Can a seller be held responsible for failing to disclose that the septic system needed complete replacment?

This seller told the buyers that there was a small leak, do they all agreed for him to provide the funds to pay for it, around $750. He said the whole system had been checked and there was only this small problem. After the sale, there were more problems with the system. The original company who checked the system prior to the sale was called out again. At that time, the new owners were told by the company’s owner that the seller knew all along that he system needed replacing and that it was in danger of causing major damage but did not know the seller was meaning to sell the property. The original company refuses to do any more work on the old system; a new septic repair company is involved. The price for the new system is

estimated to be at $20,000-$25,000. Can the seller be sued for this money?

Asked on April 25, 2016 under Real Estate Law, Missouri


S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The seller can be sued for fraud.  Fraud is an intentional false statement made with knowledge of its falsity and with the intent to induce your reliance upon which you justifiably relied to your detriment.
In other words, you would not have purchased the property had you known about the septic system's condition.
Fraud is also applicable in cases of nondisclosure where buyer could not have discovered the true facts prior to purchase.
Damages (monetary compensation) in your lawsuit for fraud would be either benefit of the bargain or out of pocket loss.
Benefit of the bargain means the defrauded purchaser may recover the difference between the real and represented value of the property purchased regardless of the fact that the actual loss suffered might have been less.
Out of pocket damages for fraudulent misrepresentation permits recovery of the difference between the price paid and the actual value of the property acquired.

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