Contract Law: Misprepresentation to the Consumer
When a home seller misrepresents the condition of their home, it is typically not something that can be easily identified by a buyer. Most states have adopted rules that require Realtors and home sellers to provide specific disclosures to buyers. However, the false advertising by a home seller can have a devastating financial impact on buyers. When a buyer signs a purchase and sale agreement, they typically place a good faith deposit to secure the home. In addition, there are hours spent obtaining documents and securing financing. However, what is not always clear is what actually constitutes misrepresentation?
Known defects - home sellers are required by law to disclose known defects. When drawing up a purchase and sale agreement, buyers are required to disclose damaged foundations, out of code electrical wiring, defective or out of code plumbing, etc.;
Easements - sellers cannot withhold known information regarding potential easements on property. Known disputes must be disclosed when the property is listed for sale;
Infestations - sellers are required to disclose information regarding pest infestations;
Lead paint - federal law requires that sellers disclose lead paint hazards that may be present in the home. Hazards including radon must also be disclosed in some states;
Structural defects - sellers who are aware of structural defects that may impact the stability of a property are required to disclose these defects per consumer protection laws.
It is important to note that advertising carries specific rules. For example, a person who is selling a home could not advertise they were selling a 4 bedroom home with 2 baths when they are actually selling a 3 bedroom home with 1 bath. This type of false advertising is uncommon and not the type that will generally create issues for the buyer as it is evident.