Plumbing Problems after Home Purchase
You fell in love with the white picket fence and the nostalgia convinced you to buy an older home. Within a few weeks of moving in, you discover that the plumbing is in poor condition. Already strapped by your recent closing costs and down payment, you call the realtor and hopefully inquire, “Is the seller liable for the bad plumbing?” Generally, when you purchase a home, you are on the hook for all future repairs. However, exceptions do apply. To determine the liability, if any, of the seller for your plumbing problem, courts will look to the purchase agreement for the home, the nature of the problem, whether you had a home inspection, and any specific misrepresentations by the seller.
The first factor a court will review is the purchase agreement between you and the seller. What were the terms of the contract by which you purchased the house? If the contract said that the house is purchased "as is" or words to that effect, the seller will not generally be liable for the plumbing's poor condition. Some contracts contain provisions that require a seller to complete certain repairs before the home is sold. If your contract contains a provision for fixing the plumbing, but the seller failed to do so, you would have a right to have the contract enforced.
Nature of the Problem
If the purchase contract was silent as to the condition of the home or the plumbing, the courts will then review the nature of the problem. The inquiry is whether the condition of the plumbing is something that you, the buyer, could have reasonably discovered. For example, if prior to the purchase, you walked through the house with the seller and noticed that pipes were leaking or perhaps you turned on the water and discovered various problems with the plumbing. You could have “reasonably discovered” the plumbing problem prior to the purchase. You would not be able to subsequently claim that the seller is liable for the condition of the plumbing when you knew about the condition of the plumbing or could have reasonably discovered its condition.
Courts will also review whether you should have requested an inspection of the home. If it is an old house, it was probably reasonable for you to expect that there would be problems with the plumbing. Was the house inspected by a building inspector prior to you, the buyer, purchasing the house? If so, was the house in compliance with the applicable building code requirements? This issue would also have an impact on your knowledge of the condition of the house. If you were aware of the age of the home, but declined to have the home inspected because you wanted to save a little money, you are probably going to be stuck with the repair costs. If you could not have reasonably discovered the condition of the plumbing prior to purchasing the house, then you may be able to hold the seller liable.
Misrepresentations by Seller
A final factor the courts will consider is the conduct of the seller. Did the seller make any misrepresentations to you about the condition of the plumbing? If the seller misrepresented the condition of the plumbing to you, the seller would be liable for misrepresentation. If the misrepresentation is intentional, in that the seller failed to disclose the condition of the plumbing when the seller had a duty to do so, the seller may also be liable for fraud. Fraud is misrepresentation of a material fact made with knowledge of its falsity and with the intent to induce reliance on that fact. Courts will consider the relative bargaining strengths of the parties. If you have an unsophisticated buyer and a highly knowledgeable seller, this may strengthen the buyer's argument that the seller had a duty to disclose. Whether or not the bargaining strengths of the parties are an issue, if the seller had a duty to disclose and failed to disclose the condition of the plumbing or other conditions pertaining to the house, the seller may be liable for fraud.
Damages for fraud
If you file a lawsuit for fraud against the seller, your damages (the amount a buyer seeks to recover in the lawsuit) would be either the benefit of the bargain or out of pocket loss. “Benefit of the bargain” is the difference between what you paid for the house and what you should have paid given the condition of the plumbing. “Out of pocket loss” is the cost of repairs. You still have to mitigate (minimize) damages by having repairs done at a reasonable cost based on the amount charged for such repairs by plumbers in the area. In order to mitigate damages, you would not be able to select the most expensive plumber or plumbing contractor to make the repairs. Failure to mitigate damages can result in your damages being reduced accordingly.
Even though your options are somewhat limited, reviewing your purchase contract and the details surrounding the purchase of your home with an attorney can help you decide which options are best for your situation.