Did the seller fail to disclose a defect?

Residential sellers of real estate are required to disclose any material defects concerning the home they sell to a buyer. What does material defect mean? It means any defect that would affect the value of the home or influence a reasonable buyer’s decision on whether or not to purchase the home. An agent advising a seller on what to disclose should advise: if there is the slightest chance that something could be an issue, disclose it. California Civil Code § 1102; Mandatory Transfer Disclosure Statement (“TDS”). If you discovered water damage, foundation problems, unpermitted work, or any other defect the seller knew about and didn’t disclose, you may be entitled to recover the cost of repairs and other damages.

Did your real estate agent fail to protect you?

Real estate agents are required to conduct a visual inspection of the residential property and provide it in writing to the parties in a standardized form labeled the Agent Visual Inspection Report (“AVID”). California Civil Code §2079. Agents who skip this inspection, paper over problems, or push a sale through to earn a commission can be held liable for the harm they cause.

Is someone wrongfully holding your earnest money deposit?

Earnest Money Deposit (EMD) law and contract terms require a buyer or seller to release the EMD funds to the other party when they have breached the Real Estate Purchase Agreement (RPA). Holding on to the EMD in bad faith exposes the party in bad faith to damages, attorney fees, and cost of litigating or arbitration. California Civil Code § 1057.3.

Legal Basis

These residential claims are grounded in the following California authorities:

• Civil Code § 1102 et seq. — requires residential sellers to complete and deliver a Transfer Disclosure Statement (TDS) disclosing known material defects.
• Civil Code § 2079 — imposes a duty on real estate brokers to conduct a reasonably competent visual inspection and disclose material facts affecting value or desirability (AVID).
• Civil Code § 1057.3 — requires prompt release of an earnest money deposit once a party is entitled to it, with damages for bad-faith refusal.
• Civil Code § 3343 — sets the measure of damages available to a defrauded buyer of real property, including out-of-pocket loss and consequential damages.
• Lingsch v. Savage (1963) 213 Cal.App.2d 729 — holds that a seller or broker who knows of facts materially affecting the value or desirability of the property must disclose them, independent of statute.

For related matters, see our Commercial Real Estate Law, Earnest Money Disputes, and Real Estate Law FAQ pages. For more on this topic, read Seller Didn’t Disclose a Defect? What California Home Buyers Can Do, 5 Signs Your Home Seller Lied on the Disclosure Form, or How Much Is My Nondisclosure Case Worth? on our blog.

On the disclosure forms themselves and the defects that most often go undisclosed, see Understanding California’s TDS and SPQ: What Sellers Must Tell You, Water Intrusion, Mold, and Foundation Issues, and Unpermitted Additions and Conversions: What Buyers Need to Know.

Jimmy has successfully helped buyers sue sellers and real estate agents for non-disclosure and misconduct, and has helped first-time buyers purchase their first home with confidence.

What should you do next?

These claims have deadlines, and evidence disappears fast. If you believe you were cheated in a home purchase or sale in San Jose, Santa Clara County, or anywhere in the Bay Area, email jimmy@lawjn.com before you sign anything or accept any settlement — a few sentences about what happened is enough to start.

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