What are my rights if the seller of home that I purchased didn’t disclose previous floods?
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What are my rights if the seller of home that I purchased didn’t disclose previous floods?
My mother purchased her home about 5 years ago. Since the property is backed up to a creek, she asked about flooding and was explicitly told that the home has never flooded. No flooding is listed in the buyer disclosure, either. The house flooded on last week during the disastrous rain event in our area. While speaking with a neighbor a few houses down the street who has lived there for 30 years, they informed her that the house has in fact flooded multiple times. Does she have any recourse against the seller or broker?
Asked on April 25, 2016 under Real Estate Law, Texas
Answers:
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If the statute of limitations has expired, your mother would not have a case.
If the statute of limitations has NOT expired, your mother could sue the seller for fraud. Fraud is an intentional false statement made with knowledge of its falsity on which your mother justifiably relied to her detriment. In other words, she would not have purchased the property had she known about the flooding.
Fraud is also applicable in cases of nondisclosure where buyer could not have reasonably discovered the true facts prior to purchase.
Damages (monetary compensation for fraud) would be either the benefit of the bargain or out of pocket loss.
Benefit of the bargain means a defrauded purchaser can 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.
It may be difficult to prove fraud against the broker. Therefore, broker could be sued for negligence (failure to exercise due care; that degree of care that a reasonable broker would have exercised under the same or similar circumstances to prevent foreseeable harm).
One lawsuit would be filed naming both the seller and broker as defendants with separate causes of action (claims) for fraud and negligence.
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