10 'Genius' Mistakes That Get Home Sellers Sued

These “genius” disclosure mistakes are exactly how honest sellers get sued after closing. In this episode, Tim breaks down 10 things home sellers forget, hide, or explain away that can turn into expensive lawsuits.

You’ll learn:

• Why “I didn’t know” usually fails as a legal defense
• Why past flooding still matters even after repairs
• How repaired foundation cracks can become lawsuit fuel
• Why neighbor disputes and HOA issues must be disclosed
• Why past pest problems need paperwork, not silence
• The 5 lead paint disclosure boxes you cannot miss
• When deaths in the home must be disclosed
• Why unpermitted work can explode after closing
• The #1 lawsuit trigger: water intrusion and roof leaks

Bottom line: disclosure backed by documentation is your legal shield. Say it, prove it, and sleep better after closing.

Intro

Outro

Transcript

SPEAKER_00 0:00

Well, hey, I am selling my house next month, so I am writing the list of everything that I need to disclose to the buyer. Full transparency, full disclosure, you know, the right way. So starting with number one, the roof leak from 2019. Actually, according to this, we fixed that, so that's not really a leak anymore, right? That's more of a fixed leak. I don't think you have to disclose a fixed leak, right? So cuss that out. Number two, the crack in the foundation. That is something. Actually, my brother-in-law, um yeah, he had to scrub a bunch of graffiti off of concrete when he was on work release, and I don't know, that kind of makes him an expert. He's actually kind of like pretty good with concrete, and he said it was probably no big deal as cosmetic, right? And cosmetic isn't structural. Yeah, we're gonna go ahead and cross that one off, too. Um, okay, number three, there's that bathroom that we added without a permanent. You know what? That buyer is going to love that bathroom. No, we're just gonna. All right. Huh. Looks like we got a great list. We're ready to sell. This guy is a complete idiot. I mean, look at him with that goofy ass gap-tooth smiling. You'd be an idiot too if you followed his example, because this is exactly how you get sued six months after you close. Just ask the attorneys. They will tell you that disclosure issues are the most common reason for seller lawsuits. And today I'm going to walk you through the 10 things that sellers never tell buyers that get them sued after closing. Let's get into it. Shameful. Number 10, assuming I didn't know is a legal defense. Almost every state's disclosure law uses the phrase known to the seller. Now, to the unscrupulous person out there, that sounds like a get out of jail free card, but it's not. Courts have consistently ruled that if a reasonable homeowner should have known about a defect, then you are legally treated as if you did actually know. If water was coming into your basement every spring and you ignored it, that is a known defect. If the roof was leaking and you put a bucket underneath it, that is a known defect. I've seen the bucket defense in real cases. It does not work. The whole I didn't know move only protects you when you genuinely did not know. And most buyers' attorneys are very good at proving otherwise. And look, here's the tricky part the bar isn't what the owner knew. The bar is what a reasonable person standing in the owner's basement would have figured out. And that is a much lower bar to hit. Number nine, this is when you forget about past flooding incidents. If your basement flooded during a storm in 2019, you are legally required to disclose it in most states, even if it has never flooded since, and even if you fixed the underlying problem. Well, sometimes sellers do forget these things because the fix worked. The sump pump may be new, the drainage could have been improved. So the problem seems to have been solved, but legally, none of that matters. The flood history is still part of the home, and the buyer has a right to know. Disclose it, describe what you did, attach the receipts if you have them, and even the warranty, and buyers are going to love that. Honest disclosure backed by documentation is the single strongest defense you can build against any claims. Number eight, this is where you don't disclose repaired foundation cracks. Let's just say that you had the foundation repaired 10 years ago, and it's been fine ever since. Will you figure, hey, problem solved, so why even mention it? Well, it's because the buyer's inspector is going to find the repair within the first 10 minutes of walking the foundation. Foundation repairs leave evidence. I mean, they could be steel peers, epoxy injection lines, patched wall cracks, helical anchors, even. And now you have two problems. You not only have a foundation history that you were trying to hide, maybe, or you conveniently forgot about, but now you have a buyer wondering why are you being so shady about the foundation history? Which is a way worse version of the same problem. Now, foundation issues can be among the most expensive repairs that a home can carry. So don't add insult to injury here. Disclose the repair with the original paperwork, the company name, again, the warranty if it transfers, and that will convert a giant red flag into a well-received maintenance record. Number seven, this is where you hide neighbor disputes. And this one kind of surprises people. But if you do have an ongoing dispute with a neighbor about maybe property lines, noises, fence, trees, pets, whatever, that is a disclosable issue in most states. Buyers have the right to know what they're walking into. Now, the courts have consistently ruled that material facts include anything that meaningfully affects the buyer's use and private enjoyment of the property. And an active feud with a neighbor definitely qualifies here. Even if you think that the dispute is pretty much over, you should probably still disclose it. Just put the facts in writing, keep it neutral. Here's what happened, here's the current status, and then let the buyer decide whether or not they want to inherit that mess. The buyer will eventually meet the neighbor, and that neighbor is going to have no problem giving their version the complete history about what a jerk they think you are. And ultimately that conversation there would totally murder your whole I didn't know defense. Number six, this is not talking about any open HOA violations or complaints. And if you're in an HOA and there's any kind of violation, complaint, or special assessment on the horizon, you are definitely legally required to disclose it in most states. Sellers typically ignore this because HOA paperwork looks like it was designed by somebody with an inferiority complex who hates any human being who doesn't automatically bow down to their authority. The problem here though is that HOA issues, annoying as they may be, become the buyer's issues the day they move in. So if there's an unpaid fine, it becomes their unpaid fine. If there's an upcoming special assessment, it becomes their surprise bill six months in. Call your HOA management company at least a week before listing and ask for a letter confirming that your account is in good standing and there is nothing that's going to stand in the way of you closing, especially any pending assessments. Now, really quick, I know a lot of this might sound scary, and that fear is why tons of people spend an insane amount of money to pay real estate agents to sell their homes for them. But here's the thing I am a real estate agent myself, and I don't even know all the legal ins and outs, which is why I partner with a title company and a real estate attorney. And best of all, I could teach you how to do those very things yourself. If you've ever wondered about what it might look like to sell your home using the same partners and tools that I use and save the 30 grand that you'd otherwise spend with an agent, go ahead and book a strategy call with me in the description below and we can talk about your options. All right, let's get back to the list. At number five, this is where you don't mention past pest problems. These could be termites, carpenter ants, rodents, bed bugs, roaches. If your house has a history with any of these, you need to disclose it, even if the problem was fully handled years ago. In fact, most state forms specifically ask about pest history and checking no when the real answer is yes is a direct path to a lawsuit. Now, outside of disclosing, if you want to be a real superhero, you could go ahead and pull your records from the pest control company, include the treatment dates and the company name and any transferable warranties they have. And I'm sure the next owner is going to appreciate all that. But if you keep silent and the buyer finds evidence of the old problem, like maybe some termite damage in the attic or old bait station still buried in the backyard, you could be inviting trouble. Number four, forgetting the lead paint disclosure. Look, if your home was built before 1978, federal law is going to require you to jump through some hoops related to lead paint. And none of these hoops are optional. And here's the weird part. In order to be in compliance, you have to comply with all five elements. So there's a pamphlet you have to hand out, there's the written disclosure of any known lead hazards, there's a specific warning language in the contract, there's a 10-day inspection window that you have to offer for them to do a lead paint test. And then there's a signed acknowledgement form that you have to have them sign. And here's why all this matters because each one of those elements is independently enforceable, which means you might do most of it right and still get nailed. If you give the buyer 10 days for an inspection but forget to give them the pamphlet, that's a violation. If you include the pamphlet but leave out the warning language out of the contract, that is a violation. And federal civil penalties average around $21,000 per violation as of 2025. And the EPA, of course, adjusts them upward every year for inflation. So three partial misses on one sale is three staff penalties. It's not just one $21,000 penalty. They're going to nail you for each one. That's $63,000. So on one house, that's just the government side, by the way. Now, civilly, an affected buyer can also sue you under federal law for triple damages plus attorney's fees, which is usually where a regular homeowner is going to get hit. In fact, there is a property management company in Montana who forgot the disclosure and a toddler in one of their units tested with elevated blood lead levels. In 2025, the owner was sentenced to three years probation in order to pay a hundred and fifty thousand dollar fine. One unit, this is one family in one missing piece of paper. I mean, the penalties are insane. Now, your title company or your closing attorney is normally going to handle this, but when the stakes are this high, it does not hurt to make sure that you're in compliance on your own. Number three, not disclosing a death in the home when the state requires it. There's only three states that have hard disclosure rules on this. California requires disclosing any death on the property in the last three years, including natural causes. And Alaska and South Dakota require disclosing a murder or suicide within the last 12 months. Then there are a handful of ask and answer places like Delaware, Georgia, New Hampshire, and New Jersey, where you don't necessarily have to bring it up unprompted. But if the buyer asks, you do have to answer honestly. And everywhere else, there's generally not a requirement. But here's the rule that overrides all of it. If a buyer directly asks anything, including whether anyone died in the home, your answer should be based in honesty, period. From anybody, anywhere. Lying in response to a direct question about a material fract is fraud. And fraud doesn't care about your state's disclosure exemption. Also, you would be amazed at how fast buyers could figure this out on their own. There are literally websites now that teach them how to do this. So check your state's rules and when in doubt, disclose. Number two, hiding unpermitted work. Let's say you added a bathroom and then you also converted the garage into a bedroom. By the way, never convert a garage into a bedroom, but we'll get to that later. Or let's say that you finished the basement without permits because your buddy, who is a contractor, told you nobody really cares in our little town. And for years, nobody did. But then it was time for you to move. So you put the house up for sale and the buyer's appraiser questions the square footage because it doesn't match the county numbers. And the buyer's inspector flags the work and well, eventually the county gets into the fold. Now the buyer is told that they either rip out the improvements or pay for the retroactive permits, which can run into the tens of thousands of dollars by the time you add up the engineering reports, the code corrections, and even the permit fees on work that should have been permitted in the first place. Well, guess who's going to get the blame on this? It's the person who sold them the house. This is another very common post-closing lawsuit. And it's totally preventable with a single sentence on the disclosure form. This work was done without a permit. You're still allowed to sell the house. And in most cases, buyers don't even really care because they're not even thinking that far ahead as to when they're going to have to sell the house. But you are not allowed as a seller to posture as if the county signed off on a bathroom that doesn't exist in any of their files. So once again, just like in a lot of our other instances, disclosure here is your best friend. Number one, this is hiding any form of water intrusion. And this is the most common disclosure lawsuit. It's not even close. And I push this one harder than any of the others because it's the one that gets ordinary, decent sellers sued the most. Roof leaks in water intrusion are everywhere and they're often intermittent. And sellers eventually just convince themselves that the problem is solved when in actuality it's not. So when the next owner moves in and they had their first heavy rain and this brown stain appears on the ceiling, well, they get the roofer out and the roofer finds evidence of prior repairs or prior patches and damage in the attic that only forms after years of leaks. Well, now they have reason to believe that you must have known. And once they have that, the lawsuit is basically a formality at that point. If you've ever seen water stains or had a repair or had a drip during a heavy storm, put it on the darn form. Get a roof inspection before you list if you're not sure. $200 for an inspection versus tens of thousands of dollars in repairs plus attorney fees, plus a year of your life you'll never get back is a pretty easy exchange in my book. I mean, you decide, but in the end, disclosure backed by documentation is the strongest defense you can put between yourself and some bloodthirsty attorney out there. Now, I've just spent several minutes scaring the crap out of you about how easy it is to get sued if you don't know what you're doing. Now, my goal here is not to scare you, though, it's to keep you educated and keep you safe. And if I knew this stuff and I didn't have the decency to pass it on to you and you got nailed with it, what the heck kind of person would I be? So let me go ahead and give you some good news here. All of this fear evaporates with a little bit of education. And that's why I created this video right here. This is where I walk you through the top 10 lies that real estate agents tell you to keep you locked into their commission machine. Once you go through that video, if you want to save 30 grand by selling your home by yourself, there is a link in the description to book a call with me below. I look forward to speaking with you.