DEAR BERNICE: We live in California and are currently in a lawsuit against the sellers of our home two years after the sale. In the winter of 2007 our agent told us that he knew some folks that had been thinking about selling their home for a while. We saw the house and loved it because it was in a very desirable area, and we made an offer.
Almost immediately after moving in, we discovered that the tenants renting the house across the street were a group of six "20-somethings." They were some of the hardiest partiers we’d ever experienced, throwing parties three to four times per week. A party starting at 2 a.m. on a Tuesday was common.
After we moved in, we discovered that the previous owners had been at "war" with the neighbors and their landlord for several years. The owners had written numerous letters complaining to the tenants and landlord. There were at least 10 incidents where the police came out to answer a "disturbing the peace" call.
The sellers deliberately concealed information regarding the problems and their involvement. In fact, the last complaint letter and calls to the police were dated 20 days prior to our offer. As you know, California has very strict disclosure laws. The items on the disclosure statement that indicated known neighborhood nuisances, noise issues (including parties), and notifications of government officials for problems were all checked "no." The problems across the street have never abated. We call the cops at least two to three times a month, and really we could call two to three times a week.
The sellers’ response to our claim is that they "told us." They did not. Besides, it wasn’t noted on the Transfer Disclosure Statement anyway. Now they claim their agent (our former agent) told them to lie. Honestly! The moral of this story: Disclose, disclose, disclose. We are currently in litigation with the sellers. We are asking for the sale to be rescinded as well as reimbursement for our attorney and court fees.
Liars beware! It’s called fraud to conceal these sorts of problems knowingly and to do so blatantly. –K.B.
DEAR K.B.: Sellers who think that they can hide a major issue from their buyers are asking for a lawsuit. Your letter points out a number of important issues that all sellers and buyers must address. …CONTINUED
First, if you are buying, it’s extremely important to investigate the property completely. Do not rely on what anyone tells you. Make your own independent investigations. In this case, it would have been smart to investigate the local police records for criminal activity. There are a number of sites that do this. Crime Reports allows you to place your address into their search engine and to bring up any reported crimes for up to the last six months. (You will need to change the defaults to bring up more than two weeks of data.) Also, many real estate company sites also have information on crime statistics.
Another smart move would have been to visit the property at different times of the day, both on weekends and weekdays. It’s always smart to talk to the neighbors as well. Usually there’s at least one busybody who will tell you everything about what is happening in the neighborhood.
In terms of the sellers, there’s an old saying that "oral representations are as good as the paper that they are written on." If the seller did not disclose these facts on the Transfer Disclosure Statement, they are in deep trouble. The law in California requires the seller to make these disclosures in writing. Failure to do so can result in serious monetary damages. If you are selling a property, it’s probably smart to follow this simple guideline: "If you have to ask, ‘Should I disclose that?’ the answer is always "yes."
Many sellers don’t realize that if they commit fraud, the buyers may be able to unwind the transaction. If that happens, they’re stuck with the house again plus court, attorney and title fees.
Perhaps the worst case I have seen with respect to disclosure happened in Studio City, Calif. The buyers were purchasing a hillside property. The geological report came back saying that if there were a major earthquake, the property could sustain severe damage or even collapse.
The sellers and the listing agent were required by law to disclose the condition of the property. The normal standard of practice was to disclose all past inspection reports, but the seller and the agent decided not to make the disclosure. The buyers moved in. Sadly, two people died when that property collapsed in the 1994 Northridge earthquake. The judgment in this case was well over $1 million.
If you’re a buyer, take the extra time to investigate the area and the neighborhood completely. If you’re a seller, don’t try to hide the true condition of your property. Disclose it up front. My experience has always been that people will buy almost anything as long as they’re told the truth about it first.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com and find her on Twitter: @bross.
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