Real Estate Fraud
Our Sacramento Real Estate Fraud Attorneys are experienced in representing homebuyers in lawsuits for fraud. Real estate fraud in the purchase of a home occurs not only when a seller makes false statements, but can also occur when a seller or someone else in the transaction fails to disclose material facts. In fact, the failure to disclose is actually much more common then actually making false statements.
What does a Seller have to Disclose in the sale of a home?
Our Sacramento Real Estate Fraud Attorneys are regularly asked: what has to be disclosed in a real estate sales contract? While not exactly an accurate statement of the law, there are a couple of rules of thumb that are helpful:
- If you have to ask if something in particular should be disclosed, it must!
- If it might possibly hurt the chance of completing the sale, it must be disclosed!
While those rules of thumb are useful, the law is much more complicated. Generally, a seller has an obligation to disclose all “material” defects or problems with the property. What is “material” is subject to much litigation, but generally speaking, the term means if it would potentially impact the buyer’s decision. Whether something is material is considered from the prospective buyer’s eyes. As an example, the fact that improvements may not have been done with permits or up to the building code standards may not matter to the seller, but to a potential buyer they may. As such, these things must be disclosed.
Likewise, whether something is a defect or a problem with the property is broadly construed as well. This can mean not only actual problems but also potential problems with the property. The problems may not actually be physical or on the property, but could be something to do with a claim to the right of ownership, or even things happening next door or nearby.
What if I bought the property “as-is”? Do I still have rights?
Many sellers of residential homes believe that they can avoid disclosures by simply writing in the contract “as-is.” However, selling a property “as-is” does NOT relieve a seller of his/her obligations to disclose.
In the current real estate market, it is not uncommon to see homes sold “as-is.” The as-is language is often written in the contract, and sometimes even in the transfer disclosure statement. Buyers and sellers operate under the mistaken belief that by writing “as-is” in the documents, it eliminates the obligations to disclose material problems with the property. While there are a few very limited circumstances when a seller has no obligation to disclose, those exceptions are very few and narrowly construed.
Quite simply, the general rule remains that if you know of a defect, you must disclose it! Writing “as-is” is not sufficient. In fact, our Sacramento Real Estate Fraud Attorneys have found that most of the best examples of fraud occur when the contract documents state “as-is.”
Does the real estate agent or broker have a duty to disclose defects?
The Sacramento Real Estate Fraud Attorneys at Eason & Tambornini are regularly asked what a real estate agent must disclose in sale, and the answer is simple: the requirement to disclose is generally the same as a seller.
If a real estate agent or broker has knowledge of facts that may be material to a buyer’s desire to purchase the property, they must disclose the facts as well. If a real estate agent or broker does not disclose facts, they may be personally liable as well. This is particularly important as the sellers often do not have the assets to pay a judgment based on fraud, but the real estate agents and brokers usually carry errors and omissions insurance.