Most people know that when they buy something used, that there is always a risk that what they are buying might not be in perfect working condition. The same – caveat emptor, or buyer beware – is also applicable to real estate. However, Pennsylvania does have some limits on caveat emptor for real property. Sellers are required to make disclosures at the time they sign a purchase agreement. However, a seller cannot disclose a problem that they don’t know exists. On the other hand, some sellers are not beyond hiding problems with the property.
Disclosures in Pennsylvania
A property seller must disclose their knowledge of contracting, architecture and engineering and the date the seller last occupied the property. Additionally, the seller must disclose known problems with:
The roof, basement and crawlspaces;
Dry rot, pests and termites;
Any structural problems;
Plumbing, water and sewage system issues;
Heating and cooling systems;
The electrical system;
Any appliances and other equipment included in the sale;
Drainage, sinkholes and soils; and
Boundaries.
Additionally, the seller must disclose any structural changes to the property, including additions and remodeling, when the plumbing and sewage system were last serviced, if there are hazardous substances on the property, if the property is subject to homeowners and condominium association rules and regulations, if the property has legal issues that affect the title or that would interfere with enjoyment of the property and the condition of stormwater facilities.
Exemptions to Caveat Emptor
If the seller knew about a problem and did not disclose it, or if the seller tried to hide the problem and it is evident that the seller knew of the problem and hid it, the seller may be responsible for the cost of the repairs and could even be charged treble damages in some cases.
Fraud & Misrepresentation
If a buyer files a fraud action against the seller, the buyer has to claim that the seller purposely did not tell the buyer about a problem. If the seller hid a problem by trying to cover it up, such as painting over water leak spots in the ceiling, the buyer might be entitled to recover the costs of the repair. If the problem is bad enough, the court might reverse the sale of the house.
If the buyer files a misrepresentation claim, the buyer has to prove that the seller should have known about the problem. For example, if the seller had a problem with water backing up several years ago, then had the problem repaired, but did not tell the buyer that the problem happened again, the seller could be held responsible for damages since the buyer could argue that the seller should have known that the repair did not work.
The buyer might file a misrepresentation claim if they think that the seller intentionally did not tell him of the problem. If the buyer can prove that the real estate broker knew of the problem and did not disclose it, the broker could be held liable for some of the damages.
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