Can we be sued by the buyers of our previous home who are claiming we didn’t disclose water damage?

We sold our home about a month ago. Two weeks after the close, we had record rainfall and apparently the basement flooded or had some water damage issues. The new owners pulled back the carpet and are claiming “evidence of prior water damage”. Apparently they found rusty nails. We never experienced anything like this. They are now threatening to sue if we don’t pay for 1/2 of the damages, sump pump and french drain. They are insisting we “had to know” and failed to disclose this at the time of the sale. Are we liable for any damages??

Asked on December 7, 2011 under Real Estate Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If you did know, or reasonably should have known (since "willful blindness," or deliberately ignoring problems, is not a defense), you could be liable for failing to disclose the issue. On the other hand, if you did not know (so, for example, if you never had a problem), you would not be liable; liability depends largely on knowledge in a case like this.

If you refuse to pay, the buyers may sue you; if you are sued, they will have to prove in court, by a prepondenance of the evidence (more likely than not) that you knew or should have known and deliberately did not disclose. You will be able to present your testimony and evidence to the contrary.


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