Issues with the Seller’s Disclosure? Here’s What to Do

Picture it: you’ve bought a new home and have just moved in. While unpacking your belongings, you see a sizable and dangerous hole in the wall that you weren’t aware of. The seller didn’t tell you about it in the seller disclosure statement.

What do you do?

Here we’ll discuss what to do when you think the seller lied on the seller disclosure statement.

First, let’s define the terms.

What is a Seller Disclosure Statement?

A seller disclosure statement is a form where the seller and real estate agent disclose any issues they are aware of that could negatively affect the value of the home. Signing this statement is part of the escrow process.

In California, sellers must provide a Transfer Disclosure Statement (TDS) to any potential buyer whose offer has been accepted. This form asks specific questions about defects or malfunctions the seller may be aware of. It asks about the condition of the roof, the electrical wiring, appliances, smoke detectors and other relevant features of the property.

You must also provide several supplemental disclosures (noting whether the house is in a flood zone, for example).

The most important concept to keep in mind is that you must disclose any material facts that you are aware of, even if they are not specifically addressed by the standard forms.

Issues they may disclose include and are not limited to:

  • Presence of mold
  • Presence of lead paint
  • Structure, foundation and roof issues
  • Water damage
  • Previous renovations and additions

Just because you have a seller disclosure, doesn’t mean you don’t need a home inspection. Inspections are crucial to learning about potential issues, and sellers may lie about the problems the home has, or they may not be aware of them.

When Do You Get the Seller’s Disclosure Statement?

You usually get the seller disclosure statement a few days before the day of mutual acceptance. The purchase and sale agreements are also signed on that day. It is also possible to ask for the seller disclosure before making an offer on a home.

What to Look For in a Seller Disclosure Statement?

Of course, everything on the disclosure form is important, but there are certain things you should look for, such as:

  • Structural issues
  • Problems with plumbing and pipes
  • Roof problems
  • History of flooding
  • Liens on the property
  • Land-use restrictions

These are the sources of major issues that aren’t quick and easy fixes, so it’s important to make sure you review these parts of the statement thoroughly.

Issue #1: Seller Lied on Disclosure Statement

While it may be shocking to find an issue with your new home that wasn’t disclosed to you, it doesn’t automatically mean that the seller lied to you. The disclosure statement is for the seller to disclose any flaws they are aware of; this doesn’t mean that they know every issue the house has. It’s possible they weren’t aware of the problem, and that is why it wasn’t on the statement.

Now, if you believe that the seller lied about problems with the home and want to take it to court, then you have to prove it. You have to bring evidence that the seller knew or should have known about the issues, and they purposely covered it up.

For example, if it was obvious that the seller tried to hide mold by painting over it, photos of that would work as evidence. Documents that indicate the seller had a professional look at an issue in the home but didn’t get it fixed is another form of evidence. It is also a good idea to get a professional to look at the problem in your home and determine how long it has been there and if there is a possibility the seller should have known about it.

Issue #2: There is No Disclosure Statement

Buying a home without a seller disclosure statement can be risky. Depending on state laws, if you find significant flaws in the house after buying it that wasn’t disclosed to you, you may be able to get money from the seller to fix it. But some state laws don’t provide the same amount of protection, and you might be out of luck after you close on the home.

If the seller doesn’t give you a disclosure statement before closing, you may be able to end the deal. It depends on the laws of your state.

If there is no seller’s disclosure statement when purchasing a home, this can also mean that the seller is selling it as is, and they don’t need to tell you about any problems in the house.

Courses of Action

If you discovered flaws in the home and believe that the seller lied about it, there are a few things you can do.

Cancel the Purchase

If you find that the seller lied about the condition of the home and you haven’t signed the contract yet, then you are better off canceling the purchase. Most laws allow buyers to cancel if they discover new and vital information about the home. This is a standard contingency in home purchasing contracts.

Come to an Agreement

Before going ahead with a long and expensive lawsuit, try coming to an agreement with the seller. You and the seller might be able to settle things out of court, where the seller could agree to pay for all or part of the repairs to the home.

File a Lawsuit

First, if you find an issue in your home, you need to minimize the damage as soon as possible. You have a responsibility to make sure it doesn’t get worse. Contact your insurance company to report the damage, then call a professional to assess the issue and give an estimate on repairs. You must take photos of the damage and keep records from companies who inspect and fix the problem. Records like these are important in court.

If you decide to hire a lawyer and go to court, it will be your responsibility to prove that the seller lied. You need to find evidence that the seller knew of the flaws.

Move On

A lawsuit is a lengthy, expensive, and stressful process. It might be better for you to cut your losses and move on. If the problems aren’t too costly to fix, then paying for it may be more cost-effective than paying for a lawyer.

Have Questions About Buying or Selling Your Home?

Contact us at New Venture Escrow if you need help with the seller’s disclosure statements or selling your home in California. We offer E&O Policies to both agents and sellers upon every transaction for a smooth and stress-free home selling process!


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