Can You Sue If a Home Seller Lies or Conceals a Defect in Pennsylvania?

Hopefully, after closing on your new Pennsylvania home, you'll find everything in good working order. Unfortunately, that's not every home buyer's experience. You might notice issues like water that has accumulated at the bottom of the basement stairs, foundation cracks that were hidden behind boxes during the open house, and so on. Do you have any recourse against the seller or the seller's real estate broker? That's what this article will discuss.

When Pennsylvania's Statutes Allow Buyers to Sue Sellers for Defects

The old common law rule in Pennsylvania was "caveat emptor," or "buyer beware" for any purchases of real property—in other words, if the back step was broken, or the ceiling in the living room caves in right after closing, the buyer was expected to take care of the cost of repair without complaint. However, the Pennsylvania Legislature placed limits on this rule, and required sellers to give buyers written notice of material defects with the property, as described in Selling a Pennsylvania Home: What Are My Disclosure Obligations?. (Also see the Pennsylvania Real Estate Disclosure Law or "RESDL" at 68 Pa.C.S. §§ 7301-7314.)

Pennsylvania's statute does not make seller's liable for undisclosed defects in cases where the seller actually knew nothing about them. The statute extends this protection to sellers who reasonably believed a problem had been corrected. So, if the sellers in the example above hadn't known that their basement was leak-prone—hard to imagine, but perhaps possible if the sellers spent winters in Florida and the water dried up by spring—they wouldn't have been required to disclose the problem during the sale transaction.

A seller can, however, be held responsible for actively hiding any problems in the house. Thus, a seller who knows that the toilet in the upstairs bath is leaking should mark this on the seller's disclosure form (as opposed to surrounding the toilet with a fluffy new rug). Similarly, if the seller is well aware that there is an open well pit in the far corner of the back yard, the seller needs to tell the buyer about it rather than cover it with a wooden plank and flowerpots—or potentially face a lawsuit later.

What Pennsylvania Case Law Adds to the Seller's Obligations

Home buyers in Pennsylvania routinely make property defects claims against sellers on two grounds that aren't covered in the statute:

• fraud, and
• negligent misrepresentation.

In a fraud action, the buyer must claim that the seller intentionally failed to tell the buyer about a problem. This failure can include taking active steps to hide the problem, such as installing new carpet in a musty, leaky basement, or simply painting a ceiling bright white to cover the evidence of water damage. The courts have allowed buyers, when they can show that this happened, to receive the costs of the repair from the sellers—and in some cases even reverse the sale of the house.

In a negligent misrepresentation action, the buyer needs to show that the seller should have known the defect existed or had not been repaired. For example, if the seller experienced a water backup years ago and had it repaired, but failed to disclose that the problem had happened again, the buyer could potentially argue that the seller should have known the repair was not successful. The buyer could also accuse the seller of intentionally failing to tell the buyer about the problem.

Is the Selling Broker Also Legally Responsible for the Undisclosed Defect?

The home buyer might also have a remedy against the selling broker if the broker knew or should have known about the concealed defect. The broker is responsible for sharing only information within their actual knowledge, so you would need to have evidence that the broker knew about it to pursue a claim. (See Will Our Real Estate Agent Tell Prospective Buyers About Home Defects? for details.)

However, in one case where the seller started to tell the selling broker something, and she responded "the less I know the better," the broker was held partly responsible for the misrepresentation. (See Schwartz v. Rockey et al, 932 A.2d 885 (Pa. 2007).)

Could the Home Inspector Be Held Responsible for Not Discovering the Defect?

Home inspectors are not legally responsible for discovering latent or concealed defects. However, if a home inspector failed to find an obvious defect within the realm of their professional knowledge, the inspector could be held responsible for the resulting damages. For details, see Can I Sue My Home Inspector for Defects Left Out of the Report?.

Consumer Protection Laws Might Also Apply

Pennsylvania's Uniform Trade Practices and Consumer Protection Law protects people who purchase goods or property for personal or household use, including homes. If the person making the sale uses unlawful means to complete the sale, the buyer has a remedy under the UTPCPL. The Act itself describes the monetary remedy as the actual amount of damages and up to three times the amount of the damages (also known as treble damages).

How Much Money Can the Aggrieved Home Buyer Ask For?

If a Pennsylvania homebuyer can prove an intentional or fraudulent misrepresentation on the part of the seller or the selling broker, the buyer can ask for anything from the actual amount of the damage all the way up to three times the amount.

What Should the Home Buyer Do Upon Finding a Defect?

The first thing to do when something goes wrong with your house is to document it—that is, start gathering evidence in case you have to present it in court. Take a picture of the damage and write down the date and a description of the problem. You should also immediately take reasonable self-help steps, such as turning off the water if a pipe breaks or mopping up water if a sump pump fails.

After the immediate issue has been addressed, you should notify the buyer's broker. If you did not utilize a broker, contact the seller's broker. If no brokers were involved, you should notify the seller about the damage and ask whether the seller knew of the problem.

Depending on the seller's response, you will likely have an idea of whether or not the seller intentionally disclosed a defect. However, you probably will need to do some investigations on your own as to what the seller knew of and when. For example, you might hire an inspector to examine the problem and see when it likely arose and whether it shows evidence of previous repairs. You can also ask neighbors about whether, for example, they saw frequent plumbers' trucks at the property or were told about problems by the sellers.

Act Quickly: Two-Year Limit on Nondisclosure Lawsuits by Pennsylvania Home Buyers

According to the applicable "statute of limitations," a home buyer alleging a violation of the Real Estate Disclosure law must bring an action for resulting damages within two years after the closing date or be barred from relief.

If you believe your home seller intentionally failed to disclose something, and you suffered damages as a result, contact legal counsel right away regarding the next steps.