Buyer Beware – Buying Real Estate In Virginia

What Can I do If a Seller Lies or Conceals a Property Defect In Virginia? A legal analysis

Virginia is a caveat emptor (buyer beware) jurisdiction. Sellers of real estate in Virginia are not necessarily required to fully disclose all property defects when you buy the property, especially when the sale is AS IS.

Typically, it is the buyer who must exercise the required due diligence before purchasing the property. The Virginia Supreme Court has defined due diligence as “such a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case.” see STB Marketing, 240 Va. at 144, 393 S.E.2d at 397 (quoting Black’s Law Dictionary 411 (rev. 5th ed.1979))

However, the seller cannot deliberately conceal any defects, refuse or fail to disclose known latent (hidden) defects, or divert the purchaser away from defects. For example, in Armentrout v. French, 220 Va. 458, 258 S.E.2d 519 (1979), the Virginia Supreme Court found that the purchaser of the property was relieved of their duty to inspect further when they specifically inquired about the condition of the septic system but were told by the seller that it “checked fine.” In reality, the system was defective and emitted a strong odor in the house, which the sellers concealed through various means.

Accordingly, if the seller violates these prohibitions, then the buyer may have viable causes of action for breach of contract, rescission, and/or fraud in the inducement. Furthermore, punitive damages stemming from fraudulent activity are permitted upon a showing of willful, wanton and reckless material misrepresentations or omissions of material facts (see Hamilton Dev. Co. v. Broad Rock Club, 248 Va. 40, 445 S.E.2d 140 (1994) (citing Giant of Virginia, Inc. v. Pigg, 207 Va. 679, 685, 152 S.E.2d 271 (1967)).

Virginia Residential Property Disclosure Act (Va. Code § 55.1-517 et seq).

When you buy a property in Virginia, the seller must provide certain disclosures under the Virginia Residential Property Disclosure Act. These disclosures can be accessed via the Department of Professional and Occupational Regulation (DPOR) website.

The disclosure effectively notifies the buyer that the seller does not make any representations about certain conditions related to the property – meaning they don’t have to necessarily disclose any information about such defects and it is the buyers duty to exercise the required due diligence. Once you sign this statement and complete the sale, the seller is protected from most defects you discover that you may have not properly investigated before buying the home.

Exercising Due Diligence As A Buyer

The Reasonable And Prudent Man Standard Under Virginia Law

Caveat emptor – buyer beware. Since Virginia is a caveat emptor state, it is mostly up to buyers to inspect the home and negotiate any necessary repairs to be made to the property before purchasing it from the seller. As you sign a purchase contract, there is a Home Inspection contingency period during which the buyer must take certain steps to investigate the condition of the property. To fully protect your purchase, you should:

Hire an independent home inspector to look at the property;
Negotiate an inspection contingency into your contract, which will allow you to void the contract if the results of the home inspection contingency are unsatisfactory and the seller refuses to repair or fix them;
Ask questions about the property to identify existing structural defects before you buy
Negotiate terms in the contract that require the seller to fix specific defects before the purchase is completed

The more due diligence you show as a buyer, by doing your own research and protecting your rights before you sign a contract, the more protection you may have if a serious structural defect is discovered after your purchase. It can be difficult to exercise full due diligence in a real estate sale on your own, which is why a real estate lawyer may be invaluable when you are purchasing a home.

Seller Liability for Damages

If you purchase a home and find that the seller misrepresented or fraudulently concealed latent property defects, you may be able to seek damages resulting from their fraudulent behavior. You are generally entitled to compensation when:

The seller covered up or concealed property damage
The seller lied about property defects when asked in order to divert you from discovering the defect(s). See, for example, Allen Realty Corp. v. Holbert, 227 Va. 441, 450, 318 S.E.2d 592 (1984) (citations omitted) (“concealment of a material fact by one who knows that the other party is acting upon the assumption that the fact does not exist constitutes actionable fraud.”)
The seller never provided a Virginia Residential Property Disclosure Statement

It is important to note that if the seller was not aware of a property defect, they are generally not liable when you discover that defect after you make a purchase. This is another reason why it is so important for you to perform your own independent inspection prior to purchasing the property.