When you sell residential property in Louisiana, you are required to fill out a full and complete Property Disclosure report that is then made available to all prospective buyers.

So what if you know something really bad about your house that you don’t want to disclose? Something so bad it would chase off a buyer, or keep him from giving you full price?

Redhibition

Here in LA we have a law called Redhibition. It gives the buyer of a property the right to demand a partial refund of the sale price; or in extreme cases, the right to completely rescind the sale…. it’s all about buyer protection for what is quite often the largest single purchase in a person’s lifetime.

The premise behind this law is simple. If there is a condition that would have kept the buyer from buying the house, or would have caused him to offer less than full price, then he has the right to recover damages from the seller… up to a year after the Act of Sale.

Unfortunately, some sellers would prefer the principle of “caveat emptor” – buyer beware. It basically says the buyer is buying the property ‘as is’ and he assumes all the risks; thus the reason for a thorough home inspection on the part of the buyer.

However, there are always things a seller will know that will never be revealed by a normal home inspection. First thing that comes to mind for me is flooding.

In 2005 the power of H.Katrina slammed Slidell with massive waves that originated in the gulf and just kept coming – across the Rigolets until they slammed Slidell. Heavy rains and wind caused bayous to rise all across SE-Louisiana and flooded areas that had never flooded before. And of course, we all know how a levee breach in New Orleans devastated this fine city.

That was then; this is now. Homes and businesses have been restored, and life is back to normal. Today, even the best home inspection won’t reveal the extent of damage or repairs… just the fact that many more homes have all new kitchens and beautiful new flooring thanks to flood insurance.

So in the section of the property disclosures pertaining to flooding, to admit that a home flooded for H.Katrina is no big surprise. The problem occurs when a seller does not admit that a home also flooded from tropical storms… It’s called ‘lies by omission‘.

So why would this matter? Because tropical storms are common and bring a lot of wind and rain, but are seldom as devastating as a hurricane… sometimes the biggest inconvenience being power outages and the lack of air conditioning for a little while.

So if a home also flooded from a tropical storm, that is a totally different kind of information; indication of a possible flood prone situation that a buyer would definitely want to know about. A material disclosure.

In the LA Agreement to Buy/Sell there is an ‘as is’ and ‘waiver of Redhibition’ clause. Even at the closing the buyer will sign a separate Waiver of Redhibiition. But here’s the point I want to get across here –

The Waiver of Redhibition was not designed to shield sellers who engage in fraud or bad faith by making false or misleading representations about the condition of a particular property.

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Get a home inspection regardless of what the Disclosures say –

In the discussion about disclosures, I have a huge bone to pick with sellers who try to mislead by pretending ignorance of a situation. I had a sale in N.O. where the seller completed the property disclosures with a Y or N all the way through, but with regards to the condition of the roof, checked off NK – for not known. Turns out, the buyer’s home inspection revealed plastic tubs in the attic to collect rain water… wonder who put those up there?

When I forwarded the buyer’s Inspection Response, I included a copy of the written inspection report along with photos of the plastic containers, and requested a new roof or a price reduction. The seller declined our request, and the sale fell through. And in spite of overwhelming evidence, the seller did not revise his property disclosure form. Soon after, the house was taken off the market.

In closing, the rule of thumb is disclose, disclose, disclose. It’s all about integrity and honesty. If the house has a problem, fix it. If you can’t afford to fix it, say so and adjust the price accordingly.

If you are the buyer and you have reason to doubt the information contained in a property disclosure, address your concerns with your home inspector. And finally, if not satisfied with the conditions, move on…. there are so many other homes to choose from.