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

If your Wisconsin home has repair needs that the seller failed to disclose to you, state law may offer you a way to get reimbursed.

Discovering a defect or flaw with your Wisconsin home that the seller did not bother to warn you about can be not only frustrating, but possibly expensive. No one likes to find things like a basement leak that has been hidden, rotting wood that has been covered with paint, or damage that resulted from improper home maintenance by the prior owner.

Luckily, you may have recourse to recover against the home seller under Wisconsin law. But your ability to do so will depend on things like what the seller already told you, what issues you waived in the course of the sale, and more, as described below.

Wisconsin Law Requires Home Sellers to Disclose Significant, Known Defects

Under Wisconsin law, a home seller must, before the sale closes, tell buyers about any condition or defect that would have a significant negative effect on the property value, significantly impair the health or safety of future occupants, or significantly shorten or negatively affect the normal life of the property. You probably received a written set of seller disclosures, in the form called a “Real Estate Condition Report” (the language of which is required by Wisconsin law). (See Wis. Stats. §709.03.)

Take a look at the form the seller gave you. Wisconsin home sellers are usually encouraged by their brokers or attorneys to err on the side of over-disclosure; that is, to disclose items that may or may not actually be significant flaws. It’s possible that the seller actually did make the required disclosures -- in which case, the seller cannot be held responsible for flaws that come to light after the sale.

Even if the defect you have discovered does not appear on the seller’s disclosure form, this doesn’t necessarily mean the seller is liable. A home seller must have been aware of (or blinding him- or herself to obvious information of which he or she should have been aware) a defect in the property and must have reasonably believed that the defect would have a significant negative effect on the property before the seller needed to disclose the defect. So it may be that the seller had no idea of the defect that you’re now noticing, or thought it was no big deal.

Buyers Can’t Recover Over Defects They Already Knew About and “Waived”

In some cases, a Wisconsin home buyer will give up the ability to collect for a defect within his or her offer, indicating that potential defects are deemed acceptable. This would most likely have occurred if you bought the home “as-is.”

You may also have, in effect, waived the defect, if it turned up on an inspection report but you subsequently proceeded to closing without demanding that the seller correct the flaw.

Buyer Duties Upon Discovery of Defect

Once you discover a defect that you think the seller should have fixed or warned you about prior to the sale, you generally have two duties.

First, you should inform the seller of the defect you have uncovered. This gives the seller the opportunity to attempt to resolve or settle the matter prior to ending up in court.

The second duty is to mitigate damages, which means that you must take steps to prevent the damage that results from the defect from getting any worse. This usually means repairing the problem (if you have the ability to do so) even if you have not yet reached a settlement with the seller.

The concept behind this duty is essentially that it is in no one’s best interest (including future buyers if you sell the property at some point) to allow the property to continue to decay. Failure to mitigate damages will result in you being able to recover only the reimbursement cost (determined by the court) of the damage caused by the defect up to the point of discovery, or could defeat your claim altogether.

Pre-Closing Remedies Under Wisconsin Law for Seller’s Failure to Disclose

If the home seller failed to disclose a defect and the property has not yet closed, you may be able to rescind the transaction. This means that you would, in effect, cancel the sale. This can only occur in certain instances and within a small timeframe prior to closing, so it is probably in your best interest to consult with an attorney to confirm whether this is a realistic option.

Post-Closing Remedies Under Wisconsin Law for Seller’s Failure to Disclose

After the home purchase has closed, Wisconsin law allows you to file suit as a result of property damage or loss resulting from the seller’s nondisclosure. For example, let’s say the seller decided not to disclose the existence of a foundation problem. If the basement subsequently flooded and damaged the home and your personal belongings, you may have a claim. If you are successful in this type of suit, you could potentially recover treble damages and your court costs.

Wisconsin law also provides an opportunity for you to argue that the seller is guilty of fraud or misrepresentation. These claims would be valid not only if and when the seller failed to list the defect on the disclosure form, but also if the seller did things like making cosmetic changes to the property to hide a problem. If successful, you could recover any funds used to fund repairs to the property, plus the cost of litigating the matter.

Keep in mind that these claims hinge in part upon whether you have any indication or evidence that the seller actually knew about the defect and hid it from you. Examples of this could include such things as recently repainted walls (to cover up water stains), notations from a property inspection report, variations in appearance between the home’s initial walk-through and closing, or anything else appearing to show an attempt at repair.

Resolving a Nondisclosure Issue Outside of Court

Litigating the types of claims described above can be costly and time-consuming. Many times, a seller may be amenable to resolving the issue outside of court, such as through direct negotiation or by use of a mediator. Consider whether you may be better served by such alternatives, which are typically quicker and less expensive for all involved.

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