It usually starts with a remodel. The old flooring comes up and there is an inch or more of leveling compound poured over the slab on one side of the house. Or a door that always stuck turns out to have been planed down, and the crack behind the new paint runs from the corner of a window to the ceiling. A foundation contractor measures the floors, and the bid to stabilize them runs to five or six figures before anyone has priced the framing, drywall and finish work that come after.
The question that decides what you can do about it is the same one in every California nondisclosure case: did the seller know? This page covers what the seller had to tell you about the foundation, how foundation problems get covered up before a sale, the evidence that proves knowledge, and the deadlines that start running once you find it.
What the seller had to tell you about the foundation
For most California home sales, the seller has to complete the Real Estate Transfer Disclosure Statement (TDS) under Civil Code section 1102 et seq. The form asks about the foundation directly and in several places. The seller has to say whether they are aware of significant defects or malfunctions in the foundation, the slab, the floors, the interior and exterior walls, and “other structural components.” Separately, the form asks whether the seller is aware of:
- “Any settling from any cause, or slippage, sliding, or other soil problems”
- Fill (compacted or otherwise) on the property
- Flooding, drainage or grading problems
- Major damage to the property from fire, earthquake, floods, or landslides
- Room additions, structural modifications, or other alterations or repairs made without the necessary permits
The seller signs a certification that the answers are true and correct to the best of the seller’s knowledge. The Seller Property Questionnaire (SPQ) used with most C.A.R. purchase agreements goes further, with its own sections on documents and prior reports, repairs and alterations, and structural components. A seller who knew about settling and checked “No” on both forms has made a false statement in writing on the very question at issue.
The duty does not depend on the forms alone. Under Lingsch v. Savage (1963) 213 Cal.App.2d 729, sellers and their agents must disclose known facts materially affecting the value or desirability of the property that the buyer could not reasonably discover, and an “as-is” clause does not relieve a seller of liability for fraud. Foundation movement is about as material as a fact about a house gets.
How foundation problems get hidden before a sale
Foundation settlement rarely appears overnight, so a seller who has lived in the house for years has often seen the signs. What matters is what was done about them before the listing photos were taken. The patterns that come up again and again:
- Leveling compound under new flooring. A thick pour of self-leveling compound over one part of a slab, with new flooring installed on top, can make a sloping floor read as level during showings and the home inspection. How thick the layer is, and where it is thickest, can say a lot about what the installer was compensating for.
- Fresh patches on stucco and drywall cracks, especially diagonal cracks running from the corners of doors and windows, repainted shortly before listing.
- Doors and windows adjusted to close: planed edges, re-hung hinges, new strike plates.
- Trim, baseboards or cabinets shimmed or recut to hide gaps that open as a floor drops.
- A report from a cancelled escrow. If an earlier buyer backed out after an inspection, that buyer’s inspection report, structural engineer’s letter or request for repairs may have put the seller on notice.
- Bids that were never acted on: a foundation repair estimate the seller obtained and decided not to pay for.
Concealment is not just an aggravating fact. Active steps to hide a known condition support a fraud claim on their own, and they are often the strongest evidence that the seller knew.
Evidence that proves the seller knew
Sellers almost never admit knowledge. In foundation cases, the evidence that carries the claim usually comes from the paper and the physical record the house left behind:
- Prior listing photographs. The MLS record from the seller’s own purchase, or from an earlier attempt to sell, may show the floors, walls and cracks before the cosmetic work.
- Permit records from the city or county building department for foundation work, flooring or structural repairs, or the absence of permits for work that obviously happened.
- Flooring and contractor invoices. The installer who poured the leveling compound knows why it was needed and when.
- Earlier inspection reports and engineering letters, including those from a cancelled escrow.
- Insurance claims for earthquake, water or soil-related damage.
- Neighbors, particularly if nearby homes on the same soil have had piers or underpinning installed.
- The agents’ files: notes, emails and texts that become discoverable in litigation.
Before anything is removed, photograph and measure it. The leveling layer, the patched cracks and the old flooring are evidence, and once a crew hauls them away, that part of the case goes with them.
Get an engineer, not just a repair bid
A foundation repair company’s estimate tells you what that company proposes to sell you. It is useful for pricing, but it is not an independent opinion on cause. A licensed civil or structural engineer, and in some cases a geotechnical engineer, can document what is actually happening: whether the movement is ongoing or historic, what is causing it, and, crucially for your claim, whether the condition and any cover-up existed before you bought the house. A floor-level survey that maps the elevations across the slab is often the single most persuasive exhibit in these cases.
Read your own pre-purchase inspection report again as well. If your inspector noted settling and recommended a structural evaluation that never happened, the seller will point to it. If the report found nothing because new flooring and fresh paint hid the signs, that helps show the problem was concealed rather than overlooked.
What you can recover
Against a seller, California measures fraud damages in a property purchase under Civil Code section 3343(a): the difference between what you paid and what the property was actually worth at the time of purchase, plus additional damages arising from the transaction, such as repair costs you actually incurred. That is not automatically the full amount of a repair bid; the value side is usually proven with an appraiser who can account for the foundation condition. Claims against your own agent are measured differently, under Civil Code sections 3333 and 1709, because the agent owes you a fiduciary duty (how nondisclosure damages are calculated). Where the concealment was deliberate, punitive damages may be available under Civil Code section 3294.
If you bought on a C.A.R. purchase agreement, its mediation paragraph matters before anything is filed: a party who refuses or skips mediation can lose the right to recover attorney’s fees even after winning. See why mediation comes before a lawsuit.
The deadlines
- Fraud or concealment against the seller: three years under Code of Civil Procedure section 338(d), running from when you discovered the facts, or reasonably should have, rather than automatically from closing.
- Breach of the written purchase agreement: four years under Code of Civil Procedure section 337.
- A claim against a broker or salesperson for breach of the visual-inspection duty in Civil Code section 2079: two years from the date of possession, with no discovery rule (Civil Code section 2079.4). A crack or sloping floor that a reasonably competent visual inspection should have caught falls in this category, and it is the deadline that expires first.
Foundation problems tend to surface during the first remodel, which can fall well into the second or third year of ownership. If that is where you are, the agent deadline may be close or already gone even though the claim against the seller is still alive. Seller didn’t disclose a defect? walks through how the three clocks interact.
What to do this week
- Stop any demolition that would remove evidence, and photograph and measure everything already exposed.
- Keep samples of removed material and every bid, invoice and email.
- Hire an independent engineer for a written opinion and a floor-level survey.
- Pull your TDS, SPQ, purchase agreement and inspection report, and mark every answer about the foundation, floors, walls, settling and soil.
- Write down the date you took possession and the date you first saw the problem. Those two dates set your deadlines.
- Do not contact the seller or the agents until you have decided how to approach them. What you say first can shape the case.
How Jimmy can help
Jimmy Nguyen is a California real estate attorney and licensed real estate broker based in San Jose. He represents home buyers in seller nondisclosure and agent misconduct cases throughout the Bay Area and elsewhere in California, and he reads the disclosure packet, the listing history and the public records before he gives an opinion. Foundation cases are part of his California nondisclosure practice; for other common hidden conditions, see water intrusion, mold and foundation defects, and for the first steps after any discovery, the first 72 hours after finding an undisclosed defect.
The fastest way to get a useful answer is to write out what happened — when you bought, what you found, and what the disclosures said. Email jimmy@lawjn.com or use the form below for a free case evaluation.