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Can a Buyer Sue After the House Is Sold?

Posted on in Real Estate

IL real estate lawyerConsider the following scenario: “About nine months ago, my wife and I sold our house in Aurora and moved to Mesa, Arizona. We were just beginning to settle in when we were blindsided by a letter from a lawyer. She wants us to pay the new owners $20,000 to compensate them for some foundation work they had done. What are our options?”

In this situation, the lawyer appears to be threatening to take action under the Illinois Residential Real Property Disclosure Act (RRPDA). When real property is sold or transferred, the current owners must disclose any structural problems or related issues, like water leaks, menacing tree roots, and other defects. Legally speaking, a seller has a duty to disclose when “equity and good conscience” requires such a disclosure. The theory is that the current owners of the property are in a position to not only know about latent defects in a house that can cost the new owners thousands of dollars in repairs, but they are also in a position to conceal these defects.

One of the forms buried deep within the mound of paperwork at closing was probably a “Residential Real Property Disclosure Report” form. Essentially, the seller must declare that the house is in good condition or that the buyer is aware of any existing defects. If the seller does not disclose a known patent or latent defect, the buyer could potentially sue.

Some Common Defenses

Some transfers are exempt from the RRPDA’s requirements. If the transfer occurs during a bankruptcy, divorce, foreclosure, or other legal proceedings in which the seller does not normally guarantee the condition of the property, there is no duty to disclose.

A better defense, however, is a lack of knowledge. You cannot disclose what you do not know. Moreover, the seller has no obligation to have the property inspected prior to completing the report. If there is no actual knowledge, there is no duty to disclose. The buyer must prove that you knew about the defect, failed to disclose it and that there was some monetary damage – usually either the cost of repair or the diminished value of the house.

Protect Yourself With the Help of a Lake County Real Estate Attorney

If a buyer sues you for unintentional misrepresentation on the disclosure form, your homeowner’s insurance company may provide you with a lawyer. Otherwise, you need to speak to an attorney straight away. For a free consultation with a Libertyville real estate lawyer, contact Newland & Newland LLP. Call 847-549-0000 to schedule a free consultation.



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