In the summer of 2023 the Smiths* put their $1.3 million home for sale in California. Right before closing, the buyers discovered water damage and mold in the home. The buyers requested that the sellers leave $115,000 in escrow to pay for the damages. The Smiths declined, the title company released the funds and the home closed.
A month after closing the sellers received a demand letter to either rescind the purchase agreement and/or enter into mediation.
The sellers reached out to Sellers Shield shortly after receiving the demand letter. Within 24 hours the Sellers Shield team assessed the situation and hired an expert real estate attorney.
The attorney Sellers Shield hired responded to the demand. However, to date, the buyer’s attorney has not responded back.
While the attorney considers the case closed, the statute of limitations in California is three years. It’s not clear why the buyer or their attorney went silent. However, if they come back with a response, or file a suit, Sellers Shield has their back.
Important things to note about this claim:
Failure to disclose is the most commonly cited issue in legal demands and lawsuits.
In the demand letter it was clear that the buyers and their attorney were building a case against the sellers. They hired experts to evaluate the damage and mold, who said “confirmed that the water intrusion could only have occurred at least four to eight months prior.” The demand letter also states that the buyers were not able to see the effective areas before closing because the seller’s personal property had previously obstructed their view.
Buyer’s remorse has been noted by others why the number of claims have increased.
The demand letter mentions several times that the buyers paid over $100,000 above the asking price.
According to the research done by Victor Insurance Managers, this “buyer’s remorse”, along with other factors, is resulting in an increased number of lawsuits.
In their 2023 study, Victor Insurance Managers saw a whopping 9% increase in E&O lawsuits and a 13% increase in damages (averaging $39,000). This is concerning to agents and brokers nationwide: one lawsuit can damage a real estate business’s reputation.
In a survey by Clever Real Estate nearly a fourth of buyers were not satisfied with the home-buying experience, the largest group of buyers feeling like they spent too much.
About Home Sale Legal Protection™
Home Sale Legal Protection™ is activated at closing for the term amount purchased for the property, which is anywhere between 1 year to 4 years after closing. Sellers or agents can purchase Home Sale Legal Protection™ anytime before the home closes.
What can real estate agents do?
The first thing you can do is use Sellers Shield’s Gold Standard Disclosure Process™. With Sellers Shield, agents invite sellers to disclose on our interactive platform. It’s the same forms you already use, but it features expert tips, examples, definitions, and guidance. When the seller starts the process, we explain to them that the disclosure form is a legal document and providing accurate information is key. However, even with accurate disclosures, buyers can still make post-sale threats, demands, or sue.
The second thing agents can do is recommend Home Sale Legal Protection™. For less than the cost of a legal consultation, sellers can have peace of mind that if something does happen after the sale, they will have anywhere between $20,000 and $75,000** of their legal fees paid for.
***This article was written to educate agents on home sale disputes. Sellers Shield saw a 25% increase in home sale disputes in 2023.