Why Are Seller Non-Disclosure Claims So Hard?

In past entries to this blog, we have highlighted many times the reasons for sellers to “disclose disclose disclose” when it comes to providing information to buyers of residential property. Full disclosures serve to insulate sellers from post-closing claims by buyers that the seller hid defects from them in order to sell a house. This blog is going to turn that analysis around, and look to what buyers need to know about proving up a seller non-disclosure claim.

First: let’s identify that standard that the courts have established for a seller non-disclosure claim. The Florida Supreme Court sets out the following rule: “where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.” There are a few elements that need to be proved:

1. The seller had knowledge of a fact;
2. The fact impacted the value of the property sold;
3. The impact on the property was material; and
4. The facts are not readily observable by the buyer;

Of the elements above, the hardest to prove is always the seller’s knowledge of the “bad facts.” Some things are easy to prove in court, and some things are hard to prove in court – a person’s knowledge of a fact is often-times hard to prove. For instance, proving that someone ran a red light is pretty straight forward – you may have witnesses who can testify or video from nearby cameras to show whether the light was red. On the other hand, imagine a buyer who discovers a serious crack in a home’s foundation under some wooden flooring. Can the buyer pin responsibility for that defect on the seller?

The buyer’s first step: figure out if there is any reason to think that the seller knew of the defect. The assumption that “they must have known” usually isn’t good enough – a judge or a jury will require more evidence of knowledge than an assumption that the seller knew because they lived in the house. So, what kind of evidence can be used to show a seller’s knowledge? The more common sources of proof:

a. evidence of efforts to repair or to hide the condition that can be attributed directly to the sellers;
b. testimony from vendors that worked with the sellers and disclosed the problem to them;
c. testimony from neighbors or friends who can establish that the seller knew about the condition (“Good old George was always complaining about that leaky roof!”);
d. discovery of repair records or estimates that show prior work was conducted (often times termite treatment companies will leave stickers under a sink, on the water heater or in an electrical box showing when inspections or treatments were conducted);
e. testimony that a listing agent knew about some defect because they were told by the seller (unfortunately, we hear about this happening too often – agents need to protect themselves a whole lot better if they discover that the seller is failing to disclose information that they have a duty to disclose).
If a buyer is able to establish with some certainty that a seller knew of a problem that they didn’t disclose, they are a lot closer to having a viable claim. Without being able to prove this most critical element, though, a buyer is likely out of luck.

Also, buyers need to recognize that sometimes stuff breaks, and sometimes it’s not seller’s job to pay for it – even if it broke right after closing. That being said, if a buyer can gather strong evidence that a seller had actual knowledge of a defect that was not disclosed, the law does provide for a claim against the seller.

Berlin Patten Ebling, PLLC

Article Authored by Dan Guarnieri, Esq. dguarnieri@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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