In Kansas and Missouri, as in most states in the U.S., an owner selling a property has an obligation to disclose any latent defects with that property. Latent defects may not be discoverable for months or even years, and failure to disclose is equivalent to fraudulent misrepresentation. If the seller does not disclose, the purchaser has a right to compensation for remedying those defects. In some cases, the buyer can even request that the purchase be rescinded.
Who is liable?
When a seller fails to disclose material, latent defects, that seller is liable for any costs the purchaser has to pay to remedy the situation. This liability extends to the listing agent if the buyer can prove that the agent observed or was told about the problem by the seller and failed to disclose it. In such a case, you might have to prove that the issue would have been apparent to the agent, but not to you, prior to the sale.
Both owner and agent have a duty to not only disclose but to exercise reasonable diligence to discover any latent defects in the property they want to sell. This means that even if the defect was not readily observable but could have been reasonably discovered by the seller and/or agent, then liability attaches to both. The seller and agent may remain liable even if the buyer’s inspector does not discover the defect(s) during their inspection.
With that said, an important place to start is reading over your inspection report to see what it says about the area in question. A seller may find that the problem was in-fact covered in the report, or falls within an area that the inspector rightfully excluded from the report. It will be important to examine the report with your attorney to decide if this is the case, or if the inspector failed to meet basic standards of professional competence.
What type of defects must be disclosed?
A seller will likely not have a strong case if they discover an elongated crack in their sidewalk leading through their backyard a year after purchase. This is because minor home defects and natural aging are not grounds for a lawsuit, nor do they usually make financial sense to sue for.
There is an obligation for the seller to advise buyers of certain defects in the property, usually through filling out a standard disclosure form before the sale is completed. This applies to properties purchased “As Is” as well. If there were omissions on the paperwork filled out prior to the transaction, you must then ask yourself what kind of omission it was.
Any material defects that threaten the property’s structure or interfere with the enjoyment of the property must be disclosed. These defects include but are not limited to the following:
- Former fires, especially inside the walls or hard to see areas
- Roofing defects
- Wiring and electrical problems
- Water damage inside the house
- Plumbing issues
- Septic tanks, water heaters, and furnaces in disrepair
- Permit or code violations
- Remodeling or construction issues
- Underlying structural problems not readily observable
- Termite damage
Prior crimes and stigmatized properties
In select cases, Missouri requires the buyer to be informed of a crime occurring in a property if the seller is aware of it. Missouri Rev. Stat. 442.606 requires that if the property was formerly used as a site for methamphetamine production, the seller must disclose that in writing to the buyer. Methamphetamine is a dangerous and illegal stimulant drug sometimes manufactured in homes, often in basements or bathrooms, leading to major toxicity and the potential for explosive and toxic residues. Similarly, a seller must inform the buyer in writing if the property was the subject of criminal behaviors that endangered the physical welfare of children.
According to the National Association of Realtor’s study guide, “stigmatized property” is property that has been psychologically impacted by an event that has occurred on the property, even where there was no physical harm to the property. Realtors know that properties with a “reputation” are often hard to sell. Additionally, state laws may vary about a seller’s obligation to reveal such extraordinary occurrences such as a crime that occurred on the property or even cases where there are reported “hauntings.”
In Reed v. King, 193 Cal. Rptr. 130 (Cal. Ct. App. 1983), the court recognized the buyer/plaintiff’s right to rescind the contract upon discovery that a woman and four children had been murdered in the home. In Stambovsky v. Ackley, 572 N.Y.S.2nd 672 (N.Y. App. Div. 1991), the court allowed a rescission of a contract after the purchaser discovered his home was widely reputed to be haunted by poltergeists. While rare, there is a chance of positive action if the buyer finds themselves in such a situation – even if through reputational implications of a lawsuit.
If you find yourself experiencing problems with a property that went unaddressed throughout the purchase and diligence process, contact Hunter Law Group to see what steps need to be taken to reduce your liability and make sure that the responsible parties pay. Give us a call at (913) 320-3830 or visit us at https://hunterlawgrouppa.com/.