Many people are nervous about putting their house on the market because of the notion that California is a very litigious state. They are right, California is a very litigious state: We have four lawyers for each 100 people in California so they are definitely looking for work.
The length of the sales contracts we use speaks to the number of lawsuits on the specific issues reflected in those contracts. Everything from Megan's Law to mold to asbestos to disclosures of death on the property -- it's a byzantine mixture of pages and pages of questions and forms galore.
Even upon the exhaustive filling out of the forms and answering questions in a very thorough manner, you can still get sued. Unfortunately, nothing will make you completely bullet proof from an angry buyer. But there is an art to filling out the forms in such a manner that you will be better protected, and a good agent will guide you through the process.
Efram and his wife closed on their Atherton home in August. His brother (Noah) from Fresno represented them in the sale. On Dec. 18, Noah received a call from the agent who represented the buyer regarding a leak in the roof that "had obviously been there for years." He went on to say that his buyers expected the sellers to pay for the repairs because the leak now had done extensive damage to the tune of $21,000. Noah was pretty sure his brother had never mentioned a leak but called him to double check. Efram then recounted how he had mentioned a leak to Noah that had occurred about a year and a half before.
The leak had been fixed so Noah told Efram not to worry about it as it had been fixed and he didn't need to disclose it. After much back and forth between the buyer and seller, Efram refused to pay or assist in the repair in any way. The buyers then replaced the entire roof and sued Efram for the cost of the entire roof -- $34,000.
The first rule of disclosure is, if you have to ask if you should disclosure something, you just answered your own question. Efram should have made mention of this repair and, if possible, made note of what company completed the repair. With this simple bit of information, the buyer would have been put on notice with regards to the roof and had the opportunity to have it inspected or not. Another protection that the seller could have provided would have been to place a Home Warranty on the property that can include the roof. This may not have provided 100 percent protection but would have been another measure to help the seller.
Additionally, there are numerous places in the state-mandated disclosures that should have tweaked the seller's memory with regard to his previous roof repair if he had carefully and thoroughly read the questions. The forms are meant to protect both parties if used correctly.
When answering questions about the house, the large and expensive systems in the house should be given special consideration -- the roof, the heating system, plumbing, electrical and even sprinkler systems. The money a seller pays to have upfront inspections is well worth the investment. The time spent in fully and completely filling out any questions about the property is also well worth the time invested. Both should be looked at as insurance policies for the sale of the house.
Unfortunately, Efram ended up settling with the buyer for $28,000. Noah ended up feeling really badly.