Seller failed to disclose issue with house. Can we sue them?

Recently on our legal forum a user asked, “I live in the State of Texas. We bought a home recently. We were in the house just a few weeks when the sewer had issues and we had to call a plumber. The plumber said that the damage to the sewage system has existed for quite some time. The sellers did not disclose this to us prior to the sale. What legal recourse do we have against them?”

What is a Seller’s Disclosure report?

For many individuals, the purchase of a home is a substantial investment. Although the seller may want to sell the property as is, as the buyer, you have a right to know about all of the known adverse conditions, defects, and needed repairs.

To that end, the laws in Texas do offer some protection to the homebuyer. Prior to all home sales in Texas, the buyer of a property should request a Seller’s Disclosure report which details any physical problems or defects with the home. All known defects must be reported under Texas state law (i.e. Seller’s Disclosure of Property Condition for use in residential real estate transactions is attached to the contract).

After the home buyer receives the Seller’s Disclosure Report they may wish to renegotiate the purchase of the home. In some cases, however, the seller may have already lowered the price of the house below market value due to the known defects. Common issues which may be listed include: 

• Defects and malfunctions to critical systems
• Termite treatments
• Previous fires
• Previous floods
• Unpermitted additions
• Unpaid HOA dues
• Lawsuits
• Any condition which “materially affects the health and safety of an individual"

Note: there are some instances when the seller does not have to provide the Seller’s Disclosures report. For more information review Texas Property Code section 5.008(e)).

How much will the Seller’s Disclosure protect you?

Now, you mentioned that the home you purchased had pre-existing plumbing issues. From your question, you seem to imply that the seller did or should have known about the plumbing issue. First, it’s important to note that the seller is not liable for not disclosing what he did not know or even what he should have known. Texas law requires that the seller had actual knowledge of the defect.

But what if the seller did know about the plumbing defect and failed to report it to you? Failing to give notice about a defect, assuming the seller knew about it, could be considered a violation of Deceptive Trade Practices Act and/or the Statutory Fraud Act.

What legal recourse do I have against the seller for nondisclosure?

Now, assuming the seller knew about the defect and failed to report it, you may have legal recourse against them. Whether it’s negligent misrepresentation (failing to report a flood had occurred) or intentional fraud (intentionally covering up evidence of foundation issues), you may be able to receive compensation.

First, you can send a demand letter which details the costs of the repairs. If that does not work, and you have sufficient evidence, you can sue the seller for nondisclosure of the defect either by filing a suit under the Texas Deceptive Trade - Consumer Protection Act or the Statutory Fraud Act or simply filing a fraud lawsuit.

Talk to a lawyer if you have questions about filing a lawsuit, the amount of compensation you can expect to recover (i.e. monetary damages, punitive damages, or possible cancellation of the contract), and what statute to pursue your claim under.

Bottom line:

There are some housing sales which do not require a seller’s disclosure. There are also sales which may allow the seller to sell a property “as is.” Most home sales, however, require the seller to disclose all known defects of the property. If a seller fails in their duty to report, the homebuyer may have the legal right to sue them for monetary compensation.