Homebuyers must show care during transaction


October 30, 1994|By Michael Gisriel

Q: Does Maryland have a "lemon law" to protect homebuyers? We settled on our home and then several months later discovered problems with the heating and air-conditioning system.

Carol LeBlanc, Bel Air

A: Generally speaking, there is no "lemon law" in Maryland that covers the purchase of a home, as there is for the sale of automobiles. "Let the buyer beware" are still the watchwords when buying a house.

Maryland law typically holds that a deed -- written as a result of a sales contract -- merges the provisions of the contract, as well as all negotiations and agreements leading up to the execution of the deed, into the deed. That is, the deed becomes the final and exclusive agreement between the parties; only rights granted in the deed are conveyed to the buyer.

This rule does not apply when the sales contract specifically states that certain agreements, warranties or representations made by the seller to the buyer will survive after settlement. And the rule does not apply in cases of fraud, accident or mistake in the terms and execution of the deed, or where there has been a clear misrepresentation by the seller and relied on by the buyer.

The latter is why the new seller disclosure law is so important. The seller of an existing house in Maryland must disclose any information that he or she knows about certain aspects of the house using disclosure forms approved by the state Real Estate Commission.

These statements about the house should survive the settlement -- the closest thing Maryland has to a "lemon law" for houses.

Remember, however, new home sales and foreclosure sales are exempt from the disclosure law, and the seller of any home may provide a "disclaimer statement" indicating that no warranties are being made and that the house is being sold "as is."

When advising a buyer, I recommend asking for the disclosure rather than the disclaimer form. If the seller insists on the disclaimer, I then ask for a reduction in the sales price and order a home inspection. Home warranty policies can also be purchased from private companies that will help mitigate the risk for the homebuyer.

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