Discovering Defects After Buying a House

The homebuying process offers several opportunities to uncover any defects. Sellers must disclose any known defects. Buyers can get an unbiased, licensed home inspector for an independent assessment. These are great options, but after a family moves into a new home, they may uncover undisclosed defects.

You have options if you discover problems after you finalize your home purchase agreement. You may want to consult a real estate lawyer about the next steps. This article explores homeowners’ options after they finalize a home sale.

Hidden Defects During the Homebuying Process

You may find your dream home early in the homebuying process. Yet, you almost certainly won’t move in the next day.

Buying a home is a significant financial and legal responsibility, and there are many steps to closing. Your home inspection and final walkthrough are critical, as they can alert you to possible defects.

Although the new homeowner has opportunities to inspect the house for any defects, it is the home seller’s responsibility to disclose all known home defects. It doesn’t matter if the defect is minor or material. The seller must disclose it to the homebuyer or their real estate agent.

The disclosure rule does not apply to known defects of which both parties are aware. That may include obvious issues, such as a home needing general renovations.

Common Undisclosed Defects

Home defects can range from a broken window to a leaking roof. Depending on the type of defect, it may cost thousands of dollars in damage and repair costs. Some defects may create long-term challenges for the new owner.

Some possible home defects include:

• Bad sewer lines or rusted pipes
• Hidden water damage
• Rotted wood or termites (learn more about termite letters)
• Huge cracks in driveways or house foundation
• Asbestos
• Inadequate or old ventilation or windows
• Septic system or water heater issues
• Radon leaks
• Outdated wiring
• Electrical, plumbing, or HVAC issues

What Are Material Defects?

According to the International Association of Certified Home Inspectors, a material defect includes these three factors:

• Deals with a fundamental system of a residential property
• May have an adverse impact on the property value
• May result in an unreasonable risk to human life

This does not necessarily include normal wear and tear, like an old furnace in need of repair.

Home inspectors focus on irregularities that amount to material defects. So a scratch on the kitchen counter or a screen door with a few small tears rarely amounts to a material defect.

Minor Repairs for House Defects Before the Sale

Buyers and sellers often negotiate the cost of minor home repairs. The seller can deduct the cost of repairs from the purchase price and amend the purchase contract. Otherwise, the seller may opt to fix the repair themselves and maintain the same terms of the sale.

Buyer and Seller Responsibilities

In every home sale, all parties have responsibilities depending on their role. For example, the buyer must pay for the house in question. The current owner should work with the seller’s real estate agent to ensure the house is in saleable condition.

A buyer’s real estate agent may often advise the buyer to purchase a home warranty covering undisclosed defects. However, that’s not a requirement.

State Laws Require Seller Disclosures

Some states require home sellers to complete disclosure forms and provide them to potential buyers. State disclosure laws often say sellers must “disclose all material defects” in a property. This means they list them out and explain them to the buyer.

For example, one important seller’s disclosure is the lead paint disclosure. Sellers must disclose the presence of lead-based paint or hazards in homes.

A few states follow the rule of caveat emptor, which means “buyer beware.” In those states, the seller is subject to relaxed disclosure requirements. Sellers still can’t fraudulently hide defects or mislead buyers. States may also have different disclosure requirements for real estate agents than unlicensed private sellers.

If a Seller Repaired a Defect, Do They Still Have To Disclose It?

Depending on state law and required disclosure forms, a seller may have a legal obligation to report a significant defect that they already addressed. For example, most states require sellers to disclose whether the property had prior mold remediation. 

Buyers benefit from having as much information as possible about the home. For certain defects, there may be a risk of recurrence. Some repairs may need special maintenance to prevent complications in the future.

But many states don’t require the disclosure of past problems, especially if they will no longer affect the home quality or value. Instead, these states might require the seller to report any current issues.

A seller can voluntarily disclose previous defects and repairs to protect themselves against liability. Yet, sellers might worry that unnecessary disclosures could risk the sale. 

What To Do After Discovering Home Defects

The timing of a defect discovery and state laws significantly impact your options for a remedy. The buyer has limited options after escrow closes. 

Who Is the Responsible Party?

The seller is not always responsible for undisclosed defects. Liability often extends to either party’s real estate broker, real estate agent (realtor), or home inspector. Every case is different.

If the homebuyer has evidence that the seller knew or should have known about the undisclosed defect, the buyer may have legal action for nondisclosures or negligent misrepresentation.

If the home inspector overlooked a material defect, they may have to refund the cost of the home inspection report.

Time Limit To Complain After Your Purchase

Once you discover an undisclosed defect, don’t wait too long to explore your legal options. You may also want to consult with a lawyer before taking the next step.

Each state sets a statute of limitations, which describes how long you have to pursue a claim. Once the time limit passes, the buyer will be unable to hold the other party liable for undisclosed material defects.

Certain property issues might only become clear over time. State time limits usually allow buyers a few years to discover latent defects. Yet, the deadline to take legal action may depend on the type of defect found.

Remedies for Post-Sale Defects

Depending on the statute of limitations and the circumstances, the buyer has several options, including:

• Recission of the contract if the homebuyer uncovers the defect before the home sales contract closes, in some states
• Filing a lawsuit in small claims court against the seller or seller’s agent
• Filing a claim with their homeowner’s insurance policy, if it covers undisclosed defects
• Filing a claim against the warranty if they purchased one

Lawsuits involve arguing that the seller knew or should have known about the material defect. For claims, the defect must fall within the specific warranty or insurance policy coverage. Buyers often face resistance during these processes. That’s why a real estate attorney can be helpful in house defect cases.

Learn Your Legal Rights and Options for Serious Defects

If you discover material defects after the real estate transaction has closed, you may have an action for breach of contract. A qualified, local real estate attorney with experience in housing and construction defects can help you understand your rights and draft an appropriate demand letter. A demand letter can explain the defect and request a repair or remuneration.