Home Defects in New York

In New York, you may have the right to sue if you bought a house with defects, especially in cases involving misrepresentation or non-disclosure of defects.

General Rule for Home Defects in New York

Under New York laws, the general rule for home defects is based on the principle of “caveat emptor” or “let the buyer beware.” This means that the buyer is responsible for conducting due diligence and inspecting the property before purchasing.

However, this principle has some limitations, particularly when the seller actively conceals defects or engages in misrepresentation or fraud.

Property Condition Disclosure Act

The Property Condition Disclosure Act (PCDA) in New York requires sellers to provide a Property Condition Disclosure Statement (PCDS) to the buyer before the contract is signed.

The PCDS should disclose any known defects or issues with the property. If a seller fails to provide the PCDS, they may be required to provide a $500 credit to the buyer at closing. However, this act does not provide a direct right to sue based on undisclosed defects.

What Are Some Remedies at Common Law?

At common law, remedies for undisclosed defects or misrepresentation may include:

1. Rescission: Canceling the contract and returning both parties to their pre-contract positions.
2. Damages: Compensation for the costs incurred due to the undisclosed defects.
3. Specific Performance: Requiring the seller to correct the defects at their own expense.

These remedies will depend on the specific facts of the case and the extent of the seller’s misrepresentation or concealment.

Real Estate Broker’s Liability

Real estate brokers play a crucial role in property transactions, acting as intermediaries between buyers and sellers.

Due to this position, brokers have a responsibility to both parties and must adhere to certain standards of conduct.

These standards include the duty of care, which obligates brokers to exercise reasonable care and skill when representing their clients.

Misrepresentation and Non-Disclosure of Defects

A real estate broker can be held liable for misrepresentation or non-disclosure of defects if they had actual knowledge of the defects and failed to disclose them to the buyer.

Misrepresentation occurs when a broker provides false or misleading information about a property, while non-disclosure involves failing to reveal known defects that could impact the buyer’s decision-making process.

In order to establish liability for misrepresentation or non-disclosure, the following elements must typically be proven:

1. Knowledge: The broker had actual knowledge of the defects in question.
2. Duty to disclose: The broker had a duty to disclose the defects to the buyer.
3. Breach of duty: The broker failed to disclose the defects or misrepresented the property’s condition.
4. Reliance: The buyer relied on the broker’s misrepresentation or omission when deciding to purchase the property.
5. Damages: The buyer suffered harm as a result of the misrepresentation or non-disclosure (e.g., repair costs, decrease in property value).

Negligence

In addition to misrepresentation or non-disclosure, a real estate broker may be held liable for negligence if they fail to exercise reasonable care and skill when representing their clients.

Negligence involves the failure to act as a reasonably competent broker would under similar circumstances. In order to establish negligence, the following elements must generally be proven:

1. Duty of care: The broker owes a duty of care to their client (and potentially the other party) to act competently and diligently in their representation.
2. Breach of duty: The broker breached their duty by failing to exercise reasonable care and skill.
3. Causation: The client suffered harm as a direct result of the broker’s breach of duty.
4. Damages: The client incurred actual damages due to the broker’s negligence.

Example 1

A real estate broker represents a seller who discloses that the property has a history of water leaks in the basement. The broker does not disclose this information to potential buyers, and a buyer purchases the property without knowledge of the issue.

After the sale, the buyer discovers the water leaks and incurs significant repair costs. In this case, the broker may be held liable for non-disclosure, as they had actual knowledge of the defects and failed to disclose them to the buyer.

Example 2

A real estate broker represents a buyer and is aware of the buyer’s concerns about potential mold issues. The broker notices signs of mold during a property viewing but does not inform the buyer.

The buyer purchases the property and later discovers the mold problem, which requires costly remediation. In this case, the broker may be held liable for negligence due to their failure to exercise reasonable care and skill in representing the buyer’s interests.

In both examples, the injured party would need to prove that the broker’s actions directly caused their damages and that a reasonably competent broker would have acted differently under similar circumstances.

Can a Home Inspector Be Liable?

A home inspector’s liability for defects can arise when they fail to identify or report certain issues with the property during the inspection. This liability is typically based on the concept of negligence, which means that the inspector failed to exercise the care and skill that a reasonably competent home inspector would use under similar circumstances.

To establish negligence, as mentioned before, the following elements must generally be proven:

1. Duty of care: The home inspector owes a duty of care to the buyer (and potentially the seller) to conduct a thorough and accurate inspection of the property.
2. Breach of duty: The home inspector breached their duty by failing to identify or report a defect that a reasonably competent inspector would have discovered under similar circumstances.
3. Causation: The buyer suffered harm as a direct result of the home inspector’s breach of duty.
4. Damages: The buyer incurred actual damages (e.g., repair costs, diminution in property value) due to the inspector’s negligence.

The extent of a home inspector’s liability will depend on the terms of the inspection contract, the applicable professional standards, and the specific circumstances of the case. For example, many home inspection contracts contain limitations on liability, such as caps on damages or clauses that exclude liability for certain types of defects.

Here are two hypothetical examples to illustrate the concept of home inspector liability.

Example 1

A home inspector conducts an inspection of a property and provides a written report to the buyer.

The report fails to mention a significant termite infestation in the basement, which a reasonably competent inspector would have discovered. The buyer purchases the property and later discovers the termite damage, which requires costly repairs.

In this case, the home inspector may be liable for negligence due to their failure to identify and report the termite infestation, and the buyer may be entitled to recover damages for the repair costs.

Example 2

A home inspector inspects a property and notes in the report that the roof appears to be in good condition.

However, shortly after the buyer moves in, the roof begins to leak, causing water damage to the interior of the home.

Upon further investigation, it is revealed that the roof had several hidden defects that a reasonably competent inspector would have identified.

In this case, the home inspector may be liable for negligence due to their failure to discover and report the hidden roof defects, and the buyer may be entitled to recover damages for the costs of repairing the roof and addressing the water damage.

In both examples, the buyer would need to prove that the home inspector’s negligence directly caused their damages and that a reasonably competent inspector would have discovered the defects at issue. The specific remedies available to the buyer, as well as the extent of the home inspector’s liability, will depend on the details of the case and the relevant legal and contractual provisions.

Do I Need a New York Real Estate Lawyer?

If you believe you have a claim for undisclosed defects or misrepresentation in a New York real estate transaction, consult with an experienced real estate lawyer in New York. An attorney can help you understand your rights, evaluate your case, and pursue the appropriate remedies.

Reach out to a New York real estate lawyer today to discuss your options and protect your interests.