Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Feb 9, 2020

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The home seller could potentially be liable for undisclosed problems under the following two situations:

1) If the seller gave the buyer some sort of warranty or guaranty. If the seller it would be liable under the terms of that document, to whatever extent (e.g up to whatever dollar amount) it specified.

2) If the seller committed fraud. Fraud is usually committed by a material (or important) misrepresentation (or lie), which was made knowingly (knowing it was false) and with the intention that the recipient of the misrepresentation rely on it to his or her detriment (e.g. with the intention that the misrepresentation convince the buyer to purchase a home which he or she otherwise would not have bought). Sometimes fraud can be committed by a material omission, too—i.e. intentionally NOT saying something vital, especially if it’s something the speaker had a duty to disclose.

In either event, for fraud, if the seller did not know the statement was false, or did not know there was a problem that ought to be disclosed, then there is no fraud and no liability. For example, if there was some major structural damage, but it was hidden within the walls and not only did the seller not know about it, but it’s reasonable they did not know (e.g. it only came to light later, when a wall was opened up for renovation or repair), they would not be liable for it. On the other hand, if the seller knew that the basement floods anytime there’s a rain and did not share that fact, they may be liable for the omission.

If a buyer suspects that he or she was the victim of fraud as defined above, he or she should consult with an attorney.

As to the home inspector: generally, the agreement or contract by used when you hire an inspector strongly limits their potential liability. A buyer should review (and/or have an attorney review) the agreement to see if and when, and to what extent, the home inspector may be liable. As a general rule, an inspector who actually inspected the premises and had the credentials he or she claims would probably not be liable (or if liable, probably only to a limited extent). However, if the inspector committed fraud (isn’t trained like he represented; didn’t actually conduct the inspection he claimed) or possibly was grossly negligent (e.g. did the inspection while drunk), then there may be liability.