What if the house is a lemon?
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What if the house is a lemon?
My mother recently retired. She put her house in California up for sale and went to Tennessee to look at homes. She made an offer on a house contingent upon a home inspection but had to return to California to finalize the sale of her house there. The home inspector was recommended by her Realtor and they were both aware of her circumstances and that she would be unable to attend the home inspection. The Realtor told her that he was legally unable to attend the inspection as her advocate and because she knew no one in the area she allowed the home inspector to do the inspection alone. Based on his report and the supposedly successful negotiation of some minor repairs, she concluded the sale of her property in California and purchase of the property in Tennessee. Upon taking physical possession of the property a few weeks later, it was determined that the home inspector’s report was erroneous in the extreme. A second home inspection was completed and is vastly different from the first. One of the contractors who has examined the house noted that if it was within city limits and someone had to come out and inspect it it would probably have been condemned. Part of the house is unlivable due to rotting floors and shifting foundations. Emergency electrical and plumbing work have already had to be done on the home in excess of 5000. She bought the house outright, using the money from the sale of the California house and is now living on a fixed income and looking at estimates for repairs to make the home actually livable that range from 50 to 100 of the purchase price. Neither the initial home inspector nor the Realtor she used will return her phone calls and she is afraid of hiring a lawyer because she is convinced that if she loses a lawsuit she will have to pay not only her lawyer but the defendant’s lawyer and court costs. Any suggestions at all?
Asked on September 8, 2017 under Real Estate Law, Tennessee
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 3 years ago | Contributor
Your mother will need to be represented by an attorney. She will need to sue the seller for fraud and the home inspector for negligence.
Fraud on the part of the seller is the intentional misrepresentation or nondisclosure of a material fact made with knowledge of its falsity and with the intent to induce your mother's reliance upon which she justifiably relied to her detriment.
In other words, your mother would not have purchased the home had she known its true condition.
Your mother's damages (monetary compensation she is seeking in a lawsuit for fraud) would be either the benefit of the bargain or out of pocket loss.
Benefit of the bargain means a 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 determination of damages for fraudulent misrepresentation permits recovery of the difference between the price paid and the actual value of the property acquired.
As for the inspector, negligence is the failure to exercise due care (that degree of care that a reasonable home inspector would have exercised under the same or similar circumstances to prevent foreseeable harm). Your mother's damages for the inspector's negligence would be for forseeable harm caused by the negligence such as costs incurred for repairs.
Your mother would file one lawsuit naming the seller and inspector as defendants. Again, the cause of action (claim) against the seller would be fraud. The separate cause of action against the inspector would be negligence.