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Who is liable for home repairs after a closing?

| Aug 12, 2020 | Firm News |

Moving into a new house can be exciting. But if owners find substantial damages after the closing, it can turn the age-old American dream into a nightmare. That’s especially true if the seller doesn’t disclose any critical information during the purchasing process.

If the seller fails to notify them about such damages, owners may wonder who bears financial responsibility and whether they can get the seller to pay for the defects?

What issues could buyers find after the closing?

While every home is different, these are a few common areas in which it can be difficult to locate defects:

  • Deteriorated or rusted pipes
  • Damaged sewer lines
  • Radon gas leaks
  • Heating and air conditioning issues
  • Termite infestation and damages
  • Wiring or electrical system defects
  • Cracks in the home’s foundation
  • Water damage
  • Septic tank damage

Sellers and third-parties can, in theory, be held accountable for such defects, but it is extremely difficult to do so. New York is a “buyer beware” jurisdiction and holding sellers responsible for conditions after closing is problematic and rare

In New York, sellers are required by statute to disclose known issues regarding property defects by completing a detailed Property Condition Disclosure Questionnaire and delivering it to purchasers. If they neglect to notify the purchasers, they can theoretically face fraud charges. If the seller is found liable, buyers can, in theory, have them pay for the damages. However, fraud is extremely difficult to prove. If the purchaser could have discovered the defect and the sellers actually hid it, then some cases have found that sellers could be liable. Such recoveries are rare. Purchasers should not count on any such recoveries.

Under the statute which requires the disclosure, sellers are permitted to credit the purchasers with $500 in lieu of providing the Questionnaire. The payment is intended to compensate the purchasers for the approximate cost of an inspection by a qualified engineer or property inspector employed by the purchasers.

In most New York transactions, the sellers do not provide the Questionnaire and do credit the purchasers with the $500. Sellers do not want to give any evidence to purchasers for possible post-closing litigation.

It is also theoretically possible that an inspector or real estate agent may fail to find or inform the buyer about property quality or other defects. In these instances, the real estate agent or inspector could be found liable for payments, but again, it is extremely rare that either is found liable for such failures.

Virtually all contracts for the purchase of real estate contain “as-is” clauses. Typically, an as-is clause indicates the buyer accepts the state of the property as it stands. An experienced attorney can help buyers examine these issues and map out the best course of action.

Most contracts will provide that the property will be delivered to the purchasers in the same condition as it was at the time of the contract, “normal wear and tear excepted” and with the buildings’ systems (plumbing, heating and electrical) and appliances in working order.

It is critical that buyers should do their own “due diligence” to identify issues before signing any contract of sale.

Homes are a costly commitment. Before buyers sign the dotted line, they should make sure they learn everything they can about the property.