Seller undisclosed information

6 Replies

We recently purchased a home in the Plano, Texas area. However several large issues have come up that were not disclosed to us during the process. Does texas allow for the home owner to give back the house and recoup all monies invested into the property? 

I'm sorry to hear this @Jason Kim !  I know in most states there's not a clear-cut "lemon law" like that, but it would be achievable through court.

I would recommend giving a savvy agent in the area (like Jay Marks), your title officer, or your go-to real estate attorney in TX and asking them. They have probably all crossed this bridge before and, at the very least, know the best person to point you to.

Best of luck in this sticky situation,

What issues? Was there a property disclosure form that was filled out incorrectly? Are these visible issues, behind walls, etc? How long did the seller own it and was it owner occupied or rented?

To answer your question: there is no "give back" mechanism for real estate. Your option is to sue if the seller won't cure on their own.

There's a statutory "seller's disclosure" form that you are supposed to get at or before close.  Even then, the seller can only disclose conditions of which they are aware.  If they are unaware, and don't disclose, no liability.  The hardest part of this type of case is proving knowledge.

The next part is determining if a recovery is possible.  The most extreme remedy you asked about is rescission - the court undoes the contract and attempts to put each side back to where they were as if neither entered into the contract.  It's rare, messy, and courts dislike it because it can't be done well. 

Most likely remedy is "out-of-pocket" damages.  Say you bought the house for $100K because in the seller represented that it was worth $100K with the disclosures.  In reality, evidence shows that it was really worth $80K because of $20K in defects the seller knew about but failed to disclose.  In addition to the $20K in actual (monetary) damages, there's $5K in consequential damages (additional expenses for the longer rehab).  And if it goes to trial, you might get awarded attorney's fees based on breach of contract.  On average, expect $8-15K (or more).

So...assuming you can prove all this, and win on all counts at trial - Can you collect $40K from the seller?  I just made up numbers on damages, but you get the point.  You might end up with a judgment you may never collect on.

What happens if you sue and don't get a recovery?  You could end up getting a judgment against you for their attorney's fees.

Thanks for the feedback guys.  One of the larger issues is that we believe the seller had used their own hvac workers to 'repair' our furnace to get it into 'operating' standards.  However, we had a hvac team come out and re-inspect the unit a couple of days ago and commented that the unit had a safety/limit switch that was bypassed. We've been having issues turning the heat on and off over the last few days so this makes sense.  Is the best route to submit a complaint for compensation?  

During the purchase process our inspector had not caught mentioned we needed to get a second opinion. We brought out an hvac tech out for an inspection and they quoted in their inspection nothing in regards to the limit/safety switch being bypassed or any hazards related to this. However they did note that the unit does not work and needs full evaluation. The seller made updates to the unit after we had shown what the hvac team had found in order to get the system to be operable. It's during this time we believe they had made the bypass in order to get the system to work temporarily...

@Jason Kim I know people who hired a lawyer and were awarded their money back in exchange for the property. The seller was a corporation and had put on the disclosure that they were unaware of any issues but in fact had hired someone to cover up water damage due to an ongoIng flat roof/raIn water Issue prior to putting the property on the market. Large national corporation selling corporate housing (and lyIng). Difficult to solve roof, drainage, hvac floor vents filling with water. Older couple in 70’s. Bad realtor advice at sale, too. They were awarded lawyers fees too but nothIng to compensate them for havIng to go back Into an appreciating market and pay more for a comparable place. I suspect your lawyers fees would pay for a new hvac and more. But consult one. Maybe they will write you a letter for a few hundred bucks. Your seller might cough up some money in response. But it’s a crap shoot.

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