Robert is selling his single-family home in Newark, Delaware. He is aware that the basement has experienced periodic water intrusion during heavy rainstorms but believes he fixed the problem two years ago and has seen no water since. Robert does not mention the prior water intrusion on his Delaware Residential Real Property Disclosure form. Three months after closing, the buyer discovers significant mold damage resulting from the historical water problem. Which of the following best describes the legal consequence Robert may face under Delaware law?

Correct Answer

B) Robert may be liable for contract rescission or damages because the prior water intrusion was a known material defect that should have been disclosed regardless of whether it appeared to be resolved

Under the Delaware Residential Real Property Disclosure Act (6 Del. C. § 2570 et seq.), sellers are required to disclose known material defects, including conditions that have occurred in the past and may have been remediated. Prior water intrusion is a classic known material defect because it indicates vulnerability of the structure and can lead to mold, structural damage, and other latent issues. The fact that Robert believed the problem was fixed does not eliminate his obligation to disclose the known history. Failure to disclose a known material defect can result in contract rescission or an award of damages to the buyer under Delaware law.