Seller or agent can be liable for hidden defects


October 24, 2004

Two readers write to discuss water damage to recently purchased homes. In both cases, the buyers say they were not told of water leaks.

In one case, the buyer says the home inspector missed the problem. The house was purchased "as is."

In the other case, the buyers say they found a major leak in the foundation in a remodeled basement. The listing for the property described the basement as a "cozy den with fireplace."

In that case, the buyers say they went to mediation with the seller, who denied knowledge of the wet basement.

Asked why it was referred to as "a cozy den," the seller said the real estate agent wrote that description in the listing. He said he didn't know the basement was wet because he did not use the room while living there for eight years. He also said he would not have referred to the basement as a "cozy den."

The readers want to know what recourse they would have in court.

A licensed real estate salesperson is required to disclose to a prospective purchaser any material defects that the licensee knows or reasonably should know about the property.

Consequently, the real estate agent might be liable if he or she knew about the wet basement or should have known about it and did not disclose it.

Because the leaks were not apparent and the basement in one case had recently been renovated, the real estate agent might claim no knowledge of the problem and no reason to know there was a serious leak.

The seller who had lived in the house for eight years certainly should have known whether there was a major leak in the foundation. The workers who renovated the basement or others who visited the home might be able to testify that the basement had a water leak.

Sellers of older homes are not required to disclose hidden defects. Maryland law lets a seller disclaim any representations about the condition of the property, in which case the buyer purchases the property as is.

When a seller makes an affirmative representation about the condition of his home, the buyer has a right to rely on the seller's statement.

A court would have to determine whether the statement about a "cozy den with fireplace" was an affirmative representation about the condition of the home or a descriptive opinion about the possible use of the basement as a living space. Real estate advertisements often use such adjectives as "cozy," "sunny" and "breathtaking."

Courts generally hold that these terms are not representations upon which a buyer may reasonably rely, because what's "cozy" or "breathtaking" to one person might be cold and uninspiring to someone else.

Buyers of older homes often insist on the opportunity to have a professional home inspection conducted. Or they might ask the seller for a written statement disclosing known defects.

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