Protecting Yourself from Buyer Lawsuits when Selling Your Home

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One of the worst things sellers of real estate can experience is a lawsuit from the buyer after the closing. There are two main areas where the seller can get in trouble: not disclosing known physical defects and not taking care of title problems. Avoiding these pitfalls may seem like a “no brainer,” but in fact, it can cause serious headaches. My goal is to give you, the seller, information you need to stay out of trouble with your buyer and the courts.

We all know the routine to get top dollar for our house: paint the walls, clean the carpet, and de-clutter. What you may not know is that Nevada law requires sellers of residential property to disclose all “known” defects to a prospective buyer. This means disclosing anything you know about which may impact the value of your home.

What about that water leak in the master bathroom a few years ago? You dried out the carpets, replaced the drywall, and painted over the water stains; do you still have to inform the buyer? Yes! If you don’t and he or she later finds out, it may mean trouble.

The list of possible defects is too long and varied for a single article but a good rule of thumb is if you know about a condition, discuss it with your real estate agent, possibly with an attorney, and, if in doubt, disclose it. It’s always better for a sale to fall through than to be sued.

In addition to physical defects, legal problems with title (i.e. legal ownership) to the house you’re selling may also cause problems. These are issues which make it legally unclear that you as the seller are able to transfer your house or that there are legal “strings” attached.

The most common title defects occur where: 1) either the seller or the seller’s next door neighbor builds a structure (such as a storage shed, planter, or fence) that crosses the property boundary line; or 2) there’s a landscaping/remodel that the HOA disapproves of or that violates city or county code.

Other, less common, title defects are unexpired leases on the house and unrecorded property transfers. Any of these can lead to trouble down the road for sellers. Your title company will catch most title defects prior to closing; however, trying to take care of them right before closing may delay or prevent the sale. Even worse, if a sale closes without title defects being corrected, you may be sued and title insurance may not always pay to fix the error.

Thus, if you suspect a title problem tell your agent, consult an attorney, and resolve it before listing your home.

Selling a house is frustrating enough as it is; make sure that you disclose all defects required by Nevada law and that your title is free any legal defects. That way you can buy your next house with the confidence of knowing that your previous house will never come back to haunt you.

Clifford Gravett has been with the full service law firm of Bingham Snow & Caldwell and a resident of the Virgin Valley for four years. He specializes in litigation and family law matters and is licensed to practice law in Utah and Nevada. Cliff and the other attorneys of Bingham Snow & Caldwell are ready to assist you with any legal needs you have.  

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