When purchasing real estate, buyers expect transparency from property owners about any existing problems or defects. However, undisclosed issues can lead to frustration and financial loss for the buyer. In such cases, the original owner may legally be accountable for their omission.
Sellers must disclose any known material defects or problems with the property. These disclosures typically cover structural problems, environmental hazards, zoning restrictions and other issues that may affect the property’s value or safety.
Establishing damages
In a lawsuit, the buyer must establish the damages incurred as a result of the nondisclosure. This may include the cost of :
- Repairs to address defects
- Diminished property value
- Financial losses stemming from legal disputes or regulatory issues.
It is in the seller’s best interest to be honest when completing a disclosure.
Proving fraud
The buyer must show that the property owner engaged in fraud by concealing known issues. This involves providing evidence that the seller had knowledge of the problems and deliberately chose not to report them, with the intent to deceive or defraud.
Commercial real estate agents must also disclose evidence of a potential or existing problem with a structure. Failure to inform potential buyers of a concern is a breach of Article 2 of the National Association of Realtors 2024 Code of Ethics.
Seeking legal remedies
Legal remedies for failing to document problems may include financial compensation or rescission of the purchase contract. Additionally, the buyer may receive punitive damages in cases involving egregious misconduct or intentional deception by the property owner.
Failing to disclose problems with a property may have consequences for commercial real estate sellers. Buyers should understand their rights and obligations regarding disclosure. Both buyers and sellers can ensure fair and transparent real estate transactions.
