You’ve probably seen the story about the couple that bought a house in Annapolis infested with snakes. They thought they found the perfect house. Nice neighborhood, good schools and close to family.
They are now bringing a lawsuit against the real estate agent and the real estate broker that sold the house. I suppose for a normal person reading a story like this would focus on the terror of snakes coming out of the walls, having to walk around with a machete and worrying about a snake making its way to the baby’s room.
Well, I’m not normal: I’m a lawyer. When I see a story like this I can’t help but think about issues like Duty to Disclose and Latent Defects. Ok, I’m not that different; the snake thing freaks me out too. Here are some legal lessons to learn from this story to help you make sure you don’t end up with a horror story house, or a lawsuit over that house you just sold.
Here in Southern Maryland two issues that seem to come up in real estate lawsuits are the failed septic system and mold. And while these problems may not be as scary as snakes, they can make you feel pretty crappy about your house.
When you are selling a house in Maryland you can either sell the property “As Is” or complete a disclosure form. Many sellers opt for the “As Is” option so they don’t have to worry about having to be sued for accidentally leaving something off the disclosure. However, even if a seller takes this option under Maryland Law they must still disclose defects that the average person “would not reasonably be expected to ascertain by a careful visual inspection” and “that would pose a direct threat to the health or safety of the purchaser or occupant.” These are what are called “Latent Defects” under Maryland law.
However, the snake case doesn’t seem to focus on the seller, but on the real estate agent. According to the reports the focus on the lawsuit is based on the allegation that people who had been renting the house moved out because of the snakes. When asked, the seller’s real estate agent told the buyers they moved out because they failed to pay rent. This allegation is important because legally real estate agents have an obligation to disclose any “Material Defect” of which they have knowledge. Real estate agents also have an obligation to treat all parties honestly and fairly.
So what are buyers and sellers supposed to do? As usual with legal issues there is no one right answer. Beware of the real estate agent who says always disclose. But also beware of the agent who says never disclose. The right answer depends on your particular set of facts.
If you have a problem that could amount to a “Latent Defect” it could be a good idea to do the disclosure to make sure you don’t end up in front of a Judge arguing over what does or doesn’t amount to a “Latent Defect”. On the other hand, if you have experienced a lot of small problems with your house, or owned it for a long time, it may make more sense to sell “As Is” and not do the disclosure form. This way you avoid being sued for something you forgot that happened twenty years ago.
If you are not sure what to do you can always come in to see me, or another lawyer in our office for a consultation. Think about the Snake House case. The sellers could have disclosed the problem and shown what was done to get rid of the snakes. Since the buyers viewed this as their dream home wouldn’t they have bought the house anyway?
As for buyers, don’t fall in love with a house. Before the Maryland Disclosure Form became law in 2005 the rule in Maryland was “Caveat Emptor”. This means buyer beware. (There, we covered our lawyer required Latin) While this is no longer the law it is best to approach buying a home as if that is still the law. If you see a house that you are in love with you may look for an excuse to overlook that musky or musty smell. “Oh the house has been empty” may be your only thought. If you dismiss such a concern you may later be disappointed when you find out that the problem was mold or a house full of snakes. While you may have a case that you could win years later how do you pay for a house you can’t live in?
The snake case also points out how important it is to find a good real estate agent that you trust and that will look out for you. A really good agent will act as a check on your emotions and make sure you look for real answers as to why the house smells funny. If you are in love with a house it is easy for an agent to let you get carried away. You want to overlook a problem or pay too much? The good agent will tell you not to do it, even though that may make you mad. The easy path for some agents is to not get in the way of your emotions and collect the bigger, quicker commission check.
For the seller in the snake house case, if the allegations are true, they may have sold their house a little quicker by having an agent willing to skirt the line. But even if they aren’t being sued they are sure to be spending some time meeting with lawyers and being called as witnesses. So if you are buying or selling a house you can think of erring on the side of caution as an insurance policy against having to spend a lot of time and money getting to know a bunch of lawyers.