What Happens When a Seller Lies on a Disclosure?

What happens when a seller lies on a disclosure? This home buyer discovered damage they believe the sellers’ purposely failed to disclose.

Q: When Do You Have Enough Evidence to Pursue a Seller Disclosure Case?

We purchased a “remodeled” home early last year. We have recently discovered after doing some deep property cleaning that the sellers purposely hid major termite damage on all kitchen base cabinets.

The sellers apparently glued a false top over the original base and painted it. As I was cleaning, my thumb went through the board because it was so thin. Upon further investigation, we discovered the entire base of the cabinets had just crumbled.

The sellers said they had a termite inspection a month before we moved in, and there was a sticker on the cabinet indicating that it passed. We have had termite traps since we have been here and while this is clearly old damage (we haven’t seen any active termites) this is just one of the many many issues they have bandaged over.

We’re sick over their dishonesty and flat out lying on their seller disclosure statement. Do we have a seller disclosure case or not? Please advise if we should proceed, or add this to the already large pile of cash ($10,000+) we have to fork out due to their lies.

What Happens When a Seller Lies on a Disclosure?

A: As we say in each of the seller disclosure questions we receive, just because you think or believe the sellers knew of an issue does not mean that they actually did. Sam has seen plenty of situations where buyers honestly believed that sellers were deceiving them but there are very few cases where deception can be proven beyond a reasonable doubt.

What does it take to prove the sellers lied on a seller disclosure form? In one situation a client of Sam’s faced, the buyers had a large plumbing issue occur within a month after closing. When those buyers called a plumber to fix the problem, they fortuitously called the same plumbing company the sellers had used. The very same plumber came out that had told the sellers that they had a major issue, and that he had advised the sellers the cheap fix they wanted done would, in fact, result in a big, expensive problem in the near future. Because the same plumber has advised the sellers, and had all the documentation, the sellers paid up.

In a second situation, a listing broker that sold his own home represented to the buyer that there was no asbestos in the home. However, shortly after the buyers moved in, they discovered there was actually quite a bit of asbestos in the home. The listing broker tried to say that she had no knowledge of asbestos and tried to defend himself by pleading ignorance. The court, however, took the view that the real estate broker had years and years of experience selling real estate and should have known better. In this situation, too, the seller had to pay up.

How Do You Prove the Sellers Knew About the Problem?

We know termite damage is costly, and we understand that it appears the sellers papered over a known problem. But you’ll need more than just speculation to prove your case. You need to prove the sellers knew or should have known about the problem if you’re going to collect.

Did the sellers use a carpenter or tackle the renovation work themselves? We’d love for you to find out that the seller had carpenters come in to hide the problem and actually talk to those carpenters. You can check with local exterminators to find out if any of them ever treated the home and when. You might find that some states keep records of the application of the chemicals used to rid a home of termites and that your home is on that list. If you find anything that ties your seller to the application of termite or wood-boring insects to the home, you may be closer to having an action against the seller.

We’re surprised it’s taken you almost a year and a half to find the damage. Usually, when sellers hide something from the buyers it shows up shortly after the sale: a leaky basement, a leaky roof, or a cracked foundation. We certainly aren’t saying that you don’t have a case, but it’s interesting that it took you a while to find the damage.

Potential Statute of Limitations for Seller Disclosure Violations

Finally, you should know that some states limit the time to sue a seller for a violation of seller disclosure issues, typically two to four years. You’ll need to find out what the time limit is your state. Given that you have $10,000 invested into solving the problem, you might want to talk to an attorney in your area that has some expertise in seller disclosure issues to discuss the facts. Remember, you might have to decide quickly whether you’re going to file a case, so the clock doesn’t run out on you.

Good luck. (And, we hope you don’t find any other problems.)