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Real Property • Conveyances
PROP#169
Legal Definition
A seller is liable for failure to disclose where: (1) they know or have reason to know of a defect, (2) the defect is not apparent and the seller knows the buyer is not likely to discover it during an ordinary inspection, and (3) the defect is serious.
Plain English Explanation
Generally, people have no duty to say anything, only a duty to not lie when they do choose to say something. However, when you are selling a property, you have a duty to disclose defects that you know the other party is not likely to be able to easily discover even with an inspection if those defects are "serious." It's sort of like the "golden rule," you should tell potential buyers things you'd likely want to know if you were them if they aren't likely to find out even if they try hard to inspect.
Hypothetical
Hypo 1: Amy is selling her house. Bob is interested in buying the house. Amy knows that 10 years ago, when she was crawling under the house, she accidentally hit her head on a wooden beam causing a small blood stain on one of the wooden beams. Result: The blood stain is a defect that Bob is unlikely to discover during an ordinary inspection. However, a small blood stain on a wood beam under a house—though super gross—isn't serious, so Amy has no duty to tell Bob about it.
Hypo 2: Amy is selling her house. Bob is interested in buying the house. Amy knows that on extremely rainy days, a small pinhole in the roof allows water to drip into the attic. Result: A pinhole leak in the roof is a defect, and because it only reveals itself on particularly rainy days in a part of the house not easily accessible, it is unlikely that Bob would discover it during an ordinary inspection. Most importantly, a water leak into the interior of the house is a serious defect, which means Amy must tell Bob about it since she is aware of its existence.
Hypo 2: Amy is selling her house. Bob is interested in buying the house. Amy knows that on extremely rainy days, a small pinhole in the roof allows water to drip into the attic. Result: A pinhole leak in the roof is a defect, and because it only reveals itself on particularly rainy days in a part of the house not easily accessible, it is unlikely that Bob would discover it during an ordinary inspection. Most importantly, a water leak into the interior of the house is a serious defect, which means Amy must tell Bob about it since she is aware of its existence.
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