Home of Mount Rushmore, South Dakota knows a thing or two about grand appearances. The state is filled with beautiful homes, often on sweeping properties and ranches. If you purchase a home, you will hope and expect that the house itself and the surrounding property will be in good condition. But what happens if you move in and discover major problems, like a sinkhole in the yard, a flood in the basement, or a leaky roof? Did the seller have to tell you about these problems, and if so, can you recover any money after the sale has closed?
When you discover a big problem with your recently bought South Dakota home, your first emotion will probably be surprise. Your second will probably be anger. The legal question to ask, however, is whether the seller knew about and had any obligation to notify you about this problem before the sale.
There's a good chance the seller did have an obligation to tell you about any known problems. South Dakota Stat. § 43-4-37 et seq., which broadly covers disclosure statements, requires the seller of residential real property to "furnish to a buyer a completed copy of the disclosure statement before the buyer makes a written offer.”
Indeed, South Dakota’s legislature has an entire disclosure form codified as South Dakota Stat. § 43-4-44. Your seller should have filled this out, signed it, and given it to you before the sale.
As you can see, this form asks broad questions about the seller’s knowledge regarding the condition of various aspects of the home: the roof, the attic, the plumbing, the basement, and the sewers, just to name a handful.
For each, the seller was required to state whether or not he or she was aware—“Yes”, “No”, or “Not Sure”—of any material defects with respect to that element of the home. The form also asks the seller to disclose any defects that were not specifically addressed by the questions, making South Dakota’s requirements for disclosure very inclusive.
As a buyer, you are fortunate that South Dakota has built such robust protections into its legislation. If you discover a defect in your new home, check your records for the disclosure report or ask your attorney or real estate agent who assisted with the sale to give you a copy.
The timing is also important: Did you discover the defect within mere minutes of walking into your newly bought home, or has it been several months? If the seller delivered the statement to you belatedly, you can terminate the entire sale (i.e., cancel the purchase contract and unwind the transaction) within three days of receipt of the statement (or an amendment), under South Dakota Stat. § 43-4-39.
The purpose of this statute is to give homebuyers time to look at the disclosures and consider the value of any defects before it comes time to close on the purchase. Thus, if the seller hands you a long disclosure right before you’re expected to close on the property, you still have an escape route.
What if the seller lied on the disclosure form? For example, what if the seller said that there were no easements on the property, but you soon learn that your next door neighbor claims an easement over your entire yard to drive a tractor to and from his property? Surely, this decreases your land’s value as well as your enjoyment of it.
Fortunately, the legislature gives you a powerful remedy. According to South Dakota Stat. § 43-4-42, a seller who makes misrepresentations or omissions on a disclosure statement “is liable to the buyer for the amount of the actual damages and repairs suffered by the buyer as a result of the violation or failure.”
Not only that, but “In any court action pursuant to this section, the court may award costs and attorney fees to the prevailing party.” In plain English, this means that not only would the seller need to reimburse you for the costs of remediation, but the seller could end up paying your attorney if your lawsuit is successful! Legal fees can be significant, and serve as a warning and punishment to sellers who attempt to act in bad faith.
If you believe that you were intentionally misled on a disclosure form from your seller, contact a real estate attorney. Your attorney may suggest initiating a lawsuit pursuant to this statute. (It is also possible that the seller may wish to avoid the cost and uncertainly of litigation and offer you a settlement.)
Keep in mind, you are not protected from defects in the home if the seller actually did disclose them. South Dakota Stat. § 43-4-40 states that: “a seller is not liable for a defect or other condition in the residential real property being transferred if the seller truthfully completes the disclosure statement.” In other words, if you receive a disclosure form that says that there are easements on the property or problems with the plumbing, and you fail to investigate them further and buy the property anyway, you will be unsuccessful in suing the seller. After disclosure, the burden is on you to investigate. South Dakota’s statute allows you to claim your rights only if you were genuinely the victim of fraud.