A great deal of any real estate attorney's business involves suits that arise after the sale of a house, even many years after. A seller can be liable for defects in the house he sells, even defects of which he was unaware. The defects, depending on how severe they are, can lead to the seller having to return a portion of the sales price or even to refunding the whole sales price and taking the house back. If the defects were known to the seller but kept hidden from the buyer, he may also have to pay the buyer's attorney's fees and damages. |
Sales without warranty It is quite possible to sell a piece of real estate without warranty. This can be a specific clause in the sale and is binding on the parties. In one recent case, a woman bought a condominium which, in the sale, said "sold as is where as" which is language you would expect to find in a car sale, not a property sale. Immediately after the sale, the roof began leaking badly from a pool and hot tub on the roof. The buyers suit for redhibition was dismissed since she agreed in writing that she accepted the house "as is". |
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What
happens if you buy a house only to find out that the foundation is cracked
or that the roof leaks? In Louisiana, an action to rescind a sale, or to
seek damages because of defects in the property you bought, is called
redhibition. In this type of suit, the unhappy buyer must prove that the defect is so serious that the thing bought is useless or so inconvenient that it must be concluded that he would not have bought it had he known of the defect. In other words, minor complaints about the property would not qualify. |
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In any redhibition case, the buyer must also show that the defect existed before he bought and that he could not have discovered the defect by a reasonable inspection of the property. If the seller tells the buyer of any defects before the sale, the buyer cannot sue for redhibition after the sale because of those defects. If the seller makes a declaration in good faith that the property has some quality and it turns out after the sale that it does not, the buyer has an action in redhibition. Here is an actual Louisiana case on redhibition: Professor Jones, a research chemist newly employed by Tulane University, found exactly the house he was looking for. It was located close to the university and had a den that he could convert into a study. A floor plan diagram prepared by the seller's real estate agent showed that the den was 13 feet by 24 feet. Professor Jones knew that this was just the right size to build bookshelves along one wall to store his extensive research library. After purchasing the house, Professor Jones discovered that the den was actually 13 feet by 20 feet. Professor Jones sued to have the sale rescinded since the size of the den was a major factor in his decision to buy the house. The sellers refused to take the house back and claimed that since Professor Jones had inspected the house, the burden was on him to discover any defects. Besides, the sellers argued, it was an innocent mistake made by the real estate agent and didn't really alter the house that the Professor had seen and liked. The court held that Professor Jones was entitled to rescind the sale. It is true, the court reasoned, that a buyer must make a reasonable inspection to discover any obvious defects. However, this defect was not obvious and the professor should be able to rely on what the seller claims are exact measurements. The court ordered that Professor Jones get back the purchase price, together with his reasonable costs connected with the sale. Because the court found that the misrepresentation was innocent, no other damages were awarded. The suit took three years to get resolved in the courts, during which time Professor Jones lived in the house. Because of this, the court reduced the award to the Professor by the fair rental value of the house for the months that he had a place to live. In all suits for redhibition where the buyer is seeking to rescind the sale, the judge has the option to reduce the price rather than order that the property be returned to the seller. This will frequently happen when there is a defect that can be repaired. In that type of case, the judge will most likely order a reduction in the purchase price to equal the cost of making the repairs. In cases where repair is not an option, like with Professor Jones, a rescission is the only remedy that will put the buyer back in the position he was in prior to the sale. In one case, a buyer sued for rescission because he found that his back yard flooded every time there was a heavy rain. The court felt that the defect was not serious enough for a rescission and ordered that the purchase price be reduced by $20,000. The defect of flooding could not be repaired, but the court felt that this award would make up for the inconvenience to the buyer. |
Fraud In cases where a seller knows of a defect but does not make it known to the buyer, the seller may also be liable for damages beyond returning the purchase price and selling costs. This happens frequently with termite damage cases. The seller has the infestation treated and then covers over the damage with paint or other materials so that it is not discoverable by a reasonable inspection. A suit for redhibition must be brought within one year of the purchase. However, if the buyer alleges fraud, the suit may be brought within one year of the time the defect is discovered by the buyer. Liability after the sale, therefore, can extend for a considerable amount of time. If the home is purchased from the original builder, however, a different set of laws may apply. Public records Despite laws about redhibition and fraud, if an alleged defect is part of the public records, a buyer will probably be deemed to be aware of the defect, even if it is not disclosed by the seller. An example would be building or subdivision restrictions. |