Disclosing Hidden House Defects

In most states, it's illegal for a home seller to knowingly conceal major defects.

Generally, you're responsible only for information about defects you knew about or should have known about.

It's a good idea to have your home inspected prior to putting it on the market to figure out what needs to be repaired or replaced.

Your agent can tell you what repairs are necessary and what improvements will increase the selling price.

Defects That Should Be Disclosed

While it's always best to disclose any defects, the following problems should always be disclosed to the buyer:

• Plumbing and sewage issues
• Water leakage of any type, including in basements
• Termites or other insect infestations
• Roof defects
• Heating or air conditioning system issues
• Property drainage problems
• Foundation instabilities or cracks
• Problems with title to the property
• Neighbor issues that aren't obvious
• Lead paint (under the federal Lead-Based Paint Hazard Reduction Act)

In many states, home sellers are required by law to fill out a disclosure form when they list their homes with listing agents. The forms typically contain a laundry list of possible defects for the homeowner to check off.

If the seller discloses the defect and the buyer decides to purchase the home anyway, the seller isn't responsible for the consequences.

What Happens If The Seller Doesn't Disclose

A seller who doesn't disclose known defects can be sued by the buyer after the defect is discovered.

The seller may then be responsible for the costs of repairs and other damages resulting from the undisclosed defect.

A seller may also be ordered to take the property back if a judge "rescinds" (invalidates) the sale because the seller didn't disclose defects.

You can also be held responsible for the buyer's attorney's fees.

If it's fraudulent, you may also have to pay "punitive damages" that can be many times the value of the property.

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