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Material defect claims may not be as inclusive as you think

A home's history may not be as open and honest as you think. While regulations apply to require disclosure of certain material defects in a home, what qualifies as a defect may vary according by the state.

Purchasing a home can be a long and confusing process. Adding unforeseen issues on top of that strain can be overwhelming to many buyers. Generally, this is remedied by a requirement for sellers or new construction contracts to disclose any significant defects in the home. Sellers are required by law to disclose any material defect in a property, including any issue with a system or component of a residential property that may have a significant, adverse impact on its value.

Obvious material defects may include termite damage or water intrusion. However, some defects are not noticeable at first glance. Many issues arise regarding the purchase of a home with a psychological impairment, applicable when a previous murder or violent crime occurred within the home. Some states require open disclosure about these types of events, while others offer no such safeguard for buyers.

When a material defect is revealed before the purchase is completed, the law sometimes allows a buyer to rescind the offer and cancel the transaction. If there is a material defect in a home that a buyer does not discover until after the purchase, a buyer generally is not able to take back the sale unless the condition results in particularly severe defects. A buyer may still have remedies available, however. Recovering lost worth on a home that was later discovered to have had a psychological impairment may be an option. Additionally, a buyer may be able to hold either party's broker or home inspector liable for not noticing a particular defect. If a buyer can show a seller knew or should have known about a defect, the seller himself may be liable for the defect's cost.

Engaging in the home buying process is a major step in a buyer's life. Finding out that the entire process resulted in a loss after a discovery of hidden defects can have a devastating impact on new homeowners. Material defect claims can help restore to the homeowner the entire value of the property that they deserve.

Source:, "Horrible history of a home may be hidden from buyers," Steve Bergsman, Jan. 13, 2011

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