Can You Sue a Home Seller for Undisclosed Defects in New Jersey?

What to do if your New Jersey home came with some unexpected issues, of which the seller hadn't warned you.

No one expects their newly purchased home to be perfect. Buyers do, however, have a right to expect that the seller has informed them of any major problems with the home. In New Jersey, a seller is legally required to disclose all “material defects” that the seller knows of in a property. If, after the sale has closed, you discover a material defect that seems to have existed before you bought the home, which defect the seller did not tell you about, you may be able to claim compensation from the seller.

What Types of Defects New Jersey Home Sellers Must Disclose to Buyers

The seller of your New Jersey home was not required to disclose every defect in the home. Cosmetic repairs like dirty carpets or missing floor tiles, for example, are not considered material defects. And again, only “material” defects are considered important enough to the transaction that you should have been advised of their existence.

But what does “material” mean? New Jersey law doesn’t (as of early 2015) contain any definitions of the term, but the International Association of Certified Home Inspectors offers a definition that’s in keeping with how materiality is understood nationwide, as “a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people.”

Home inspectors are, after all, often on the front lines of figuring out what defects are material, since many home buyers – hopefully, including you – commission a professional inspection before closing the sale. Put another way, the term “material” means anything that would make a reasonable buyer decide not to buy the home or, at the very least, address it as a major concern in the Contract of Sale.

How New Jersey Home Sellers Advise Buyers of Material Defects

Typically, prior to closing, a New Jersey home seller will provide the buyer with a form referred to as a Seller’s Property Condition Disclosure Statement (“Disclosure Statement”). Its purpose is to give the seller the opportunity to disclose, to the best of his or her knowledge, the condition of the property, thus allowing buyers to make an informed decision about whether to purchase and at what price. For more about the seller’s legal obligations, see Nolo’s article, “New Jersey Home Sellers: Disclosures Required Under State Law.”

Use of the Disclosure Statement form is not legally required, however. A New Jersey home seller may choose to disclose any known material defects in the property in some other way, either orally or in writing. Check the documentation from your sale to see whether you received the Disclosure Statement. If you didn't, look into whether you received anything else in writing from the seller discussing the condition you believe is a material defect.

Among the numerous types of things a seller in New Jersey is required to disclose are electrical system hazards; structural problems; roof leakage; termites; environmental hazards; and plumbing, water, and sewage issues.

Consequences of a Seller Failing to Disclose a Defect

New Jersey sellers can be held liable for failing to disclose a material defect. For example, if a seller knew that whenever it rains, water enters the house, but failed to disclose this information, the buyer who discovers this can potentially sue.

Part of the buyer’s challenge, however, will be showing that the seller knew about the defect in the first place. A seller is not required to actively look for defects, only to report on issues discovered in the course of homeownership. So if you find moisture in a corner of the basement after lifting up a wooden platform that the seller never looked under, you may have no cause to complain about nondisclosure. An issue like water entering the house whenever it rains, however, is a defect that the seller would have likely known about after having lived in the home for any period of time.

Start thinking about issues of proving the seller’s knowledge as soon as you spot a problem. Take photos of the troubled area, and ask any repairperson to note and write up findings regarding previous repairs and when the problem likely started.

You Can’t Sue the Seller Over Issues You Already Knew About

As the buyer, you hopefully inspected the house beforehand, both through your own examinations and discussions with the seller and by retaining a home inspector to conduct an independent inspection. The home inspection is a structural and environmental analysis of the property, which should have yielded a report of material defects that were visible and accessible. Any defects noted during the inspection were open for negotiation before the closing, but not after.

Consider Whether a Lawsuit Is Worth the Time and Expense

When you find something wrong with your newly purchased New Jersey home, you have to determine who may be liable and whether it is worth the time and expense of pursuing a case against the responsible person. This is best determined by estimating the cost of repair versus the cost of retaining an attorney to litigate the matter.

Not every defect is the seller’s responsibility to disclose to the buyer -- but you may be able to find someone else who is responsible for having failed to advise you of a known defect, such as the seller’s broker and/or your home inspector. For example, a broker may be liable if he or she failed to disclose a material defect of which the broker was aware, such as condensation on the windows that occurs due to a defect in the windows but was not visible when you visited. Or the home inspector may have missed the defect during the inspection, and can be held liable if this oversight did not meet industry standards for professionalism.

Before suing, you might first try remedies such as contacting the seller’s broker (who may have a professional interest in seeing this matter resolved quietly) or writing a letter to the seller with evidence of the problem and requesting compensation.

If you have discovered an undisclosed material defect, consult with a real estate attorney to determine how best to proceed. It can often be difficult to prove that a seller knew of and failed to disclose a material defect. A real estate attorney will offer an evaluation of the situation and provide the best strategy on how to proceed.

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