Duty to Disclose Defects in Residential Properties

There is nothing more exciting than when you finalize the purchase of a new home and finally receive the keys to your new place. What is not so exciting is finding out a week, month or even year after you move into the new home that there is something wrong with it and that “something” is going to be expensive to fix. This is especially true if you suspect that the house’s previous owner knew about this defect and did not tell you about it.

Depending on the circumstances surrounding the sale, you may have remedies available under Massachusetts state law to recover the costs of the repair, and in some circumstances, considerable monetary penalties from the party who failed to disclose the defect.

Buyer Beware: Sellers’ Duty to Disclose

Private, individual sellers of a residential property do not have a legal duty to voluntarily disclose much about their homes to potential buyers. Massachusetts law requires sellers to disclose the following:

• Whether the property has a septic tank, cesspool or other private waste disposal system and the condition of the system (these must be inspected within 2 years of selling the property or six months after the sale, if weather prevented an earlier inspection)
• Whether there is any lead paint in the home (if home was built before 1976, sellers must have it inspected for the presence of lead paint)

Aside from these items, the seller does not have to voluntarily disclose information pertaining to any other defect in the property, including water leaks, mold or termite infestation.

The key word, however, is “voluntarily.” If the buyer asks the seller about any defects in the home or any repairs that have been made or need to be made, the seller has a legal duty to truthfully and fully disclose any known defects. The seller cannot provide the buyer with half-truths, vague answers or (especially) outright lies.

However, it is important to note that sellers do not have a duty to disclose problems they may suspect, but have no knowledge about. Even so, sellers cannot actively avoid discovering a suspected problem is a real problem in order to claim ignorance of the defect.

If the seller is not truthful and the buyer relies on this information to purchase the home, the buyer may be able to bring a legal action against the seller for fraud, breach of contact and/or misrepresentation.

Chapter 93A Claims

Real estate agents, brokers and other professionals in the business of selling homes have higher disclosure duties under Massachusetts law than private sellers. Under the Consumer Protection Act — or as it is more commonly referred to,  Chapter 93A — real estate professionals have a duty to voluntarily disclose “any fact the disclosure of which may influence the purchaser not to enter into the transaction.”

For example, if the seller (who is the private homeowner) reveals to his real estate agent that the roof is in bad shape and needs to be replaced, the real estate agent then must disclose this fact to the potential buyer.

Real estate professionals who fail to disclose information about defects to buyers may have a Chapter 93A claim brought against them and be forced to pay not only compensatory damages (damages for actual losses), but also punitive damages in an amount double or triple the awarded compensatory damages.

Lastly, those who violate Chapter 93A may be ordered to pay attorney fees and costs, making a 93A violation a very expensive mistake.

Tips for Protecting Yourself

It is important for buyers to enter the process of purchasing a new home with their eyes open. While there is no way to guarantee that a seller or real estate agent will disclose all of the information they are required to, there are steps you can take to protect yourself, including:

• Be sure to have a thorough inspection completed by an independent, reputable home inspector (not one beholden to the seller or finance company)
• Get a list from the seller of all problems they have experienced, whether fixed or not, while living in the house so you have a written record if a problem comes up after the sale. This should include problems with the interior and exterior of the house as well as with any other structures on the property (such as a barn, pool, or detached garage)
• Ask the seller specific questions about the property — have there been any water leaks in the roof or basement? Has there ever been an issue with mold or insects? How old are the windows? Has the property ever flooded?

If a seller, real estate agent or other professional involved in the sale of your home was less than honest with you about the property’s condition, you may have legal remedies available to you, including a 93A action. For more information on Massachusetts disclosure laws, contact an experienced attorney today.