Expert: liznarr - 8/1/2007

Question
Hi
My name id Edward and I live in Texas but I hope you can help me. I understand you have experience in disclosure.  I recently purchased a home and a couple months later received a letter from my HOA that I need to replace my roof due to the color not being consistent with the rest of the community.  I believe the seller intentionally did not disclose this to me.  Now I did sign a AS IS agreement but upon close reading noticed I agreed to release liability from the Agents, Brokers, and Title company only so my question to you is do I have a case against the seller and legally should he have disclosed this to his agent, me, or the title company? Your help would be tremendously appreciated.

Answer
Hi Edward,

Not knowing all the facts of your situation, I will make some comments below.  

Keep in mind that I am not qualified to give legal advice, and any of my comments below are from my experiences only.  I would strongly recommend that you consult with an attorney for legal advice as to how to proceed.

If the Seller, agent(s) and/or broker knew of the requirement for roof colors, or SHOULD HAVE KNOWN this information (which is what my state’s real estate laws say), yes, it should definitely have been disclosed.  Failure to disclose a material fact is fraud, which is defined as INTENTIONAL misrepresentation.  A material fact is a fact that, if known, could cause a purchaser to not go forward with a purchase.  

Having to replace a roof would qualify as a material fact.  If you can prove that the Seller, broker and/or agent(s) knew that the roof color was not approved and/or was not an allowed color, then you probably have a very good case.

A question that comes to mind is, was the Seller required by the Covenants and Restrictions and/or the HOA to get an approval for the roof color PRIOR to replacing his roof?  If so, and he did not do this, he is clearly in violation of the Covenants and Restrictions.  If the Seller claims he did receive approval, he should provide written documentation from the HOA.    My opinion on this issue would be that the Seller should have known of the requirement, and ignorance of the law is never an excuse, so I would think this could be deemed negligence and fraudulent disclosure.  An attorney will be able to give you legal advice for Texas statutes.

I’m playing the Devil’s advocate here, but a second question comes up in that if you had access to the Covenants and Restrictions prior to closing and you knew the roof had recently been replaced, a judge might say that you should have asked the question.  My personal opinion here is that this scenario is far-reaching, but the Seller/agent/broker … when backed into a corner … might bring this defense up.

A rebuttal to the above, however, might be that you could say that the HOA was negligent in NOT notifying the previous owner immediately when the roof was replaced with a non-allowed color.

I would hope that any release of liability you signed at closing would only cover the condition of the property -- and not fraud.  Rest assured, however, that there was a reason for having you sign such a document.

I checked at the Texas Real Estate Commission site http://www.trec.state.tx.us/index.asp  and Texas DOES have a mandatory disclosure form as covered by Section 5.008 of the Texas Property Code.  

You can read Section 5.008 at the following link:
http://www.trec.state.tx.us/pdf/articles/trec/5.008.pdf#search='disclosure'

The Texas disclosure form can be found at the following link:
http://www.trec.state.tx.us/pdf/contracts/op-h.pdf#search='disclosure’

If you will download the disclosure form, look at Paragraph 5 which reads (the words in all caps are mine for emphasis):

“Are you (Seller) aware of any of the following?  Write Yes (Y) if you are aware, write No (N) if you are not aware.

____ Room additions, structural modifications, or other alterations or REPAIRS MADE WITHOUT NECESSARY PERMITS or not in compliance with building codes in effect at that time.

____ Homeowners’ Association or maintenance fees or assessments.”

Based on what you wrote me, the Seller should have answered “Yes” to both the above.  I would think that the first reference above as to structural modifications might cover the color of the roof replacement made by the Seller.

Note that Paragraph “(f)” of Section 5.008 regarding the disclosure form reads as follows:  

“The notice shall be delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property.  If a contract is entered without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason within seven days after receiving the notice."

The above information should be sufficient to point you in a direction that you may not have gone yet.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth