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You bought a house, it passed pre-purchase inspections, and you got it insured. However, it later turned out that the house frame is damaged by rot or termites. Maybe the house even has to be demolished.
From the insurance company's point of view, it's a pre-existing condition. You also can't prove that the seller knew about the problem (and perhaps he didn't).
Will you be solely responsible for the damages, or do you somehow take over the right to make a claim against the previous owner's insurance?
It's more complicated than that. Rot and termites don't mean that there was homeowner fraud. You can have termites in the soil that get displaced and then work their way back over to the house. That's why a lot of people do pest treatments as part of their homeowner maintenance. If the previous owner did regular preventative termite treatments and the next homeowner stopped, that isn't the old homeowner's fault.
Rot on homes is a regular maintenance item in places that have any kind of moisture. Sprinkler heads can malfunction and send water the wrong way, etc. A downspout can fall apart, gutters have issues, a roof leak can funnel water down a wall causing damage. None of those things mean the previous homeowner did something wrong.
Do you have a right to file a claim against a previous homeowner's insurance policy? I can't imagine that is the case, but that would be a question for an insurance agent. If that was common, then people could let their homes get dilapidated and then file a claim against the previous owner. If someone thinks there was misrepresentation, then you follow the guidelines outlined in your contract for disputes. If your contract doesn't have a dispute resolution clause, then you chat with an attorney and they tell you whether or not you have a case.
Insurance doesn't pay for failure to maintain homes. It is for fires, or water heater's bursting, dishwashers leaking, etc. Rot and termites are maintenance issues, in my opinion.
Getting back to the insurance question for a moment. I am a 35 year veteran of the insurance industry and have been an underwriter, agent, and claims adjuster.
Here it is from the standard HO-3 Homeowners policy Section I Property Coverage - Exclusions of damage caused by:
Birds, vermin,rodents, or insects;
Mold, fungus or wetrot (unless caused by sudden discharge from a plumbing system).
Wear and tear, marring,deterioration;
There's more. You can read your own homeowners policy or download a policy sample from the internet.
Termite infestations can happen very quickly and depending on where they are located they can be hard to find...
I was once looking at a rural house, that seemed in good order on the outside. I had been given permission to walk around it on my own. Fortunately, a neighbor came over and told me that he'd accompanied an inspector who had examined the place a few months before. He'd lifted up a section of kitchen linoleum and a dozen white termite larvae went scooting down into the holes they'd eaten in the floorboards.
Going under the house, the inspector found a major termite infestation all through the structure, as well as a lot of dry rot. The neighbor said that the high groundwater made it necessary to have sump-pumps and ventilation fans going at all the houses in the area. They also needed to have an extermination company give them termite treatments, every two years. But that house had been sitting vacant, without any of those things running, for a year.
When I'd talked to the real estate broker and then the sales agent on the phone for quite a while each, they'd said nothing about the termites and rot. When I confronted the agent about it later, she claimed to know nothing about an inspection that had shown the damage. I think they were hoping to pass off that house on some sucker, before the floor caved-in.
Oddly, looking at that house on Google Earth recently, it's still standing there, seeming to be just the same structure. Someone must have put a lot of money into it, to replace all the damaged wood. I'm hoping that the buyer discovered the truth about it and paid a very low price, as a salvage property. I would have thought it would be demolished and the acre of land used to build something new. The previous owner, who let it sit there untended for a year, may have taken a big loss for that negligence.
It's always a good idea to talk to people around the neighborhood, before you buy a house and you may pick up some important information. A very old house recently sold next door to me. No prospective buyers ever talked to me. I could have told them plenty, most of which would have been good, about how thoroughly the seller had re-built almost everything in it. But if there had been hidden negative things, they passed up a good source, who could have told them about past problems, that the current inspectors might have had no way to know.
Last edited by Steve McDonald; 02-02-2018 at 11:35 PM..
No
Inspectors ate not allowed to even move furniture or curtains to check for stains, wood damage, or holes
No?
Hmmm... That is why the agent and client should be there, to move stuff an inspector refuses to move.
And, a good contract and good conversation prior to inspection, confirm that areas will be accessible for inspection.
It isn't all that hard to get compliance unless the seller is a real jerk.
I would definitely lift back loose sheet vinyl flooring.
Heck, in foreclosures, it is common to go in and see nasty stained carpet pulled back in corners, because everyone wants to see the subfloor.
We can always look. We cannot damage, of course.
And, just one more reason to prefer empty houses. Buying or selling...
I'm not an attorney (but I watch Judge Judy). I believe, the one initiating a legal action has the burden of proof. Common sense also puts the burden on the buyer, as it is almost impossible to prove a negative.
There's an old thread on here where a buyer spent six years proving the owner/agent knew about serious defects and concealed them. The poster hung in there to finally get a judgment and was nice enough to keep us all posted along the way and through to the conclusion. Bought a house with major defects not disclosed sellers knew about
Quote:
Originally Posted by just_because
It may depend on the basis for the claim. My understanding is that some types of claims like 'innocent misrepresentation' have a lower bar and the plaintiff does not need to prove that the seller knew, just that there was a material representation made, it was false, there was a loss, etc. Fraudulent misrepresentation is different and there is a higher level of proof required on the buyer. Anyway, I don't think this impacts the discussion other than to understand that your lawyer may follow a strategy that may not require proof that the seller knew about the problem.
Happy to be corrected but that's my understanding (which nobody should rely upon as I'm just a lay man).
Similarly just a layman but its my understanding that its one of those lawsuits that's nearly impossible. Not only do you have to prove something was pre existing, you also have to prove they knew about it. Proving they knew about it is the extremely difficult bar to to reach.
One of the big reasons the example cited above from a CD poster prevailed was that she was able to find neighbors that told her what was up, AND the previous tenant that dealt with the problem, and knew that they had to move her from the property because the problem was so bad.
From a practical perspective, it sounds like its extremely difficult to get attorneys to even take these cases except in the most egregious of circumstances.
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). I believe, the one initiating a legal action has the burden of proof. Common sense also puts the burden on the buyer, as it is almost impossible to prove a negative. 
