Q: I recently purchased a residence and I signed a standard California Association of Realtors Residential Purchase Agreement. I now believe that there are defects in the home that were not disclosed to me by the seller and I want to file a lawsuit and recover my attorney fees. The Agreement has a provision for mediation, but do I need to request mediation before filing a lawsuit?
A: It depends. There is no requirement to mediate before filing a lawsuit against the seller or any broker involved in the transaction, unless there has been an agreement to arbitrate. If the parties agree to arbitrate and one of them files a lawsuit, the other party can file a motion with the court to stay the lawsuit and compel the arbitration.
However, pursuant to paragraph 26(A) in the recently revised C.A.R. Residential Purchase Agreement, both the buyer and seller agree to mediate any dispute or claim arising between them out of the Agreement, or any resulting transaction, before resorting to arbitration or court action. The mediation provision applies even if the parties have not agreed to arbitrate. The buyer and seller also agree to mediate any disputes or claims with brokers who agree in writing to such mediation prior to, or within a reasonable time after, the dispute or claim is presented to the Broker. Except under certain circumstances described below, any party who commences a lawsuit or arbitration without first attempting to resolve the dispute through mediation, or refuses to mediate after a request has been made, is not entitled to recover attorney fees even if they prevail. Continue reading
Q: My real estate agent has told me that I have a duty to disclose to prospective buyers information about defective conditions in my house, but why do I need to disclose such conditions when the buyer is hiring a home inspector and has viewed the house during an open house?
A: Under California’s Civil Code and common law, a seller of real property has a duty to disclose any fact that materially affects the value or desirability of the property, including, but not limited to, the physical conditions of the property. If the seller is found to have breached the duty of disclosure, the seller may be held liable for actual fraud, negligence, and breach of contract, and may have to pay punitive damages and attorneys’ fees in addition to compensatory damages. The buyer does not need to ask about such conditions of the property; instead, the seller has the affirmative duty to volunteer the information. The duty of disclosure exists after the purchase contract is signed and continues until the escrow closes. In addition to the common law duty, completion by the seller of a transfer disclosure statement is required for all sales of residential property, and it provides a check list of the most commonly experienced conditions and required disclosures. Continue reading