When buying or selling a home, there are many obligations and rights that dictate not only the sale, but also the future liabilities of those involved. In particular, a seller may be liable even years after the sale for failing to disclose issues with the property to the buyer in accordance with a very important Michigan statute.
The Michigan law is called the Seller Disclosure Act, codified at MCL 565.951, et seq. Under this Act, a seller of residential real estate is required to make specific disclosures about the condition of the property. Specifically, the Act requires the seller to provide a written statement to the buyer that discloses the seller’s personal knowledge concerning the condition of the property.
When the seller fails to disclose such conditions, it may be liable to the buyer for damages predicated on a claim for fraud. When making a claim for fraud, a buyer has the burden to prove not only the specific defect but also that the seller had personal knowledge that the condition existed. For example, let’s say you are selling a home that had a roof leak during the previous spring season. You promptly had the leak repaired last year and at the present time you haven’t seen any additional leaks. When the time comes to sell your home are you required to disclose the past roof leak even though it has since been fixed? The answer is yes. All issues covered in the statement, even those that have been remedied, should be disclosed to the buyer.
Now let’s switch perspectives to the buyer. You receive a Sellers’ Disclosure Statement from the seller’s listing agent, and you do not see any issues with the condition of the property noted in the statement. You proceed to closing, move into the home, and in your first spring season there you find that the roof is leaking. When the contractor arrives to fix the roof, he tells you that it appears the roof has leaked in the past. You are frustrated and facing a large repair bill for an issue that you wish you knew about before deciding to purchase the home. So how do you proceed with gathering the evidence necessary to prove that your seller failed to satisfy its obligations under the Sellers Disclosure Act?
First, there are several types of evidence that may be utilized in proving your fraud claim. The most substantial type is direct, physical evidence – either in the form of materials used to repair the leak in the past, or possible a document (such as a quote or invoice) showing that the seller had to hire a roofer to fix the earlier leak. Either of these forms of direct evidence will help establish that your seller knew about the issue. To bolster this type of evidence, it is often beneficial to have an affidavit or in-court statement from a contractor who is able to attest to what the physical evidence indicates.
However, in the absence of such evidence, there are other ways to support your claim. One of those ways is through testimony of neighbors or associates of the seller who either heard the seller discuss the leak (hearsay limitations aside), or personally witnessed the rook leak inside the home or saw a roofing company performing repair work at the home at some point in the past. This testimony, however, will only be as good as the credibility of the witness. Considerations such as bias or criminal history will, thus, need to be evaluated in building a claim based on testimony.
Regardless of the type of property defect you are facing (or defending), the types of evidence mentioned above will be key in proving a claim for fraud in the sale of a home. The attorneys at Dalton & Tomich are knowledgeable in finding and utilizing proof of personal knowledge in real estate fraud and have successfully pursued and defended such claims across Michigan. For more information or to schedule a consultation with one of our attorneys please feel free to contact our office.