What is our recourse regarding lies on a disclosure statement?

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What is our recourse regarding lies on a disclosure statement?

We purchased a house 4 years ago and just uncovered lies on our disclosure form regarding water in basement, plumbing, sewage and a death. House was sold by deceased’s daughter. We found out recently that they had work done 10 years ago because the septic system was failing. The work done was illegal. Found out owner died in the house. Much more. Just wondering what we can do.

Asked on September 22, 2011 under Real Estate Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You *may* have recourse--and should act soon to see if you do.

First, there is something called a statute of limitations (SOL). That is a law which defines how long you have to sue. A claim in this case would most likely be considered a contractual matter (fraud or  misrepresentation or breach of contract). The SOL for a written contract is four years, so you should be well within time, but there is no reason to delay.

Second, IF the seller knew of the work then you may, as indicated above, have a cause of action for the nondisclosure or misrepresentation. If so, you could potentially sue for the cost to set the problem right (e.g. redo any below-code work, have it inspected and certified, etc.). If the daughter and whomever else made the disclosures, however, did not know of the work, they might not be responsible. In that case, if she did not  know of the work, she did nothing wrong.

Third, though, one issue may be who to sue. If the house was owned not by the daughter but by the deceased's estate, that estate has presumably been wrapped up by now, which eliminates the most likely party to sue. You may however be able to recover from the daughter in any event, if she knowingly mistrepresented, for her part in doing so. This is something to discuss with your attorney.


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