What is the liability of a home seller, broker or home inspector for a non-disclosed septic system failure?
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What is the liability of a home seller, broker or home inspector for a non-disclosed septic system failure?
Sellers had tank pumped just before the home inspection to conceal that leach field is not working. Do we have any recourse with sellers, their broker, or home inspector?
Asked on June 21, 2012 under Real Estate Law, New Hampshire
Answers:
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
You can sue the seller for fraud and the home inspector for negligence. You may have a case against the broker for negligence, but the claim against the broker would be weak.
You would file one lawsuit against these three defendants with two separate causes of action (claims); one cause of action is for fraud and the other cause of action is for negligence.
Fraud is the intentional misrepresentaion of a material fact made with knowledge of its falsity and with the intent to induce your reliance upon which you justifiably relied to your detriment. In other words, you justifiably relied on the seller's intentional misrepresentation regarding the septic system and would not have purchased the property had you known the true facts.
Your damages (the amount of compensation you are seeking in your lawsuit) for fraud would be either the benefit of the bargain or your out of pocket loss.
Benefit of the bargain permits a defrauded purchaser to recover the difference between the real and represented value of the property purchased regardless of the fact that your actual loss might have been less.
Out of pocket damages for fraudulent misrepresentation permits recovery of the difference between the price paid and the actual value of the property acquired.
Negligence is the failure to exercise due care (that degree of care that a reasonable home inspector would have exercised under the same or similar circumstances to prevent foreseeable harm). Your damages (the amount of compensation you are seeking in your lawsuit for negligence would be the cost of repairs to the septic system.
The negligence claim against the broker would be whether the broker had a duty of care to know about the ssptic system's condition. This would appear to be a weak caae against the broker.
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