Property Disclosures and ‘Redhibition’


MC900324380[1]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.

flood insurance riskIn 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.Flood Waters

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.

   *      *     *     *

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 Disclosureway 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.

Sig photo2 8-18

About Joyce Albert

Why you need a Real Estate Consultant, not just another Agent… The difference between a real estate agent and a real estate consultant is the difference between someone who just wants to make a sale, and a professional who is willing to share with you their in-depth knowledge of the market in order to help you navigate one of the largest financial decisions of your lifetime. In my career as a real estate consultant, putting my clients first is the hallmark of my success. So if you are looking for a true professional to help you buy or sell a home in the Greater New Orleans Area, please contact me. I look forward to woing with you. Certified 203k Specialist I am a certified FHA-203k Specialist - a program designed to assist buyers wanting to purchase distressed properties (hurricane damaged, repos, short sales) that require repairs or major rehab. Accredidations -  Accredited Buyer Representative (ABR)  e-Certified  Short-Sale & Foreclosure Certified (SFR) Other Memberhips. . .  Louisiana Association of Realtors  New Orleans Metropolitan Assn of Realtors (NOMAR)  Gulf South Real Estate Information Network  National Assn of Realtors (NAR) of Realtors (NAR)  Real Estate Board of Accredited Buyer Consultants (REBAC)
This entry was posted in Real Estate Information and tagged , , , , , . Bookmark the permalink.

4 Responses to Property Disclosures and ‘Redhibition’

  1. Louisiana, with our civil law tradition is actually ahead of many of our common-law sister states with regard to our warranty against hidden defects. In many states, the rule of “caveat emptor” does control, however, more and more often those states, by legislation, are beginning to abrogate the rule that the seller makes no warranty as to the condition of the premises.

    Also, it may be important to note that that actions in redhibition only apply to sales. Thus, contracts to build, repair or remodel a house, for example, are not susceptible to a redhibitory action, but rather the purchaser of those services would have to seek redress under the laws governing breach of contract.

    Like

    • Joyce Albert says:

      Thank you for your comment. I would also like to see redhibition extended to foreclosed property when the banks representative has done an inspection. Too often the bank’s mngt company knows of serious defects, but hides behind their exemption status. For their buyers, “caveat emptor” applies even in Louisiana.

      Like

  2. Mona jacob says:

    I bought a house in Holden, at the act of sales I point blanked asked if the house ever flooded, the answer I got was no. So the sale went thru. After the remodeling started ifound rotten wood and watermarks from flooding, have spent much more damage then expected. Floor joist had to be removed ad reached. Then besides this the owners failed to disclose restrictions on property. Wouldn’t this be lies under omission. The repaired have started costing me more than the house.

    Like

    • Joyce Albert says:

      A seller does not always know the history of a house they are selling. For example, if in the sales history of a property, there was a foreclosure or succession sale, there would be a gap in information. If however, you feel the water damage is recent and information was deliberately withheld, you may want to consult an attorney. Good luck with this.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s