What liabilities do home sellers face?

When you sell a house, there are potential post-sale liabilities that could arise if certain obligations weren’t met. Below are a few examples of the types of liabilities you may face as a home seller:

• Breach of contract: If a seller backs out of a valid purchase contract, the buyer can sue for damages or breach of contract. A judge could order the seller to complete the sale and sign over the deed.
• Required seller disclosures: While state laws differ, sellers must typically disclose known material facts about the property, such as structural issues, water damage, or a history of flooding. Failure to disclose significant issues could lead to legal claims if the buyer discovers them after the sale. These liabilities can sometimes fall in the same arena as a breach of warranty or implied warranty.
• Unfulfilled contractual repairs: If you agreed to complete repairs or replace something that’s broken (like appliances or fixtures) and failed to fulfill these promises, the buyer could seek compensation after the sale.
• Taking fixtures not listed as exclusions: Fixtures that are attached to the home, like lighting fixtures or built-in shelving, are typically expected to stay with the property unless otherwise noted. Removing these items can lead to buyer claims if they were not disclosed as exclusions in the purchase contract.
• Post-sale title issues: Issues like undisclosed easements, unpaid property taxes, or unresolved liens can create legal complications. Buyers can pursue legal action to clear unidentified title issues that weren’t resolved prior to closing.
• Known environmental hazards: Falling under the disclosures umbrella, you must reveal any known environmental hazards, such as radon, asbestos, lead-based paint, or mold. Concealing these issues may expose you to serious liability if the buyer later faces health or safety problems.
• Fraudulent activity: If you intentionally concealed important property information (for example, claiming there were no other liens on the property when there were), this could be grounds for a lawsuit. Fraud claims can have longer liability periods and more serious consequences.
• Failure to settle outstanding HOA fees or dues: If you didn’t pay all HOA fees or dues up to the sale date, the buyer might be forced to cover these expenses, leading them to pursue compensation from you.
• Not disclosing major neighborhood issues: Beyond property defects, in some states, sellers may also be required to disclose significant neighborhood issues that might impact a buyer’s decision to purchase the home or affect a property’s intended use. This can include excessive noise, obstructive school traffic, or proximity to disruptive industrial activity.

What you say also matters

As a seller, even casual comments about the home, neighborhood, or recent renovations can become liabilities if buyers later find them inaccurate or misleading.

In addition, a comment you make to a buyer may inadvertently violate the Fair Housing Act, which protects against discrimination because of race, color, religion, sex (including gender identity and sexual orientation), disability, familial status, or national origin.

For these reasons, let your real estate agent handle all buyer communication to avoid unintended — and possibly costly — liability pitfalls.