Can I sue the previous homeowner for an undisclosed condition?

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Can I sue the previous homeowner for an undisclosed condition?

We purchased a home 2 months ago and iscovered water damage caused by a leak in the bathroom a couple of weeks ago. When we open a window on the dry wall the wood was rotten and mold (indicating an old issue). Home warranty said it won’t cover because it is not a plumbing issue, homeowners insurance won’t cover because it is an old issue. Nothing was detected on the home inspection or disclosed by the previous homeowner.

Asked on December 28, 2012 under Real Estate Law, California

Answers:

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

Answered 8 years ago | Contributor

You can sue the seller (previous homeowner) for fraud.  Fraud is the intentional misrepresentation of a material fact made with knowledge of its falsity and with the intent to induce your reliance upon which you justifiably relied to your detriment.  In other words, you would not have purchased the house had you known about the mold and rotting drywall.

Fraud is also applicable in situations where the seller failed to disclose a material fact which the buyer could not have reasonably discovered prior to purchase.  The seller had a duty to disclose the mold and condition of the drywall because you could not have reasonably discovered it.

Your damages (monetary compensation you are seeking in a 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 purchased regardless of the fact that your 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. 


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