They were perfect buyers -- until after the sale

Question: My father was an original owner of a condominium for more than 25 years. He sold it to a young couple. Everything went smoothly, and they paid the asking price without a quibble. About three months later, a process server knocked on my father’s door. The couple turned out to be two lawyers who sued him for most of the amount they had paid for the condominium. Their complaints included alleged non-disclosures, incomplete association governing documents, a “screaming kid” three condos away, noise from people walking on hardwood floors above, too many dogs soiling the frontyard and failure to inform about rising assessments and a special assessment that my father knew nothing about. Could this have been avoided?

Answer: The sales contract terms determine who pays for what. Sellers may place the entire due diligence burden on buyers or insert contract provisions indicating the buyer has not relied on representations made by the seller or seller’s agent. The clauses are binding on the contracting parties.

Purchase of real property is not open-ended to the extent it leaves the seller liable forever. Circumstances over which a seller has no control, such as screaming kids, noise and animals soiling lawns, cannot form a basis for liability unless the seller knew about them. The efforts of these buyers appear to be creating a type of leverage for obtaining a money settlement rather than a legitimate cause of action for which the seller can be held liable.

Buyers who are denied association documents that are not statutorily required have no cause of action against the seller unless the demanded documents were written as a contingency on sale in the initial agreement. Be aware that many sales contracts contain terms including waivers of deficiency in documents provided.

Although the seller may be able to sue the association if it fails to provide documents, the seller’s remedies in situations like these are extremely limited. Suing after the fact could result in damages upon damages with both sides incurring attorneys’ fees. There is little in the Davis-Stirling Act to remedy situations like these.

One cannot be held liable for failing to disclose something about which nothing was known, or rising regular assessments. Absent those disclosures, the seller is not required to disclose a situation that is based on a hypothetical. The statute does not require a titleholder to disclose a rise in assessments, and an individual titleholder has no control over assessment increases.

Boards may raise regular assessments as much as 20% annually and levy special assessments up to 5% of the total budget without a titleholder vote. An anticipated special assessment, including the approximate amount, is required to be disclosed in the association’s pro forma budget. Under Civil Code section 1367 assessments are a “debt of the owner of the separate interest at the time the assessment or other sums are levied.” If your father sold before the assessment was levied, he is not liable for paying it; the new owners are.

This lawsuit sounds more like a nuisance suit rather than one designed to address legitimate damages. Before deciding whether to follow a particular course of action, check with your father’s insurance carrier -- homeowners or umbrella -- to determine whether his policy covers situations like this.

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Send questions to P.O. Box 11843, Marina del Rey, CA 90295 or e-mail noexit@mindspring.com.