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Accused of Disclosure Fraud Six Months After Closing

Home buyer accuses Seller of Concealing Water Damage over 6 months After the sale

We owned our 1973 house for 17 years. My husband lived in it for two years before we were married and then we rented it out for 14 years. 

Feb 1, 2019 the tenant moved out. (no bad blood, we had told her a few months prior we were looking at selling the property the next spring to take advantage of the hot real estate market and gave her first rights to buy – so when she found a new rental that suited her she gave us notice and moved on). She painted upstairs living areas and replaced upstairs carpet.

For the month of Feb, we painted the kitchen and downstairs bathroom, replaced the dated master bath linoleum and the kitchen countertops. Put carpet downstairs and replaced back deck stairs and railings. Took staging photos and then put home on the market Feb 27.

Got full price cash offer first day listing. We took it. They did their own home inspection. We noted that it was a long term rental but did the home disclosure forms. Listed the improvements done before sale as well as the new roof, new water heater done during the time we owned it – provided receipts as requested by new buyer.

"We Closed Mid March 2019 And Went On With Our Life..."

Buyer did not have any buyers objections. Closed mid March 2019 and went on with our life. Mid October 2019 get a text from our realtor that the buyer is unhappy. Asks permission to give buyer our contact info. We agree.

The buyer calls, saying there is leaking pipes and water damage that he discovered upon starting renovations. Husband asks how he discovered the damage and buyer says he pulled drywall down to renovate and found bad pipes, leaks, and water damage.

My husband tells buyer that the tenant didn’t have any issues in the 15 years she lived there, and since buyer has been living in the home for 6 months and only found issues by renovating and removing walls, how did he think we could have known in the month we visited the home to prepare it for sale…

Buyer states that there is “brand new drywall” on the garage ceiling and is sure we replaced it, and thus must have known about the damage and then hid it, so he’s suing us for breach of contract for failing to disclose. 

Here’s the thing. We didn’t replace drywall. Didn’t see any moisture, or evidence of leaks. The tenant didn’t tell us of any issues in all the time she lived there.

We looked at the staging photos of the garage to figure out what he’s talking about. There is a portion of the garage ceiling drywall that is not the original 50+ year old drywall. Original drywall is orange/yellowish and replaced is white. Don’t know how long it’s been there. It’s tight and flat, no moisture or discoloration on it, the surrounding drywall, or the garage floor under and around it. This was apparent, so not sure why he didn’t ask during his home inspection why the difference in the ceiling drywall – it wasn’t even on our radar to address as we didn’t notice it or have any concerns about it. Garage is old, none of it is painted and we just concentrated on getting the house itself updated and ready for sale.

We asked the tenant to provide a notarized statement that during her 15 years there was never a water issue in the home.

The whole situation was extremely stressful. We did not deliberately conceal anything and filled out the disclosure form to the best of our ability. We did not build the house and had little knowledge about previous work on the house.

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