How Long Are You Liable After Selling A House?

How Long Are You Liable After Selling A House

As a seller, state laws require you to disclose crucial information to potential buyers before they make an offer. These laws typically require you to disclose known defects, past repairs, water damage, and more.

Despite these disclosures, buyers can sometimes run into unknown issues. Are you liable for these defects?

If yes, how long are you liable after selling a house?

How Long Are You Liable After Selling a House?

So how long are you liable after selling a house? A statute of limitations is a deadline that limits the amount of time a victim has to take legal action.

For defects that arise after the sale of a property, the statute of limitations varies from two to ten years, depending on the state where the sale takes place.

For instance, Connecticut law establishes a statute of limitations of three years for fraudulent misrepresentation or nondisclosure. If you breached a written contract, the statute of limitations is six years.

California has a four-year statute of limitations for breaching a contract. If the sale happened in Minnesota, the buyer has two years to take legal action.

The statute of limitations varies from one state to another, but you should keep in mind that these statutes only apply if you breached a contract or failed to disclose something you were aware of.

What Are You Liable for When Selling a Home?

When selling a home, you’ll have to provide a document called a seller’s disclosure statement. This document should list the latent conditions you’re aware of, along with repairs and other issues.

The definition of a latent condition varies between states and can impact what you’re responsible for disclosing. For instance, Maryland law defines a latent condition as a flaw that poses a threat to health or safety

In Texas, state law says you must give a written description of your knowledge of the state of the property, with a focus on material defects.

Note that the language used in Texas state law potentially makes you liable for diverse defects, including issues that don’t affect health or safety.

Your sales contract should include language that explains you disclosed everything you were aware of and the steps you took to uncover possible flaws with the property before the sale.

If a buyer runs into an issue, they have the possibility of filing a lawsuit in a small claims court. A judge will then determine if you failed to disclose something you knew about or if you genuinely didn’t know about the issue.

A judge can also hold you liable if you should have reasonably known about the defect.

The Importance of Scheduling a Home Inspection

Even though no laws require a home inspection, it’s a common practice to schedule one before the sale is final. A buyer will typically make an offer and schedule a home inspection shortly after the seller accepts their offer.

A home inspection typically costs $300 to $500. It ensures both parties are aware of the property’s condition and know about issues that will require repairs.

In the event of a lawsuit, the home inspection will establish a baseline for what you and the buyer were aware of at the moment of the sale. It can help prove that the issue the buyer encountered didn’t appear until after the sale.

The buyer will usually schedule a home inspection after you accept their offer. At this stage, the offer is still contingent on some conditions.

The seller can withdraw their offer if the inspector finds some significant issues with the property. You can also negotiate a lower selling price or offer to take care of some repairs before the sale.

There are no laws that require a home inspection, and buyers have the option to waive this step and purchase the property as is. However, it’s always a good idea to schedule a home inspection so both parties know about the property’s condition.

You can also have an appraiser look at the property before putting it on the market. Their job is to help you set a fair asking price.

They will not thoroughly inspect the property, but they have enough experience to assess the overall condition and spot some potential issues.

Who Is Liable?

As a seller, you’re liable for disclosing what you know about the property. Your real estate agent can help you with this process. While you can sell your home without an agent, hiring a professional ensures you meet state requirements regarding disclosures.

However, there are situations where you might share liability with another party. For example, if your agent hides something you told them or misrepresents a defect, they can be liable. 

Keep track of communications with your agent so you can record what you disclosed to them. In some cases, the home inspection company can share the blame if they missed a major defect or failed to report it. 

The new owner can also share liability. From a legal point of view, they have a duty to mitigate the problems they run into.

Even though another party might have misrepresented the property’s condition, the new owner must take reasonable steps to address the issue and limit the harm it causes.

For instance, a seller is liable for a known pest problem they failed to disclose. However, if the new owner does nothing and lets the issue get worse, they will share some of the liability.

You should also know that homeowner’s insurance companies will cover property defects in most cases. Some buyers will also have a home warranty they can rely on for coverage. Suing the previous owner isn’t the only recourse they have to fix the issue.

Wrapping Up

So how long are you liable after selling a house? Statutes of limitations mean you are typically liable for a property between two and ten years after the sale. 

When selling a home, you can limit your liability by disclosing everything you know and keeping records of what you disclosed. It’s also best to schedule a home inspection, even if it means offering to pay for the process to entice the buyer not to skip this crucial step.

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