Legal Remedies If a Home Seller Lies or Conceals a Defect in Massachusetts

Buyers' remedies against a home seller in Massachusetts are quite limited; though holding the broker liable may be possible.

No… in most situations, Massachusetts law does not allow a home buyer to sue the seller of the home for defects that the buyer finds after purchasing the home, which the seller had not warned the buyer of. However, if you’re the buyer in such a situation, there’s a possibility you might be able to sue seller if he or she outright lied or misrepresented something; or you might be able to sue the real estate broker for nondisclosure, as described below.

Massachusetts Sellers Have No Duty to Disclose Home Defects to the Buyer

In Massachusetts, the general rule regarding undisclosed defects is caveat emptor, or “Buyer Beware.” This means that if the property being sold has any defects, such as a basement with a history of flooding, the presence of underground storage tanks (which tend to be leak-prone), or a leaky roof, they become the buyer’s problem, not the seller’s. This is true whether the seller told the buyer about the defects before the sale closed (in legal lingo, “disclosed” them) or not.

Massachusetts is somewhat unusual in this regard. Although caveat emptor was long the tradition in U.S. real estate transactions, most U.S. states have passed laws requiring sellers to fill out a detailed form providing information about the property’s features, physical condition, defects, and more.

The lone exceptions are that sellers are required to disclose to buyers the existence of lead paint, pursuant to theMassachusetts Lead Paint Statute, and the presence of a septic system, according to Title 5 of the State Environmental Code.

How Do Massachusetts Buyers Find Out What Condition the Home Is In?

The caveat emptor rule makes it especially important for buyers in Massachusetts to have a home inspection performed by a licensed home inspector. The vast majority of purchase and sale agreements contain a home inspection contingency allowing the buyer to conduct such an inspection and to walk away from the transaction if the inspector turns up issues with the property that cannot be resolved by the parties.

Another measure that Massachusetts buyers can take is to ask lots of questions about the property’s condition, especially questions about other environmental hazards such as radon, asbestos, and underground storage tanks. If you did so, and received false answers, this may provide grounds for you to sue the seller, as described next.

What If the Massachusetts Home Seller Lied About the Property’s Condition?

While individual home sellers (as opposed to an entity such as a real estate developer) have no duty to disclose ANYTHING about the property (well, except for the existence of lead paint and the presence of a septic system, mentioned above), they cannot affirmatively misrepresent a fact about the property.

So, for example, if a buyer asks a seller if the roof has ever leaked, and the seller says no, when in fact the roof leaked three months ago, then the seller could be held liable (sued) for that misrepresentation, assuming it was reasonable that the buyer relied on that statement in deciding to purchase the property.

If however, the basement floods six months after a buyer moves in, and buyer later discovers the basement has a history of flooding but never had a home inspection and did not ask the seller about the basement flooding history, then this issue is solely the buyer’s and the seller has no liability!

What to Do If You Believe a Home Seller Lied to You About a Home Defect

Because Massachusetts only has two statutorily required seller disclosures, and no standard seller disclosure forms like most other states have, it can be difficult for a buyer to come up with the proof that a seller lied, or misrepresented, a fact about a home defect.

Possible forms of proof you might gather include written seller statements (such as an email to you or your agent) oral statements (much harder to provide evidence of), or disclosures and representations the seller (hopefully) was asked to make in your purchase and sale agreement. From there, you will need to show that you relied on this lie or misrepresentation when making your decision to purchase the property.

A great example of these two points comes from a 1991 Massachusetts case. (Zimmerman v. Kent, 31 Mass. App. Ct. 72 (1991).) Buyers were buying a home that had a septic system (the presence of which, as you know, needed to be disclosed!).The system needed replacement, but the seller did not, or could not pay for this work. The seller brought an engineer out to inspect the system, then told the buyers that the engineer estimated replacement would cost $2,000 to $3,000 and no more than $5,000 -- which, in reality, the engineer never said. This price was acceptable to the buyers, who willingly signed the purchase and sale agreement.

When the buyers later got the bill, the cost of the replacement system was $17,000! In their lawsuit, the buyers were able to show that, first, the seller was the only person involved in the transaction to have spoken with the engineer, and had told the buyers the cost of the replacement septic system would be no more than $5,000; thus the bill for $12,000 more than they expected to pay became evidence of the seller’s lie. Next, the buyers successfully argued that they would not have agreed to the purchase at this price, and had relied on the seller’s statement in making their purchase decision. The court agreed with them, rescinded the contract, and awarded them financial damages.

When a Massachusetts Real Estate Broker Can Be Sued for Nondisclosure

While individual home sellers have no “duty to disclose,” real estate brokers in Massachusetts are held to a higher standard. The reason for this is that individual sellers are operating in a private and personal context, whereas real estate brokers are operating in a business context. This brings the Massachusetts Consumer Protection statute, Chapter 93A, into play. A real estate broker must disclose to buyers “any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.” (See 940 CMR 3.16 (2).)

So, a broker who knew of, or should have known of a problem but failed to disclose it, or knowingly and willingly sold you a property with significant title issues, could be held liable for up to triple damages under the Massachusetts Consumer Protection Statute. For example, a broker who knew that owners of a neighboring property have a right of way through the middle of your property, or of possible zoning or conservation concerns, such as one half of your backyard being ‘protected wetlands,’ should have told you about this, and can be sued for failure to have done so.

Unfortunately, the law governing brokers sets a very subjective standard and may be applied differently based on the facts of each transaction.

The law is a bit more specific on a few aspects of brokers’ duties: Chapter 93, Section 114 of the Mass. General Lawsstates that real estate agents do not need to voluntarily disclose “the fact or suspicion that real property may be psychologically impacted” as this “shall not be deemed a material fact required to be disclosed in a real estate transaction.” The term psychologically impacted includes the fact or suspicion that a prior occupant had HIV; the home was the scene of a murder, felony, or suicide; or that the home “has been the site of an alleged parapsychological or supernatural phenomenon.” So, if you discover that your home was the site of a murder-suicide and you've seen multiple ghosts, a real estate broker was under no duty to disclose any of this to you.

What to Do If You Believe the Real Estate Broker Failed to Disclose a Home Defect

First, get familiar with the Massachusetts Consumer Protection Act. You will need to write what’s known as a “30-day demand letter.” The purpose of this letter is to put the real estate broker on notice that you have a claim against him or her, and to encourage negotiations and ultimately a settlement outside of court. The law requires you to send such a letter within the 30 days prior to filing a claim in court.

This letter needs to identify you, the real estate agent, an unfair or deceptive act (failure to disclose) committed against you, and the injury suffered, along with the damages you are claiming.

During this 30-day timeframe the real estate broker has the opportunity to make a good faith counteroffer to you; otherwise the broker could be subject to triple damages if found liable. If you are unable to come to a resolution, the next step would be to bring a lawsuit against the real estate broker in which, similar to the process discussed above with respect to a seller who concealed a home defect, you'd attempt to prove that the real estate broker failed to disclose a fact that should have been disclosed and that this fact was material in your decision to purchase the home.

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