How to avoid mistakes when buying a house.

Having practiced law for over twenty years, and being involved in real estate as both a builder and lawyer, I have found that not all realtors and sellers are the same, but the real estate documents are.  Whenever you purchase a home you will inevitably deal with a form real estate contract00202_i3a8tES12A9_600x450[1].

Don’t just rely on your realtor, or the forms.

Ask a lot of questions.

Hire professionals if you have concerns.

Do independent research on the area and the home.

Check public records and news reports.

 

Over the years I have seen a lot of litigation arise from the sale of a home.  Reoccurring problems include: failure to disclose hidden defects in the home; misrepresentation of the premises purchased; the amount of land conveyed does not equal the amount advertised; and encroaching neighbors that were either not disclosed, or not known.

A contract to purchase a home generally contains a Buyer’s Disclaimer of Reliance clause, and an Inspection and Repairs clause.  In these clauses, the Buyer indicates that the Buyer has had every opportunity to inspect the property and that if the Buyer closes, he or she takes the property AS IS, WHERE IS, WITH ALL FAULTS.  This can be very hard language to get around.  The Arkansas Supreme Court has limited a Buyer’s remedies to fraudulent concealment and mutual mistake of fact.  The defect must be a latent defect not capable of being discovered without an invasive investigation, which is not normal in the buying process.  A mutual mistake of fact must be a mistake that is readily evident from the contract that the parties agreed to one thing, but the consummation of the contract yielded another.  This is a very difficult thing to prove because the mistake has to be mutual.  Generally, the disclaimers in the form real estate documents rule this out.

Most cases hinge on whether there was a fraudulent misrepresentation.  An examples of what I have seen is when there has been past water intrusions that was repaired by the Seller so as to cover up the intrusion, and not listing it in the Seller’s Disclosure.  A Buyer should hire a home inspector to look for signs of settling, cracks, mortar repairs, new paint, or carpet that seems out of place as compared to other areas of the home.  If this is noticed, then it should raise red flags, and lead to questions requiring responses in writing. Have there been any insurance claims?  Why did you put new carpet in the basement?  Why is the paint in the upstairs bedroom fresh, while the other rooms are not?  You get the point.  If it seems out of place, then something is wrong.

Sometimes the cover up is so good, it is not noticed until after the Buyer moves into the home.  Then you have to prove that the Seller knew of the hidden problem and failed to disclose it.  The Seller routinely says “we never noticed anything.”  Neighbors are a good source of information on this point.  The Seller forgets that he talked to Joe across the street about the water problem, or the neighbors saw the restoration company at the house a few times.  Other sources to show knowledge would be insurance files, and experts in construction to testify that the latent defect more likely than not was a continual source of problems for the Seller.

Another item that gets covered up is foundation settling.  Sellers will fix cracked sheetrock, or exterior brick by adding piers to an area so as to cover up past damage of foundation failure.  Look for doors that don’t close properly, cracks in the ceiling at corners, vertical cracks near doors and windows, or evidence that these areas have been repaired.  Talk to neighbors if you can or people that know the neighborhood.  Some neighborhoods, or subdivisions are built in areas where the soil is susceptible to settling.  Call a foundation company to see what they know about the area.  Check court records to see if the Seller may have been in litigation with a builder, or his or her Seller with regard to the home.

Road construction is another major issue, especially in Northwest Arkansas.  I have seen several instances where Sellers failed to disclose that there primary purpose for selling is that the highway department announced that it was going to build a bypass near the neighborhood, or a city as part of its long term street plan will be expanding the size of the road in front of the home.  If you don’t know the area check with the local city government to see what its plans are for the streets in the area.  Check the highway departments website for future construction project plans.

Other issues include misrepresenting the amount of acreage in the multi list service, or neighbors who have built fences that encroach on the land being sold.  The form documents release any claims for erroneous MLS references.  If the amount of land is important, or knowing where the boundary lines are so as to determine if fence lines accurately reflect the actual boundary, ask for a survey from the Seller, or hire a surveyor to survey the property.  Luckily for Buyers there is a remedy for a conveyance that does not include the amount of land described in a metes and bounds description.  However, if it is a platted subdivision, the deed will most likely contain only a description of a lot and block.  You should consult the public filings to determine the lot size.  You can then ask a surveyor to locate the lot lines to see if fences are where they are supposed to be.

If you find yourself in one of these or other type situations after purchasing a home give us a call to see if you have a viable claim.

IF YOU DON’T CALL, WE CAN’T HELP.

 

 

About the Author: Rick Woods