Alabama home buyers who discover defects in their homes following the sale may face challenges in successfully bringing suit against the seller for undisclosed defects. This is because Alabama law (unlike that of many other U.S. states) employs the caveat emptor rule with regard to the resale of previously owned residential real estate.
Caveat emptor is Latin for “let the buyer beware,” which means that the seller has no actual duty to advise the buyer of issues with the property’s physical condition during the sale. This places the responsibility of discovering defects upon the buyer. The main ways in which Alabama home buyers protect themselves is to either ask the seller questions about the property’s condition (in which case the seller is legally bound to answer honestly) or conduct a home inspection before closing the sale.
If the home was newly built, however, it’s a different story. Alabama law provides the home buyer with recourse against the builder for failing to disclose known defects in the home. When the home is a previously owned residential structure, however, the buyer will have a much more difficult time suing the seller
Under the caveat emptor rule, an Alabama seller ordinarily has no duty to disclose to the purchaser any defects in a used residential home. However, there are a few exceptions to this rule (found in Ala. Code §6-5-102 (1975)).
For one, the seller has a duty to disclose defects to a buyer if a fiduciary relationship exists between them. A fiduciary duty is a legal responsibility to act in another party’s best interest, as would be the case if, for example, the seller was the buyer’s attorney.
Also, if an Alabama buyer specifically inquires about a material condition concerning the property, the seller has an obligation to disclose known defects. This could be an important exception if you, as the home buyer, asked questions and received wrong or misleading answers. For example, if you asked how old the roof was and were told, “It was put in last year,” but later the roof starts to leak and you discover that the only thing put in last year was a patch, you might have cause to bring suit.
An Alabama home seller also has a duty to disclose a material defect affecting the homeowner’s health or safety, if that defect is not already known to or readily observable by the buyer. The health and safety exception is a narrow one, however. In order for it to be invoked, the Alabama home buyer would need to make a “sufficient showing” that the defect posed a direct threat to his or her health or safety. Examples of such a defect might include a non-operational heating and cooling system or the presence of black mold in the home.
The existence of the defect alone is not enough to base a lawsuit on, however. The home buyer will need to prove that: (1) the seller was actually aware of the defect; (2) the seller failed to disclose it to the buyer; and (3) the seller knew or should have known it would affect the buyer’s health or safety.
A buyer who can overcome the caveat emptor rule may be able to sue the seller for misrepresentation, negligence, suppression of material facts, or fraud. But before initiating a lawsuit, look at the terms of the sales contract. Most Alabama contracts for the purchase of real property will contain a warranty for habitability, stating that the home is suitable and in good safe working condition for occupancy.
However, there is a growing trend for Alabama homes to be sold “as is,” which essentially means what you see is what you get. In an “as is” contract, the seller makes no guaranty regarding the condition of the home or its habitability and explicitly negates any reliance by the buyer upon oral or written promises not contained in the contract.
An “as is” clause in an Alabama contract for the purchase of used real estate bars a buyer from making misrepresentation and suppression claims, negligence claims, and fraud claims. This is true even in cases where the buyer made a direct inquiry that would have otherwise imposed a duty of truthful disclosure upon the seller.
If your contract does not contain an “as is” clause, you will still need to prove that the seller’s fraudulent misrepresentation wasn’t wiped out after the execution of the sales contract at the closing table. This is because Alabama employs the merger doctrine, which means any items in the contract that are not specifically listed in the deed are considered void after the parties sign the documents at closing. Alabama courts have ruled that a buyer can save the seller’s previous representations by adding them in the purchase contract and deed. To do so, the buyer can request that a disclosure statement or an express agreement of warranty for habitability be included in the deed and purchase contract.
Although a home buyer in Alabama may have many hurdles to overcome when suing for undisclosed defects, success is still possible. Ultimately, each case must be analyzed individually. However, there are five key steps a buyer should take upon discovering a defect, whether it is the presence of black mold, structural damage, or something else.
The buyer should:
(1) take photos of any problems before fixing them
(2) ask any contractors or repair people for insights on when the problem may have begun
(3) review the purchase agreement to see what it said about seller liability for home defects
(4) contact the homeowners’ insurance company with any relevant information to determine whether it will cover any necessary repairs, and
(5) consult a licensed Alabama attorney for advice on what legal remedies may be available under Alabama law and the likelihood of success in a lawsuit.