We often get these questions from buyers who discover defects in the property they just purchased:

• Is there anything we can do about it?  
• What are our options?
• What if the Sale Contract was “As-Is”?  Are we cooked?
• What are our chances if we take action against the Seller?
• And, of course, how expensive is it going to be?

Some of these questions are pretty simple to answer, others require more explanation.  Ultimately, as with all legal questions, the right answer is always «It depends.»  But, we can do a little better than that preliminarily.

Florida Law on Misrepresentation

Let’s start with the easy stuff.  If your seller actually said something untrue, or even misleading, then there is definitely something you can do about it.  That is simply misrepresentation, which is actionable in any context, and a real estate transaction is no exception.

In any kind of dispute, your polestar will always be this: If my case goes all the way to trial, what do I have to demonstrate in order to win?  For misrepresentation cases, the answer is basically this:

• Seller made a false statement about a material fact;
• Seller had (or should have had) knowledge of the statement being false;
• Seller made the false statement on purpose to induce you to buy the place;
• You have suffered monetary damages as a result of relying on the false statement.

To put that it simply: the Seller lied to you, you believed the lie, and now you’re stuck dealing with an expensive problem because of it.

If that is the way it went down, you definitely have a case.  And, it doesn’t matter if the contract was “As-Is.”  That is never a “Get Out of Jail Free” card for lying.

Florida Law on Disclosure

Okay, so telling a lie is one thing.  But, what if the Seller just kept his mouth shut?  He didn’t lie, but he didn’t bring a problem with the place to your attention.  What is the law on that?

Here is the famous quote from the Florida Supreme Court that sets the law in this state:

Accordingly, we hold that where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. This duty is equally applicable to all forms of real property, new and used.

Johnson v. Davis, 480 So.2d 625 (Fla. 1985)

Again, to put it simply, the Seller cannot just keep his mouth closed about a known defect with the property.  The Seller has a duty to bring the issue to your attention.    You know what else?  So does the realtor . . . but we’ll get to that later.

And, as with misrepresentation, it doesn’t matter that you signed an «As-Is» contract.  If the Seller knows about the problem — and it’s a significant problem — the Seller is required to disclose that to you.

Available Options

If either of the above fits your circumstances, then you do indeed have options.  What are they?

Generally, you’re going to start off with a demand letter.  That is just the smart, inexpensive thing to do.  Have your lawyer put together a well-written letter detailing the relevant facts and explaining the liability the Seller will potentially face if you cannot reach an amicable resolution.

Basically, you’re saying: «Here is the situation.  Don’t ignore me.»

Spoiler Alert: The Seller will probably ignore you.  You know how people are.  The Seller’s first instinct will be to do nothing and see if you just go away.  Or, the Seller may hire a lawyer of his own, who will respond with a letter saying: «Oh, no, you’ve got it all wrong.»  That is just how the game goes.

But, you still have to start with the letter because (i) the Seller may surprise you by entering into discussions, (ii) the responsive letter may actually contain some points worth considering, and, if nothing else, (iii) the letter will serve as an exhibit to your complaint, showing the judge that you gave the Seller a good-faith opportunity to avoid litigation/arbitration.

Beyond that, we will have to look at your Sale Contract.  There are almost certainly provisions in there about dispute resolution.  For example, you may be required to go to mediation before you can file an actual lawsuit.

Spoiler Alert: If your Seller is in full-on «head-in-the-sand» mode, you will have to first initiate a lawsuit in order to force the Seller into mediation.  Be ready for that.  It’s very common.

Simply put, there are a couple of things you can do preliminarily, short of initiating litigation or arbitration.  If those efforts do not get you an acceptable outcome, then it’s time for a gut check.

At that point, you’re either going to make the investment in suing, or you’re going to eat it.  You’re just going to walk away and let the Seller get away with it.   

Now, it certainly sucks to find yourself having to put out more money for legal expenses, on top of what you have to pay to fix the defects in the property.  Unfortunately, short of frontier justice, that is just how it works.  What your lawyer can do, though, is help you make a smart decision.

If your case has weaknesses, your lawyer should be honest about it.  It’s really not good for anyone to having you «throwing good money after bad.»  What if you invest in the lawsuit and then lose?  That’s just salt in the wound.

Also, what if the legal fees end up being as much as it would cost you to just fix the problem with the property?  You know you’re going to think that somewhere along the way, so let’s just get it out in the open now.  

Look, that could very well be the case.  I’m going to give you links where you can get a more detailed analysis about the legal fees, but let’s just start with the understanding that it’s not going to be cheap.  If the defect(s) in the property are not that significant, then you really want to think twice before you dive into a lawsuit.

Of course, on the other hand _

1.  Nobody likes to be a punk.  The Seller has gotten one over on you, and you may feel some kind of way about that. 
2.  If you do win the case, you will almost certainly recover all the legal fees against the Seller, in addition to the money you spent fixing the problem. 
3.  You could settle along the way.  Maybe the Seller just needs to see you file suit in order to take you seriously.  

So, the story could have a happy ending, but you should go into the fight with an «all or nothing» mentality.  The very worst thing you can do is start the litigation/arbitration and then bail out before the end.  Do not do that.  First, obviously, all you will have accomplished is to be out more money.

Second, less obviously, the Seller will then ask the judge to award his costs and fees for winning the case.  Oops.  Now, you’re trapped. 

So, it’s all or nothing.  Be ready to fund the case all the way to the end, or else just keep your money.  Don’t start a fight you’re not willing or able to finish.

Chances of Winning

This question is very fact specific.  The only guidance I can give you is to point out that proving what another person knows is not always the easiest thing.   How do you get inside the person’s head and demonstrate the Seller actually knew about the problem before closing?  It just depends on how obvious the problem is, right?  Or, maybe, the Seller had some work done previously so, clearly, he knew there was some kind of issue.  And, so on.

Legal Expenses

This is a key question.  You do need some kind of answer to «How much will this cost me?»  I’ve already said «It’s all or nothing,» so you cannot get into the fight without some notion of what the whole thing could cost you.

Here is the best answer I have been able to come up with so far:

Article: Costs of Litigation

https://myhlaw.com/business-costs-of-litigation-state-court/

Video: 

In this article, and these videos, I break down the different stages of a lawsuit and give you my best ballpark estimate of what each stage could cost.  Hopefully, you will settle along the way, and the legal expenses will be less than anticipated.  But, if not, at least this analysis should give you some idea of the best and worst case scenarios.

~ Jeff Harrington, Esq.