A California seller sells a 2-unit duplex. The seller completes the TDS but mistakenly marks 'No' for the question about whether the property has had any insurance claims in the past five years. In fact, the seller filed a water damage claim two years ago and received $15,000 from the insurance company. The buyer discovers the claim history after closing. What is the seller's potential liability?
Correct Answer
B) Liability for negligent misrepresentation if the seller genuinely forgot, or fraud if the omission was intentional
Insurance claims related to property damage are material facts under the TDS. If the seller's error was a genuine mistake, the seller may face liability for negligent misrepresentation. If the seller intentionally concealed the claim, the seller could face liability for fraud. The level of scienter (knowledge/intent) determines whether the claim is for negligence or fraud.
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Previous Question
A buyer's agent represents a purchaser in a California residential transaction but never conducts a visual inspection of the property and leaves the agent section of the Transfer Disclosure Statement blank at closing. Which of the following best describes the legal consequence of the buyer's agent's failure?
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Nancy, a seller in California, is transferring her home to her ex-husband as part of a court-ordered divorce settlement. Nancy asks her agent whether she needs to provide a TDS. What is the correct answer?