What is my recourse if the seller failed to disclose a prior flood in the home?

UPDATED: Oct 1, 2022

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What is my recourse if the seller failed to disclose a prior flood in the home?

The home was vacant when water heater burst and it;s not known how long is sat like that. The neighbors informed me of this, not sellers. I have uncovered a lot of mold in my home, mostly on the interior wall cavity side of the drywall. When I removed the baseboards to replace flooring, the mold was visible on the outside of the drywall. I’ve replaced some areas but can’t afford to replace all of it. The home still smells musty so I know there are more walls with mold but until I demo it the extent is really unknown. I tried contacting the sellers with a demand letter and request for mediation but they are ignoring me completely. I have complete photo documentation and a narrative of everything found so far, which I sent to them but they refused to accept delivery of it. I don’t know what else to do. If I initiate arbitration, I think they will ignore that as well. How do I get the sellers to acknowledge this and be held accountable. I feel they willfully and knowingly withheld information that would have impacted my decision to buy.

Asked on December 6, 2018 under Real Estate Law, California


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

Answered 3 years ago | Contributor

You can sue the seller for fraud. Fraud is the intentional misrepresentation or nondisclosure of a material fact made with knowledge of its falsity with the intent to induce your reliance upon which you justifiably relied to your detriment.
In other words, you would not have bought the house had you known of the prior flooding and/or mold.
Your damages (monetary compensation you are seeking in your lawsuit) for fraud would be either the benefit of the bargain or your 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 regardless of the fact that 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 actual value of the property acquired.

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