Home buying contract with incorrect and misrepresentation in the disclosure

Houston, Texas
Legal & Legislation
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Home buying contract with incorrect and misrepresentation in the disclosure

Phil Le
Member since 2023 · 1 post · 0 votes

I’m in a home sale contract in Houston Texas as the buyer.

After the option period was over I found that the home was damaged by water (freezing water - burst pipes) in the winter storm in Feb 2021. I found this information through my home insurance agent only.

In section 3 and 11 of the disclosure, there are the following questions and answers:

- "With in the last 4 years, have you (Seller) received any written inspection reports from persons who regularly provide inspections and who are either licenses as inspectors or otherwise permitted by law to perform inspection? [] Yes [] no. If yes, attach copies and complete the following"

=> Answer from seller:

"Inspection date: April/XX/21; Type: Mold

Name of Inspector: Inspection company (3 reports)

No. of pages: X/X/XX"

But the 3 reports were not attached to the disclosure.

- Are you (Seller) aware of any of the following conditions?

Water damage Not Sue To a Flood Event => No

I have contacted seller for the details and explanation and they acknowledged that they made a mistake when filling the disclosure.

And after that they shared with me the insurance claim, the contractor receipt to fix the issue and also the 03 mold air testing reports after the repair to correct their mistakes.

These documents show many issues with the home like water damage, excess moisture, visual growth and localized problems. If seller included these reports in the seller disclosure, I wouldn't have signed the contract.
The mold report was done 7 months ago with moderate level of spores concentration .

Due to the missing and not correct information in the disclosure, I requested seller to cancel the contract and want them to refund the fees that I paid back (option fee, home inspection, appraisal fees and the earnest money). But unfortunately the seller seems not to agree with my cancelation request.

They replied that my option period to back out was over. I have to reason to back out without losing my paid fees.

I also tried to renegotiate and asked for seller credit to pay for the mold testing and mold remediation if any but no luck. They said issues were fixed and all are in good conditions.

Please help advise me the chance of winning if I go ahead with legal action in this case.

Thanks and regards,

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  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    3y

    You have an uphill battle.  The option fee is never refundable as a matter of contract law.  The contract spells out the terms that you have to do your DD to protect the earnest money.  Lots of protections to seller regarding not relying on statements, do your own DD, etc.

    Best bet is to threaten to sue if $ not returned, but I don't know that you have a strong case.   Better bet would be to lis pendens (or threaten such) as that would keep them from selling. Sort of a nuclear option though.

    I can tell you that when I'm selling something, if someone tries to cancel after the DD period, I never return the $ and will pay more to fight the return then the amount of the return for the principle of it. 

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  • Edward Adams
    Investor · Houston, TX · Member since 2020 · 111 posts · 64 votes
    3y

    Based on the information you provided, it appears that the seller failed to disclose material information about the property's condition, specifically regarding the water damage and mold issues. This failure to disclose could be considered a breach of the seller's legal obligation to provide accurate and complete disclosure to potential buyers.

    As a buyer, you have the right to rely on the seller's disclosure statement in making a decision to purchase the property. If the seller knowingly withheld or misrepresented material information about the property, you may have grounds for legal action to recover your fees and potentially even cancel the contract.

    To pursue legal action, you should consult with a real estate attorney who can review the facts of your case and advise you on the best course of action. Your attorney may recommend sending a demand letter to the seller, which may prompt the seller to come to a settlement agreement with you. If not, your attorney may file a lawsuit on your behalf.

    Keep in mind that the legal process can be lengthy and costly, and there is no guarantee of success. It's important to carefully weigh your options and consider the potential costs and benefits before proceeding with legal action.

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