would have “accept[ed] the property with the defect as revealed by the seller… without further recourse.” In other words, the disclosure form insulates the seller from liability.
Not all home sellers will be quite so honest, however. A seller may have purposely failed to reveal a defect, knowing that the problem would scare away buyers (or resulted in lower purchase offers). In this case, Nevada law offers a few potential remedies.
If the seller knew of the defect before the sale, then the buyer "is entitled to recover from the seller treble the amount necessary to repair or replace the defective part of the property, together with court costs and reasonable attorney’s fees.” The word “treble” means triple. In other words, you could recover from the seller three times the amount it will cost you to repair or replace the defective condition, plus court costs and attorney’s fees.
This is a very harsh remedy; clearly, Nevada’s legislature aimed to encourage honesty among sellers.
There is an important caveat, however: Nevada imposes a tight statute of limitations on bringing this cause of action against a seller. “An action to enforce the provisions of this subsection must be commenced not later than 1 year after the purchaser discovers or reasonably should have discovered the defect or 2 years after the conveyance of the property to the purchaser, whichever occurs later.”
In plain English, this means you should act fairly quickly once you discover the defect. Remember, it can sometimes take months to identify the appropriate attorney and have him or her do the necessary advance research and file suit. You would not want to wait and then be precluded by this statute of limitations.
Even beyond the statutory cause of action contained in N.R.S. 113.150, you may have two additional common law causes of action under Nevada 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 was clearly dead. 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 Nevada 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 mold in the bathroom before closing, but in fact never did this remediation work, he or she would be in breach.
In sum, Nevada law provides you with a number of causes of action against a seller who intentionally and knowingly fails to disclose information about material defects in the home. After you locate the disclosure documentation and gain a sense of whether the seller omitted to mention material defects, it might make sense to have a consultation with an attorney with the appropriate background in real estate litigation. Do keep Nevada’s tight statute of limitations in mind, however, and act quickly.