I bought a house with problems not disclosed, now what? This new homeowner found out about a major insurance claim for tornado damage after closing.

Q: My husband and I bought a home two years ago and we had a multitude of problems. 

First, the real estate agent forgot to offer us a walk-thru until the last minute before we were due at our attorneys for the closing. Going by her advice and being on a tight timetable, we declined. We only had a VA inspection of the home. 

When we moved in, we noticed that there was water damage to the wood floors and damage that was fixed with different colored wood. This damage was not noticeable during the several times we saw the home. There was spilled paint under one of the beds that we could only see once the bed was removed. The master bath floor had so many cracks that had been covered up by furniture and other items. Everything had been covered with furniture and was beautifully decorated. 

Once we moved in, one of our neighbors told us that the home had damage from a tornado several years back. When I tried to get a new insurance quote I was asked if I knew there had been $40,0000 worth of damage and whether everything had been repaired. Of course, we were not aware of the damage and had no way of knowing. 

We originally went back to both real estate agents but they didn’t offer any help. I was recently told it was fraudulent not to disclose the tornado damage. We are in the process of redoing the bathroom and am terrified the concrete is cracked. 

I Bought a House With Problems Not Disclosed, Now What?

My husband is 73 and I am 68 and we don’t have the kind of money to fix this up. If this is true that the real estate agents committed fraud, do we have any recourse?  We live in Alabama and would really like to sue for undisclosed damages.

Q: While yours is a difficult story to hear, we hesitate to say that you have been defrauded. That’s a strong word and has many legal implications. For that, you’ll need to sit down with an attorney whose practice is in the area of seller disclosure and fraud issues.

But let’s start at the top. For the life of us, we can’t understand why you didn’t take up your real estate agent on their offer to see the home before the sale. We say it over and over again: as a buyer you must go to the home and walk through the home one final time after (preferably) the sellers move out and before you put down your hard-earned dollars. If you see something wrong, the time to say or do something is before you close. Your cash is the leverage you have.

Okay, so you didn’t walkthrough the home. Now what? We can’t speak specifically about Alabama law, but most seller disclosure laws require the seller to disclose known defects or problems the home has at the time or before you sign the contract. We know you mentioned that the floors are a different color, but that doesn’t mean that they are defective. The variation in color may be more cosmetic than structural. The same goes for the tiles in the bathroom. Many older homes have cracked tiles. These cracked tiles could be cracking over time but not as a result of a structural problem with the home. 

What Does a Seller Need to Disclose About Damages and Repairs?

The paint on the floor under the bed is another problem, but without actually seeing it, it’s hard to know if it rises to the level of being a defect with the home. 

While you referenced cracking concrete, you didn’t mention whether you found out if the foundation has problems. If you don’t have foundation problems, it’s quite possible all of your issues are considered cosmetic and not structural. Fixing bathroom tiles, refinishing or replacing floorboards and taking up the paint on the floor can be costly items for you but may not rise to the level of fraud – or even a misrepresentation in the seller disclosure statement given to you.

When you obtained homeowners’ insurance, you were told the home had damage in the past and you could have asked at that point to get more information about the issue. If you ask, the seller must be honest with you. In many states, when a seller makes repairs to a home, the seller is not obligated to tell you about those repairs. The seller must only to be honest with you about whether they are aware of any material defects with the major components to the home. 

Let’s say the seller replaced the roof following a hail storm five years before selling the home. If the repair was made, we doubt most seller disclosure forms would require the seller to disclose the repair. 

What Recourse Do I Have After I Bought a House With Problems Not Disclosed?

It seems to us that not only didn’t you go through the home before you closed to inspect it, you failed to inspect it altogether. Did you hire your own inspector to give you an evaluation of the home? We always tell buyers to hire a good home inspector to go through the home. That inspector owes you the duty of loyalty to go through the home and see what’s wrong with it. The Veterans Administration (VA) inspector may not be looking for the same things your home inspector was looking for. 

Given all of this, we don’t know if you have much of a case. We don’t even know what your damages are. If your damages are the paint in the bedroom, the different color floors and cracked tiles, it may be costly, but may not be worth the time and money that it will take you to sue the seller. Oh, and by the way, you never mentioned whether the brokers even knew about the home having survived a tornado. If the brokers didn’t know, they wouldn’t have known to tell you. 

The only one to know would have been the seller. If your state requires sellers to disclose tornado damage to a buyer, then you have a case. But from where we sit, we can’t tell you whether you have any chance of winning if you sued the seller. For that, please consult a litigation attorney with expertise in seller disclosure law.

More On Home Buying and Seller’s Disclosures

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When a Lack of Seller Disclosure and a Bad Home Inspection Collide

What Homebuyers Should Know About Seller Disclosure

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