The seller must prepare a disclosure form, commonly known as Form 17, about all known issues with the home. The intent here is to prevent anyone from suing the seller about a known defect. For example, if the seller discloses that the toilet leaks, the buyer can’t sue because the toilet leaks. It was a known and fully disclosed issue.
If the seller knows the toilet leaks and doesn’t disclose it, we assume that when the buyer discovers this issue that they’d be able to sue the seller for damages.
However, that’s not actually the case.
In 2013 a very scary thing happened. A seller, a licensed agent no less, told workers to make it look good and cover it up wood so rotten nails wouldn’t even hold. After discovering this, the buyer had no choice but to tear the entire house down and start over. At first the courts ruled in favor of the buyer, but The Court of Appeals reversed the trial judge’s decision and ruled in favor of the seller stating that “Once the buyers were aware of some rot at the house, they we required to investigate further. It did not matter that the discovered rot was minor and in a different location.”
Even though the seller lied about the mold and covered it all up, the onus still fell to the buyer who’s inspector didn’t do a thorough job.
Moral of the story, caveat emptor, or buyer beware.