A closer look at real estate defect disclosure

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"Caveat emptor" (let the buyer beware) used to be the rule for home sales. Sellers could conceal home defects from their buyers without fear of liability when the concealment was later discovered by the buyer. But that old rule began changing in 1984 when the California Court of Appeal ruled, in the famous case of Easton v. Strassburger, that the home seller and the real estate agent had a disclosure duty to tell the buyer the hillside was unstable and had recently been repaired. Purchase Bob Bruss reports online. Shortly after the sale, the hill slid into the home, causing more damage than the home was worth. Both the seller and realty agent were held liable for damages to the buyer. In response to that landmark court decision, California became the first state to enact laws requiring sellers of one- to four-unit residences to provide mandatory disclosures to their buyers. Most other states eventually followed either with new disclosure statutes or court decisions. Today, in mos...