What to do if you’re accused of misrepresentation after selling your home

In this post, we’ll explore what steps to take if you find yourself in this situation, drawing insights from a real-life example.

The case of John and Diane

John and Diane sold their well-maintained home in Southeastern Wisconsin and, three months later, received a letter claiming they had failed to disclose water damage in the basement. The buyers alleged this issue was discovered during a remodeling project and demanded $330,000 in damages, plus attorney’s fees and punitive damages.

John and Diane were shocked – they had never experienced water seepage in their basement during their time as homeowners. They had completed a Real Estate Condition Report when selling the property, truthfully stating that there were no defects. Yet, here they were, facing a potential lawsuit.

This is where legal representation became crucial. Working with our team, John and Diane were able to respond effectively and avoid liability altogether.

Understanding real estate condition reports

In Wisconsin, sellers must complete a Real Estate Condition Report when selling their property. This document requires sellers to disclose known defects. According to Wisconsin law, a defect is defined as:

• A condition that significantly impacts the property’s value.
• A condition that poses health or safety risks to future occupants.
• A condition that would significantly shorten the property’s expected lifespan if not addressed.

John and Diane had no knowledge of water seepage, so they accurately stated there were no defects.

Steps to take if you’re accused of misrepresentation

If you find yourself in a similar situation, here’s what to do:

1. Engage an attorney immediately

   Your first step should be hiring a real estate attorney. Buyers and their lawyers may try to twist your words or actions to support their claims. Avoid communicating directly with the buyer to protect your defenses.

2. Organize your defenses

   Work with your attorney to build a strong defense. Key questions to consider include:

   1. Did the buyer’s inspection report or appraisal reveal the alleged issues?
      Could the buyer’s actions (e.g., poor maintenance or improper renovations) have caused the defect?
   2. Is the claim based on conditions that were only discovered during the buyer’s remodeling process?

3. Educate the buyer and their attorney

   Sometimes, a well-crafted response can prevent a lawsuit. In John and Diane’s case, we sent a letter highlighting the flaws in the buyer’s claims, emphasizing that the alleged defects:

   1. Were only uncovered during extensive renovations that John and Diane never performed.
   2. Could not be attributed to the sellers’ knowledge or actions.
   3. Were invalid due to the destruction of key evidence during the buyer’s remodel.

This firm response was enough to dissuade the buyer from pursuing their case further.

1. Prepare for litigation, if necessary

   If the buyer refuses to drop their claim, your attorney will prepare to defend you in court. This may involve filing motions, gathering evidence, and presenting your case to a judge or jury. Throughout the process, you’ll weigh the risks and benefits of potential settlements.

The Value of Legal Representation

John and Diane’s case demonstrates how crucial effective legal representation can be in these situations. By addressing the buyer’s claims head-on and presenting a strong defense, they avoided liability and preserved their peace of mind.

If you’re facing a similar situation, don’t navigate it alone. At Zimmer and Rens, we specialize in protecting real estate and business investments. Whether you’re selling, buying, or investing in property, our experienced team is here to help.