Can you imagine buying a $1 million home, only to discover that it requires tens of thousands of dollars worth of termite control treatments? Home sellers are required by law to disclose defects related to the properties they sell. Failing to do so could leave the home seller liable for the cost of repairs later incurred by the purchases of the property.
State laws in Colorado require home sellers to reveal all material defects to prospective purchasers of their properties. For a home defect to be "material," it must be such that -- had the homebuyer known about the flaw before agreeing to purchase the property -- the homebuyer would have reconsidered whether to make the purchase.
The International Association of Certified Home Inspectors offers a more precise definition of a "material" defect with a home by stating that a material defect relates to "a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people." Material defects, on the other hand, do not usually relate to components or systems in the home that have lasted longer than their usual lifespan.
When homebuyers find material defects related to a home that they have agreed to purchase, they can often cancel the transaction as a result of the new information. When they find defects after the sale and transaction have been completed, they may be able to pursue legal claims against the home seller to pursue financial restitution in court.
Source: FindLaw, "Home Defects Discovered After the Sale," accessed Oct. 20, 2017