What To Disclose When Selling a
Home
In the past, the general rule if you were
buying a home was caveat emptor—buyer beware. The seller wasn’t obliged to
tell you whether the roof leaked or the furnace didn’t work, or even if the
house was built on a toxic dump. If you were buying a home, you were
supposed to figure all of that out for yourself.
But in recent years, the general trend towards consumer protection has
included a change in the laws of most states on what needs to be disclosed.
In most states, if you’re selling a home it is illegal to fail to disclose
major physical defects in your property, such as a basement that floods in
heavy rains. You may need to make written disclosures to indicate what you
know about the condition of your home.
In some states, seller disclosures are still voluntary, but even then you
may want to consider telling the buyer what you know. A major cause of
post-sale disputes and lawsuits is defects and disclosure, and most disputes
can be avoided if proper disclosures are made.
This is an area of the law that changes rapidly, differs widely from state
to state, and may be affected by local ordinances, so consult your lawyer
for up-to-date information on the law that applies to you.
How does the seller make disclosures?
It depends. In many states, compliance with disclosure obligations is made easy through the use of seller disclosure forms. These forms consist of a long list of questions, for example whether there has been fire, wind or flood damage that required repair; whether the property is in an earthquake fault zone; even whether a death has occurred on the property within the last three years. The seller must answer each question “yes,” “no,” or “don’t know.” It’s perfectly acceptable for a seller to answer a question “don’t know”—the purpose of the disclosure is to make the seller tell the buyer what the seller knows about the property, not to initiate a research project. The seller disclosure forms are usually then attached to the sale contract.
Even in those states that do not require written disclosures, some real estate companies require prospective sellers to complete a disclosure form before listing the property.
Other states may only require oral disclosures. If you’re buying a home, it is prudent to record any disclosures the seller makes, and even ask whether the seller is willing to make disclosures in writing.
What does the seller need to disclose?
In most states where disclosures are mandatory, sellers need to disclose material facts about the property for sale—that is, anything that could affect the sale price or influence a buyer’s decision to purchase a home. This is obviously a pretty subjective requirement—a fact that is material to one buyer may not concern another. Remember, generally you only need to disclose information within your personal knowledge. If you're wondering whether something should be disclosed, consult a real estate agent or your attorney. Ask yourself if you'd want to have the information if you were the buyer. If the answer is yes, then disclose. It could save you a lot of trouble down the line.
There are some defects that should always be disclosed:
- Plumbing and sewage issues;
- Water leakage of any type, including in basements;
- Termites or other insect infestations;
- Roof defects;
- Heating or air conditioning system issues;
- Property drainage problems;
- Foundation instabilities or cracks;
- Problems with title to the property; and
- Issues with neighbors that aren’t obvious.
Structural defects are one thing; toxic materials in the house are another. Federal law requires sellers to disclose all known lead-based paint and hazards in the house—which may include lead pipes or repairs to pipes—and give buyers a ten-day opportunity to test the house for lead. State laws may require sellers to make disclosures about other toxic materials, including radon, mercury, asbestos, carbon monoxide and formaldehyde.
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Exceptions: |
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Not all sellers have
to make disclosures—the common exception in most states is for banks and
mortgage companies who are selling foreclosed properties. If you’re buying
a foreclosed property, it’s a good idea to pay for a professional
inspection to ensure everything is in good shape. The old motto applies in
these cases: buyer beware. |
What happens if a seller fails to
disclose?
A seller who doesn’t disclose known defects can be sued by the buyer after the
defect has been discovered. The seller may then be responsible for the costs
of repairs and other damages resulting from the undisclosed defect. A seller
may even be ordered to take the property back if a judge rescinds, or
invalidates, the sale. These kinds of lawsuits can turn out to be very
expensive—a seller can be held responsible for the buyer’s attorney’s fees,
and if there is fraud involved a seller may even have to pay punitive damages
to the buyer.
Inspections
In most states, sellers are only required to disclose what they know, not what
they ought to know. If the sellers haven’t been living in the house long, or
are just unobservant, they may not have noticed a defect. The sellers cannot
disclose the defect to the buyer and the buyer has no protection.
To avoid being stuck with a new home that needs a raft of expensive repairs,
it’s a good idea for a buyer to insist that the contract be contingent on a
satisfactory house inspection. A professional inspector will inspect all major
house systems, including the roof, plumbing, electrical and heating systems
and drainage. If you’re buying a home, you may think an inspection is a waste
of time and money. But consider--if the house is in good shape, your mind will
be at rest. If there are any problems, it may be possible to negotiate a new
price with the owner, or back out of the deal.
Sellers might also consider a house inspection before they even put the house
on the market. A house inspection could reveal defects that come as a surprise
and can be fixed up before the house goes on the market.
On the other hand, sellers only need to disclose what they know. A house
inspection could give sellers knowledge—about lead paint, for example—that
they’d rather not have. Once sellers know about a defect, they’ve got to
disclose it.
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Megan’s Law: |
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In 1994 a
seven-year-old girl called Megan Kanka was raped and murdered by a known
sex offender who had been released into the community. Megan’s Law is a
federal law, passed in 1996, that compels states to make private and
personal information on registered sex offenders available to the public.
Several states also require every purchase contract to contain a specific
written notice informing buyers that they may access a database containing
information about registered sex offenders. If sellers have additional
information, for example they know that a sex offender has just moved down
the street, then that is probably a material fact that should be disclosed
to the buyer. |
When Are Third Parties Liable for Personal Injuries?
A
basic principle of personal injury law is that you may be able to recover
money damages if you or your property have been injured by someone’s
negligence. But what if the negligent person--let’s say the driver of a taxi
that struck you—may not be able to pay the damages?
Vicarious liability is a concept the law has evolved to address this
situation. Vicarious means “taking the place of another.” In the case of the
cab driver, it means that the taxi company will probably be liable for the
actions of its drivers if the injury occurred in the course of business and
if there is a connection between the conduct and what the driver was
employed to do.
Many may feel that this concept is unfair to employers, which have to insure
against this liability. However, the concept is often justified because it
helps secure fair compensation for victims, and gives companies every
incentive to deter harmful conduct by maintaining high standards and having
rigorous training programs and procedures to guard against these risks.
Besides vicarious liability per se, there are many other cases where someone
besides the direct perpetrator of the injury may be liable to the victim. In
these cases, the question is whether the negligence of the third person may
have been a fundamental cause of the injury.
The question of whether third parties will be liable depends on the facts of
each case, and your lawyer would be able to provide advice tailored to the
specific circumstances.
The following questions will shed some general light on a question likely to
be highly important to all the parties involved.
Q. I was injured when my automobile collided with a truck driven by a
delivery person. Can I recover damages from the driver or the employer?
A. You may be able to recover from both. Under vicarious liability, you
probably can recover from the delivery person’s employer if the negligent
act was committed by him within the scope of his job. Although the employer
was not negligent, it comes indirectly liable for the negligence of its
employee. Was the employee making a delivery when the accident occurred? If
so, the employer is liable, since deliveries clearly is part of the driver's
job. But if the employee first stopped at a restaurant for drinks and dinner
with friends, the employer may be able to escape liability.
Q. Is an automobile leasing company vicariously liable when the drivers
of leased vehicles get into collisions?
A. Probably. In many states, such companies are liable for property
damage or personal injury caused by operators of leased vehicles. This is
usually a matter of state law. One state supreme court explained the
rationale: “...to protect the safety of traffic upon highways by providing
an incentive to him who rents motor vehicles to rent them to competent and
careful operators by making him liable for damages resulting from the
[negligent] operation of the rented vehicle.”
Q. Someone recently stole my car and then wrecked it, injuring passengers
in another vehicle. Now one of those passengers is trying to sue me. Can the
passenger win? Am I responsible?
A. Probably not, since the thief did not have your permission to use the
car and the court could hold that you could not foresee that your actions
ultimately would result in injuries to others. In a few cases, though,
courts have looked at whether your actions caused an unreasonable risk of
harm to someone else. If you left your car parked with the engine running,
for example, you might be liable if the car thief then injures children
playing nearby.
Q. I was hit by a car driven by a drunk driver who was going home after a
night out. What can I do, in addition to suing the drunk driver?
A. If you live in a state that has a Dram Shop Act, you may be able to
recover damages from the owner of the tavern where the drunk driver was
served the liquor. Such acts usually come into play when intoxicated people
served by the bar later injure somebody while driving. But some courts say a
tavern owner will not be liable unless the sale of the liquor itself was
illegal.
You may also be able to collect from your own uninsured motorist or
underinsured motorist coverage for damages you suffered from the drunk
driver, if he does not have automobile liability insurance
Q. My wife was injured when her car was hit by one being driven by some
kids who had been drinking at the home of our neighbor. May I take any
action against the neighbor, who supplied the liquor to the youths?
A. Possibly. Courts have imposed liability against such neighbors or
parents when they have served liquor to minors. Parents can be liable for
negligent supervision of their children. But as a general rule, courts have
said that social hosts are not responsible for the conduct of their guests,
unless the hosts routinely allow guests to drink too much or take illegal
drugs and then put them into their cars and send them out on the highway.
Q. Someone attacked my daughter on the campus of the college she attends.
May she hold the school responsible for this attack?
A. Your daughter may have a negligence action against the college. In
a developing area of law known as premises liability, some courts have found
such entities as universities, motels, convenience stores and shopping malls
liable for attacks because they did not exercise reasonable care in
preventing victims from being harmed. However, courts are divided on this
issue and plaintiffs bear a heavy burden of proof in showing that the crime
was foreseeable. The most important factor is whether there had been similar
crimes in the location.
If You’re Facing Discrimination on the Job
American law protects a wide variety of
people from discrimination at work. But what should you do if you think
you’re facing discrimination in the workplace? The exact answer depends on
the facts of the case, and your lawyer can guide you there. In this article,
we give a quick overview of the law and discuss some of the possible steps
you might take.
Anti-Discrimination Laws
Federal laws apply all over the country, and protect a wide range of people.
Title VII prohibits discrimination based on race, sex, color, national
origin or religion. The Age Discrimination in Employment Act (ADEA)
prohibits discrimination based on age (if forty or over). Title I of the
Americans with Disabilities Act (ADA) prohibits discrimination based on
disability. The National Labor Relations Act (NLRA) prohibits discrimination
based on an employee’s union activity.
Almost every state has anti-discrimination laws that mirror the protections
found under federal law. Some state and local laws also have more expansive
protection than federal law, for example prohibiting discrimination based on
marital status, sexual orientation or weight.
Generally, the law regulates all aspects of work, including hiring, firing,
promotions, job duties, wages, benefits, and reviews.
What Is Prohibited
The law only prohibits discrimination when it is based on a person’s
protected status—under federal law, race, color, religion, national origin,
sex, age, disability or union activity.
Thus, if an employer makes a decision because of an employee’s race, that
employer has engaged in prohibited discrimination. Paying a worker lower
wages than other employees because that worker is African-American violates
Title VII. But paying a worker lower wages than other employees because that
worker is performing different kinds of job duties does not violate Title
VII. The question is whether the difference in treatment is based on the
employee’s protected status. Different treatment based on protected status
is called intentional discrimination or disparate treatment.
Title VII also prohibits conduct that has the effect of discriminating
against individuals in a protected class, even if the employer’s reason for
the different treatment is not based on protected class. For example, an
employer may decide to hire only applicants who do not have custody of
preschool age children. On its face the reason for the employer’s hiring
decision is not a protected class reason. However, the effect of this policy
is to disproportionately screen out women applicants as compared to male
applicants because more women are custodial parents. This policy, therefore,
would have a discriminatory effect, also called disparate impact. Disparate
impact discrimination is also forbidden by Title VII unless the employer can
prove that the policy is required by business necessity and is significantly
related to the requirements of the job.
The ADA defines discrimination not only in terms of disparate treatment and
disparate impact but also in terms of a refusal to provide reasonable
accommodation to an otherwise qualified individual with a disability.
Steps to Take
If you think you have been discriminated against in violation of the law,
bring your complaint directly to the attention of the employer and attempt
to resolve the problem on an informal basis. The employer may not be aware
that individuals within its organization are discriminating, or the employer
may want to address your complaint and fix the problem.
If, however, you want to pursue a legal remedy, you should get expert advice
and act relatively quickly. Anti-discrimination laws have strict time limits
for making a claim (see sidebar). The federal laws require employees to file
a complaint first with the Equal Employment Opportunity Commission (EEOC)
before filing a lawsuit in court. In some circumstances an employee is also
required to file a complaint with the state agency charged with enforcing
the state anti-discrimination laws. For claims arising under the NLRA,
employees are required to file a charge with the National Labor Relations
Board (NLRB).
Lastly, if fired or not hired for discriminatory reasons, you should look
for another job. Do so even if it seems that you are entitled to the former
job. If you do not actively seek other work, it appears as though you are
not seriously interested in employment. This can weaken your claim and may
limit any award of back pay.
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TIME LIMITS UNDER TITLE VII AND THE ADA |
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If you have been discriminated against, you must file a charge with the EEOC within 180 days from the date of the discriminatory act. There are regional offices of the EEOC in most major cities in the U.S. There is an exception to this time limit if the discrimination occurred in a state that has a state law prohibiting discrimination. In that case you must first file a charge with the state agency responsible for enforcing the state law. You must give the state agency at least 60 days to investigate your complaint. After 60 days you can then file a charge with the EEOC, but the charge must be filed within 300 days from the date the discrimination occurred or within 30 days after the state agency terminates its proceedings, whichever occurs first.
When the EEOC completes its
investigation of your charge, it sends you a letter. The letter states
whether the EEOC found reasonable cause to believe the law was violated
and informs you that you have ninety days within which to file a lawsuit
in court. This letter is called a right to sue letter. A lawsuit under
either Title VII or the ADA must be filed within 90 days of receipt of the
right to sue letter. You may file a lawsuit even if the EEOC has not found
reasonable cause. |
Anti-Retaliation Provisions
Federal law makes it illegal for an employer to retaliate against you
because you have participated in enforcement procedures. Protected
participation includes filing a charge, testifying at a hearing or assisting
the government in the investigation. Protection applies not only to current
employees but also to former employees and applicants. Thus, it is illegal
for an employer to give a former employee a negative job reference because
the employee filed an EEOC or NLRB charge. Parallel anti-retaliation
protections may also exist under state law.