What to do when sellers hide defects

Flickr image courtesy of elisfanclub.

DEAR BARRY: We bought our home six weeks ago. The sellers had inherited the property and claimed to know nothing about its condition. After moving in, there was a rainstorm. The roof leaked and the bedroom ceiling became wet. Our home inspector had said the roof was fairly new and in good condition. The termite report, however, disclosed water stains on the bedroom ceiling.

Unfortunately, we did not receive the termite report in time. Our real estate agent never gave us a copy. We obtained one directly from the termite company three days before the close of escrow. By that time, our deadline for negotiation had expired and our belongings were already packed in a moving van.

When we complained to our agent, he apologized for not having provided the termite report, but he assured us that the stains were probably caused by old leaks and were "no big deal." He also insisted that the sellers couldn't have known about the leakage or they would have disclosed it, according to law. But the sellers must have known because they paid for the termite report. Who is liable for the roof repairs: the sellers, our agent, or the home inspector? --Jen

DEAR JEN: The sellers were required to disclose the defects that were listed by their termite inspector, including evidence of possible roof leaks. When you realized that they had not provided disclosure, you could have put a hold on the deal, even though the contingency period had expired.

The sellers had violated their legal obligation to disclose known defects. That violation invalidated the negotiation deadline and now exposes them to liability for repair costs. But they are not alone in their liability.

Your real estate agent is also liable for roof repair costs for the following two reasons:

1. Your agent should have provided you with a copy of the termite report as soon as it was available. There is no acceptable excuse for failing to convey the document. This oversight essentially negated your ability to consider vital disclosure information during the contingency period.

2) Your agent had no business suggesting that the roof leak was "no big deal." That statement was patently irresponsible. Unless he is qualified to evaluate a roof, and unless he walked on the roof prior to making his evaluation, there was no reasonable basis for making that statement. If he had truly been looking out for your interests, rather than trying to close the deal, he should have demanded further evaluation of the roof by a licensed roofing contractor before the close of escrow.

Finally, there is the question of liability for the home inspector. In most cases, a leaky roof has some form of visible defect. If your home inspector overlooked visible roof defects, he could be liable for professional negligence.

All parties involved in this transaction should be notified that there are unresolved issues that cannot be ignored. A second home inspection should be performed by a highly qualified inspector to determine what other issues should also have been disclosed.

To write to Barry Stone, please visit him on the Web at www.housedetective.com.

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