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Ray, Lawyer
Category: Real Estate Law
Satisfied Customers: 40095
Experience:  Texas Attorney for 30 years dealing in real estate
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Is failure to disclose issues with house considered breach

Customer Question

Hi. Is failure to disclose issues with house considered breach of contract?
Submitted: 7 months ago.
Category: Real Estate Law
Expert:  Ray replied 7 months ago.

Hi and welcome to JA. Ray here to help you today.Please bear with me a few moments while I review your question, conduct and prepare your response.

Expert:  Ray replied 7 months ago.

Yes it is under California law it is considered a material nondisclosure and breach of the sales contract.You can sue the seller, realtor, and inspector if they failed to disclose and present during the sale.You would have local real estate lawyer send them all a shotgun demand letter and see what offers to settle you get.The realtor and inspector have errors and omissions coverage.They may settle here off of such a demand and you would sue whoever is left here.

Real Estate Disclosure Statement: Transferors of residential property must provide purchasers with a Real Estate Transfer Disclosure Statement ("transfer disclosure statement"). [Civ. Code §§1102–1102.15] Any waiver of these requirements is void as against public policy. [Civ. Code §1103(d)] This requirement applies to a sale, exchange, installment land sale contract, lease with an option to purchase, any other option to purchase, or ground lease coupled with improvements. The seller or transferor must deliver to the prospective buyer or transferee a written disclosure statement under Civ. Code §§1102 and 1102.2. [Civ. Code §1102] Delivery of the disclosure statement must be by personal delivery to the transferee or by mail to the prospective transferee. [Civ. Code §1102.10]

The transfer disclosure statement form includes the seller’s disclosure of information regarding the following [Civ. Code §1102.6]:

    1. the physical condition of the property;
    2. the existence of hazardous materials or dangerous conditions;
    3. encumbrances on the property, including encroachments;
    4. easements or other matters which may affect the other party’s interest in the property; and
    5. lawsuits against the seller threatening to affect or affecting the property.

Transferors of residential property must also disclose to potential buyers, if applicable, that the property is in a natural hazard area [Civ. Code § 1103; see § 1:30.1] and that the property is subject to a lien created under the Mello-Roos Community Facilities Act [Civ. Code §1102.6b] or to a fixed lien of assessment collected in installments to secure bonds issued pursuant to the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500 of the Streets and Highway Code)). In addition, cities or counties may require that sellers or their agents deliver to purchasers the Local Option Real Estate Transfer Disclosure Statement set forth in Civ. Code §1102.6a(b). [Civ. Code §1102.6a(a)]

Under Civ. Code §1102.13, any person who willfully or negligently violates the disclosure requirements is liable in the amount of the actual damage suffered by the purchaser.

An "as is" clause in a purchase and sale agreement does not insulate the seller from the common law duty to disclose defects or the requirements of Civ. Code §§1102 et seq. "As is" language serves to give notice of patent defects and means that the buyer accepts the property in the condition in which it is reasonably observable by him or her.

If augmented by language indicating that the buyer is relying on his or her own inspection of the property, it may also relieve the seller of the duty to inspect for defects or to disclose matters that the seller should know but does not. However, the benefits of Civ. Code §§1102 et seq. are not waived merely by the buyer’s acceptance of "as is" language in the purchase agreement, and the seller remains liable for any failure, whether negligent or intentional, to reveal known concealed defects not apparent from an inspection of the property.

Similarly, "as is" language in a real property sale agreement does not shield a seller from liability for fraud. [Civ. Code §1668 (providing that contracts that directly or indirectly exempt anyone from responsibility for fraud are against policy of law)]

You will need an estimate of your damages including any loss of value.Your lawyer would help you gather that information and pursue such a claim.California case law calls for strict disclosure here.

A buyer’s right to recover damages against a seller for breach of a purchase and sale agreement is measured either by Civ. Code §3300 or Civ. Code §3306. Where the breach arises from a covenant or warranty in the sale agreement, the general contract measure of damages applies and the buyer is entitled to the amount that will compensate him or her for all detriment proximately caused by the breach or likely to result from it.

Where the seller fails to perform altogether by refusing to convey title, the buyer’s recovery is determined under Civ. Code §3306. These damages include:

    1. the price paid;
    2. the expenses incurred in investigating title and preparing the necessary papers;
    3. the difference between the agreed purchase price and the market value of the property at the time of breach;
    4. the expenses incurred in preparing to enter on the land;
    5. consequential damages according to proof; and
    6. interest.

Damages for breach of contract are confined to those that are foreseeable or could reasonably have been contemplated as a result of the breach.

I appreciate the chance to help you tonight.I hope you will pursue this and recovery for your harm under California law.

Expert:  Ray replied 7 months ago.

Section 337 of California's Code of Civil Procedure establishes a four-year statute of limitations for most written contracts. It requires a plaintiff to file a lawsuit within four years of the alleged breach, or similar event, of a written contract.So you should still have time to pursue this matter.

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