Once escrow closes, the buyer typically won’t receive money back from the seller to compensate for any issues they find. In some states, the buyer can cancel the transaction before you close on the home if they discover severe defects.
If you're looking to file a lawsuit against the seller for problems you discover in your new home, keep in mind that there are statutes of limitations, which are typically two to 10 years after you close on the home.
When you finally close on the perfect home — especially after a long search — it truly feels like a dream come true. But what do you do when nightmarish problems start to arise in the home? Maybe during the first rainstorm, you notice a leak in the roof. Perhaps it becomes clear after you spend some more time in the home that all of the windows stick or the water heater doesn’t work as it should. It is disappointing and stressful when you come across problems with a house after you purchase it and move in — not to mention expensive.
So who’s responsible for the necessary repairs if you find problems with a house after buying it? Let’s investigate what your rights are and who is responsible.
The good thing about when you find a problem with a home before you close is that you can choose how you want to proceed. Whether or not a seller has to legally disclose material defects in a property varies by state, but most states do require sellers to list material defects and explain them to the buyer. If they “forget” or refuse to do so, this can lead to the sale becoming invalidated, and if discovered before the close of a sale, the buyer may be able to cancel the transaction.
What’s a material defect? It’s anything that:
Natural wear and tear doesn’t count as a material defect. If a system or component is at the end of its anticipated useful life, it is not considered to be a material defect. If an old furnace that has surpassed it’s life expectancy breaks down, that’s pretty par for the course.
The inspector that the buyer chooses will typically only focus their inspection on these material defects, not small cosmetic ones like a scratched window or worn carpet.
If the buyer hasn’t closed on the home yet, they can try to negotiate that the seller pays for the repairs. They can also agree to handle the repairs on their own, or back out of the sale. This is why it’s so important to not skip a home inspection, even if you agree to buy the home as-is. You may find a repair is much more time-consuming or expensive than you’d like to take on.
If the sale has already gone through, is the seller responsible for any repairs after closing? This depends on the laws in the state you live in.
Most often, once escrow closes, the buyer won’t have many options to recover money to compensate for discovered defects. Escrow occurs when you deposit funds with the promise you’ll buy the home, you then transmit the funds from the escrow account to the seller. After that transfer, you typically won’t receive any money back from the seller to compensate for any defects. In some states, the buyer can cancel the transaction before you close on the home if they discover severe defects.
If you find a big problem in your home that wasn’t disclosed before you bought it, you probably won’t be happy that you’ve missed your chance to make the seller reimburse you for needed repairs or replacements. Hope is not lost. If you bought a house with problems not disclosed, you may be able to take legal recourse against the seller, but only under certain circumstances.
So, can a buyer sue a seller after closing? In some cases, yes.
All states have their own unique disclosure laws, so it’s important to spend some time brushing up on what those laws are in your state. The most important thing to understand is if your state employs a “caveat emptor” or “buyer beware” law.
What those terms mean is that it is the buyer’s responsibility to find issues with the home before they purchase it. This is where an inspection comes in handy. This doesn’t mean the seller is off the hook though: If they’ve lied or deliberately concealed significant problems within the home, they may be at fault for the issues discovered post-sale.
Before you take any legal action against the seller, you need to prove whether you (the buyer), the seller, or the inspector purposefully withheld information about the problem or tried to hide it. For example, if the seller painted their ceilings under the guise of cosmetic updates to the home, but they really did so to hide water stains caused by a leaky roof on rainy days, that can get the seller into trouble. A homeowner may also use a fresh coat of paint to try to cover up cracks in a wall that are a sign of structural issues. Cover ups like these make a lawsuit possible.
These types of lawsuits are usually filed in small claims court and are relatively inexpensive since they don’t require an attorney to pursue. You’ll still likely want to contact a real estate attorney to understand what your options are, especially if you want to file in a state court instead if you seek more money than permitted in a small claims court.
Because it takes time to get your legal ducks in a row — time you may not have if a repair is necessary right away — make sure to save any receipts for any supplies or repairs required to fix the problem. If you have a leak in your basement, you can’t wait to sue the seller to repair it, but you will need to prove your monetary loss if you do want to seek legal recourse.
No home will remain in perfect condition forever, so it’s fair to assume you won’t have an unlimited amount of time to file a lawsuit against the seller for problems that arise in the home. There are statutes of limitations in place to file a lawsuit against the seller, which are typically two to 10 years after you close on the home.
While it’s easy to blame the seller when you discover issues after a home sale, they may have been in the dark as well. At times, the responsibility for undisclosed defects may fall on either party's real estate broker or real estate agent, or the home inspector. While it may seem like an inspection will protect you from unpleasant surprises after you move in, the inspector can be liable if they did not find and report certain issues that the seller may not have been aware of. In that case, the inspector is usually only required to pay back the cost of the home inspection report, not to pay to fix the issue.
Before you accuse your inspector of making a mistake, take some time to read your home inspection report. In some cases, the issue you’ve discovered may have been in an area they weren’t required to include in their report.
If you chose to waive the inspection before you close on the home, then you may not have anyone to blame for the issues. Often, when you waive a home inspection, you agree to buy the home as-is. Unfortunately, this means that you’ll be the one who needs to fix and pay for any problems that arise in the home.
An as-is clause in a sales contract isn’t a get out of jail free card for sellers if they know there are defects in the home and they choose to hide them. The seller may is liable for misrepresentation despite an as-is clause if they do this, as the seller still has a duty to disclose known defects. On the other hand, the seller won’t have to pay for any defects found before or after you close on the home if they weren’t aware of them.
If the buyer chooses to undergo an inspection and finds defects they don’t want to deal with, they have the right to back out of the sale. For example, if a buyer discovers cracks in the home's foundation before they close and still chooses to buy the home, the seller won’t have to repair those cracks after they sell their home.
It’s upsetting to discover your recently purchased home has a costly and time-consuming defect. It’s important not to wait to ask for help. If you come across a home defect that you think may be the responsibility of the seller or another party involved in the real estate transaction, seek out the guidance of a real estate attorney as soon as possible. They can help you learn more about what your rights are in your state and what your next steps may be.
Orchard guarantees your home will sell, so you can buy your next one worry-free.
We provide peace of mind that your home will sell, plus list your home on the market to maximize your earnings.
Use our home sale calculator to estimate your net proceeds.
Our Home Advisors are experienced local agents who know how to sell for top dollar and help win your dream home.
All Orchard Home Advisors are experienced agents who know your local market inside and out. Request a consult today.
Did you know cash offers are 4x more likely to be chosen by a seller? Let us help you make one on your next home.
Orchard’s home value estimates are 30% more accurate.
Orchard Home Loans shops the market to find your best rates.
A cash offer is 4x more likely to be chosen by a seller. Get qualified today.
Make a cash offer now, and Orchard will sell your old home after you move.
Tell us your must-haves to see personalized home recommendations that meet your criteria.
With Orchard, secure your dream home before you list. Avoid home showings, rentals, and double moves.Learn More