Suing seller for non-disclosure

9 Replies

This is a continued post from another discussion I had on BP which I received much assistance with.

I discovered a property I bought in Las Vegas had $20,000 of plumbing problems which were not disclosed in the SPD. I am now selling the property (obviously with full disclosure of the plumbing problems).

The listing agent I hired has been quite exceptional and impressive. He is passionately insisting I go after the prior owner for compensation.

We do have all the necessary things to warrant compensation. We have proof that the seller knew about the problems and failed to disclose it and the repair cost is substantial. My agent told me that you can go after the seller for 3.5 times the actual cost of repairs.

Has anyone on BP ever successfully sued a seller for lying on SPD?

The seller ticked that plumbing was a known issue and in the comments section wrote

'problem has been fixed'. Evidently the problem was no where near fixed.

I have owned the building for less than 12 months and have encountered 4 sewer back ups during this time which required a plumber call out. The first incident occurred the week after I took ownership of the building. I have recipients which document all of this.

Considering I have had 4 incidences in less than 12 months, it's safe to say that the previous owner had at least 12 similar incidences during the 3 years he owned it.

Upon questioning the tenants who were living in the building at the time I bought it, I've been informed that there were multiple plumbing problems which were severe and ongoing including regular sewage back ups and raw sewage running from the building.

Las Vegas city health department advised me they had multiple dealings with the previous owner and had instructed him to fix the plumbing problem.

It seems undeniable that the owner was fully aware of the existence and severity of the plumbing problems.

If 'the problem has been fixed' as is stated in the SPD, then can we have receipts to show this?

The selling agent was also the property manager for the building. Obviously she would have been aware of the issues from tenant complaints and handling maintenance issues. I've been advised to name the selling agent as another responsible party.

I (stupidly) did not have a professional inspection on the property but this doesn't take away from the fact that the seller outright lied. Everything in the contract seems like a regular sale and it wasn't an REO.

By law apparently both parties must first go to mediation. My agent believes we would stand a good chance of getting sizable compensation to fix the plumbing problems at mediation level, without going to court.

My agent has generously offered to represent me at mediation as I live out of state and the man is on genius level and really knows his stuff. I would be very willing to fly to Las Vegas for the matter also if necessary although my agent is way more knowledgeable and savvy about the whole issue than me.

Any thought and feedback would be appreciated.

You said you can prove the seller had knowledge, looks like he admitted that by saying it was fixed. So, can you disprove that in the seller's mind he thought the issue had been truly repaired? Proving what was in his mind is rather difficult.

You'd probably do better suing the Realtor for his failure in his due diligence as the matter was disclosed but he failed to properly advise you and have it checked, that's why he may be so passionate .

You expected a $20,000 house without issues?

Speak to an attorney, don't let a Realtor give you legal advice, for that matter, don't get legal advice off the internet. A local attorney can tell you if it's worth chasing the seller and don't forget, anytime you sue you pay, then only if you win, you get to try to collect. :) 

@Bill Gulley is right-  If seller disclosed the problem and said it was fixed- How do you know they didn't truly believe it was fixed? How can you sue for non disclosure of something that was disclosed???  Also its called due diligence and personal responsibility.. If you chose not to get the house inspected and then ask for repairs or walk away as is your right then the fact that its not fixed is on you- you had that opportunity and chose not to take it.

The sewer issue as you said is a regular back up and you said you've called a plumber 4 times- What if the seller did that as well- Called a plumber many times. If I call a plumber and I fix something is it not then fixed.. If someone buys the house from you now - as far as you know haven't you fixed it?

The seller did disclose it- However you never checked the system professional prior to buying it or asked for repairs. That's your problem now.

So did you find out what's causing the problem?? In my area tree roots can get into the drain pipe and clog the line in a matter of days. Even if you roto rooter them they will still grow back. Do you have any trees in the area of the sewer line?

@Nat Chan  

If the problem was caused by a condition similar to what @Shawn M.  described then it actually could have been fixed, but reoccurred.  When they indicated it was fixed during the due diligence of the property, did they provide proof (e.g. an outside vendor invoice and what was performed)?  This may be a tough one to win unless you can prove they did something shady or fraudulent.  

@Bill Gulley  

Have you asked any of the tenants if they recall the name of the plumber that was there repeatedly? 

The problem is major cracks and distortions in the line from soil settlement over the years. The ONLY way the problem can be fixed is by replacing the line.

The seller claims 'problem has been fixed', so he should be able to provide proof of this. We highly doubt the seller would have any receipts or documentation from a plumber which states the necessary work was undertaken as the problem was certainly not fixed.

Mediation is a great tool and doesn't cost you much.  I'd pursue it at least that far, you may get lucky, especially if your representative is as smart as you perceive.  If mediation doesn't work out you'll have a good handle on their line of defense and can make an educated decision as to whether or not to stand before a judge.  

You'll need to show that the previous Knew the problem was not fixed, and can't reasonably believe he "fixed" it by cutting/grinding out roots.  I think you'd need to find "his" plumber, and him be willing to document the previous owner knew about a more severe problem, such as soil settlement, in order to prove any deception.

Definitely talk to a lawyer. My first house had the same issue and we discovered it three days after we moved in. We were able to prove that the seller knew of the problem and filed a suit in small claims court. Be very careful though. We won the case but because we originally filed in small claims court the judge held up the rules and only awarded us $5,000. The repairs cost us over $25,000. We did have an inspector but the issue was not evident until we moved in. There was no access to the crawl space that we could find and the owner would not tell us how to get into it. Once we replaced to plumbing line out to the street we started having problem with our furnace. It was in the crawl space and once we cut a hole in the floor we discovered it was under water. The faucets outside had frozen and leaked. We could tell it had been doing it for years since the floor joists had water stains and some mold.  We had to replace the furnace, move it up to the attic and update all of the electrical to get it done. Good luck!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you